Lettings agency refusing to return holding deposit

[BemusedConfused]

We agreed to rent a house with a £500 holding deposit based on moving in on a certain date. Just days before the move in date, we called the agency to check all was ok and were told that there was a serious problem. The previous tenants had refused to leave and court papers had been served to get them evicted. This meant that we weren't able to move in.

 

We tried to come to a compromise with the agency about a new date but they were useless at keeping us informed about the progress of the court case and they kept moving the move in date further and further back. As the end of our previous tenancy agreement was very close, we had no choice but to find another property with another agent.

 

The first agent have refused to provide us with our holding deposit back, despite the fact that, through no fault of our own, the tenancy was unable to proceed.

 

Are they right in being able to keep our £500?? Thinking about small claims but I'm not sure how strong the case would be. Help!

[sequenci]

Yup, you should be able to use the small claims court for breach of contract. Prior to doing that you should write a letter outlining that you will be looking to bring legal action against them unless they return the money within 14 days or so. Also point out that you be reporting them to Trading Standards.

 

As an aside, you may be able to sue them not only for the breach of contract but possibly for any out-of-pocket expenses too.

[BemusedConfused]

My only worry is that the holding deposit contract we signed does not include the agreed date. It simply says "As per tenancy contract" and we didn't have a tenancy agreement at that stage.

 

We do have email communications from us to the agency with the agreed date mentioned on them, before it all fell through. That is the only mention of the agreed date though and everything was done over the phone.

 

Does that change anything?

[Ed999]

My advice is applicable only if the premises are entirely within England and Wales, and you were over 18 years of age when the contract was created.

 

 

The real issue here is what were the terms of the contract?

 

I think that, in my opinion, in the absence of any other cogent evidence on the point we must take the time at which the money was handed over as being the point at which the contract was entered into.

 

What can you tell us about the agreed terms at that stage? Had a date by then been agreed on which the tenancy would commence?

 

 

As regards the signed document, what does it say about your obligations under the contract? Were you allowed to withdraw as you did, without giving notice and without giving reasons?

 

What does it say about the landlord's obligations? What did he have to do, other than give you vacant possession, if anything?

 

We must establish clearly what the conditions / pre-conditions were, on both sides. And before attempting to say whether you actually had a contract, or whether it was void for uncertainty, we ought to establish what had been agreed when the contract was formed, on the sound basis that matters which emerged only later will not form part of the agreement.

 

A question then arises as to whether, if the contract was void for uncertainty, the letting agent has any entitlement to the money?

[BemusedConfused]

Thanks for your reply.

 

The contract was signed on 3rd March 2011 with a view to a move in date of 18th April 2011.

 

Apologies for overloading you with detail but here is the contract for the holding deposit. This is the only contract that we had with them because no tenancy agreement was seen by us or signed.

 

It says -

 

"Thank you for your payment of £480 by way of a holding deposit to indicate your good faith and serious intentions to proceed with renting the above property. This will be held against our expenses in processing your application and if your application is successful will be deducted from your initial monies. It is important to note that this payment does not oblige our client to let the above property or any other property to you and does not commit the landlord to granting a tenancy or constitute an offer of a tenancy.

 

You have agreed, as acceptance of your offer that your move in date is to be confirmed as (subject to contract). However, should it be necessary to alter the tenancy dates due to any change or delay in your circumstances after the tenancy agreement has been prepared, it will be necessary to charge additional preparation costs up to a maximum of £58.75.

 

Please note if the tenancy agreement does not proceed due to any of the following circumstances there will be a charge to cover any reasonable costs up to a maximum of the full deposit.

 

- Where you change your mind and withdraw after references have been sought and/or documents prepared and/or preparations for the tenancy put in hand

 

- Where the tenancy does not start within one calendar month of the signature of this agreement because of any action by you

 

- Where your references are incorrect or misleading

 

We will refund your money in full if the landlord decides to withdraw for any reason or is unable to enter into the tenancy"

 

 

[Steve__M]

This is a very one-sided "agreement". Definitely one for trading standards.

 

As yet you have received nothing for your money. On that basis you could argue that no contract has been formed (legally, in England/Wales, to form a contract both parties need to receive a benefit) and therefore you are entitled to your money back.

 

There is also a reductio ad absurdum argument. ie. you can reasonably continue to negotiate the tenancy contract as no contract has yet been agreed:

 

At this moment, as no tenancy contract has been signed you are still entitled to continue to negotiate the terms of the tenancy contract. On that basis you could insist that you have every intention of signing the contract, but the contract should start when your new current contract ends (in 6 months or a years time?) and that you have the right to inspect the property and insist that any damage caused by current tenant since you first viewed, is rectified, and the rent is to be reduced by 30% due to the inconvenience they have caused you etc. etc. .

 

"Where you change your mind and withdraw after references have been sought and/or documents prepared and/or preparations for the tenancy put in hand" does not apply as you have not changed your mind. "Where the tenancy does not start within one calendar month of the signature of this agreement because of any action by you" does not apply as the one month delay is not due to your action.

 

Obviously, you are only making this argument to point out that the agreement you have with them is so ridiculously open-ended and one-sided, and that "two can play at that game" and thereby force the landlord to withdraw (which entitles you to your money).

