Is a Holding Deposit binding or refundable?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Is a Holding Deposit binding or refundable?

    Hi people.

    Can anyone help with this as i aint really had to deal with it before.

    If someone wants to view a room, and they like it and want me to hold it for them till they move in a little further down the line, say in Sept 05 ish,

    What sort of deposit could i take for it?

    If they do decide to move in when its time, is that accepted as deposit/ 1 months rent?

    Is it be 'Non returnable' if they change mind much later on? (since ive been refusing it to be let out meanwhile)!

    Thanks for any response people. Really helps.
    T

    #2
    Pet Subject!

    I've written so much on this subject on the old forum perhaps you might want to take a peek?

    September seems a long way away [is he/she a student?] You need to do the following:

    1. Put all the terms of the tenancy in writing concerning the deposit (you don't need the actual AST here).
    2. You can't retain it as a penalty against the prospective tenant.
    3. Always use the term "Subject to Contract" in your correspondence.
    4. If the applicant fails to take up the tenancy on a certain date or fails the referencing (don't forget this) you can only mitigate your loss i.e. the actual
      financial loss to you, not a figure plucked out of the air.
    5. Make sure you don't