[Ed999]

The contract was signed on 3rd March 2011 with a view to a move in date of 18th April 2011.

 

 

Before I can comment on your latest post, which, by the way, was extremely helpful, I request that you clarify the meaning of the words I have highlighted in bold.

[BemusedConfused]

Before I can comment on your latest post, which, by the way, was extremely helpful, I request that you clarify the meaning of the words I have highlighted in bold.

 

Sure. When we agreed the cost of the rental, we put in an offer of monthly rent and move in date. At that point it was agreed that 18th April would be the move in date that the landlord wanted and we agreed to. It was all verbal agreement. We then booked everything (removals, utility switchover etc) for that date.

 

Does that answer the question?

[phoenix11]

We will refund your money in full if the landlord decides to withdraw for any reason or is unable to enter into the tenancy"

 

Surely this is the nub? Landlord is unable to enter into the tenancy and always was at the point at which you were led to believe the tenancy would be agreed and you paid the appropriate deposit.

[Ed999]

No, the 'nub' is whether there ever was a valid contract.

 

Was it valid? Or was it void for uncertainty because there is no date in it for the tenancy to commence?

 

 

When we agreed the cost of the rental, we put in an offer of monthly rent and move in date. At that point it was agreed that 18th April would be the move in date that the landlord wanted and we agreed to. It was all verbal agreement.

 

 

On what date did you reach this verbal agreement?

 

On what date did you sign the written document?

 

Sorry, but it's necessary to be precise in a case like this.

[BemusedConfused]

We agreed the move in date on the 3rd March and signed the contract the next day, along with paying the holding deposit.

[Ed999]

We agreed the move in date on the 3rd March and signed the contract the next day, along with paying the holding deposit.

 

 

In my opinion, this case raises a straightforward point of law: what were the agreed terms of the contract?

 

A contract which is otherwise valid is not invalidated merely because it is verbal. For a contract to be validly created, and therefore legally binding, there must be -

 

(a) an offer, to reserve the property, on terms, made by the landlord;

(b) an acceptance of that offer by the tenant;

© a payment, usually of money, by the tenant;

(d) an intention to create legal relations - something that is presumed to exist, unless the landlord and tenant are related to one another, by blood or marriage.

 

If any of those elements is missing, there might not be a valid contract.

 

 

Those legal requirements are normally satisfied if both parties sign a written contract, and the tenant pays the agreed amount. Here, though, one essential matter was omitted from the written agreement: the date on which the tenancy would begin. This is not fatal, in my opinion, where the parties had agreed that date, verbally. The contract is then a verbal one, supported by written evidence of some of the agreed terms.

 

The difficulty is purely one of proof. It is your word against the landlord's as to what date was agreed. If the court is satisfied that you are correct, that a fixed date was agreed, and that it was agreed before the written document was signed, then the contract will likely be valid; but otherwise it might be void for uncertainty.

 

But there might be a dispute as to whether a fixed date was agreed, or as to what date was agreed.

 

 

 

What is the effect of the contract clause "(subject to contract)" ?

 

This phrase probably was included by the landlord so as to prevent the document from creating a tenancy, the intention being that a proper tenancy agreement would be drawn up subsequently. It probably does not prevent the document which you signed from being a contract, or at least written evidence of a contract.

 

 

What is the effect of their being no tenancy agreement annexed to the holding contract?

 

This is a more fundamental issue, as it introduces uncertainty as to whether a letting could be agreed at all, since it leaves all the terms of the potential letting "up in the air". It is fairly well established in law that a contract must have certainty as to its terms, and that a mere "agreement to agree" - i.e. an agreement to agree a set of contract terms at a later stage - is void for uncertainty.

 

 

Clearly, there are a number of points which could render null and void the agreement you intended to make, due to uncertainty. In that event, it is difficult to see any basis in law for the letting agent or landlord retaining any of the money you paid.

 

If the contract is valid, then the date for performance of the contract by the landlord has passed, if your account of events is accepted by the court. The document you signed also talks about - contemplates expressly - the contract being performed within one month from the date of signing it, which time has also passed. Again, in those circumstances it is difficult to see any basis in law for the letting agent or landlord retaining any of the money you paid. The contract talks about your money being non-refundable only if it is you who withdraws from the intended letting, it doesn't bar you from recovering it where the landlord fails to proceed.

 

 

You might write a letter to the landlord, drawing his attention to the matters I have mentioned, and asking for your money back.

 

If the contract is valid, it is arguable that you also have a valid claim for damages for breach of contract, as the landlord has plainly not honoured his obligations, which would be your financial losses; e.g. any money you lost in making and then having to cancel a removal firm. And any other financial loss you suffered. But only if the contract was valid.

 

If you get no satisfactory response, then you might write a formal letter before action, or pay a solicitor to write one, threatening to sue in the county court unless the money is refunded to you within 14 days.

 

 

Unfortunately, the question 'can I win my claim?' is a question that only the Court which hears the case can decide. The Court will take into account the evidence which is given at a hearing by you and by, or on behalf of, the landlord. This evidence will only emerge by cross-questioning of the witnesses.

 

The outcome of a Court case is never certain.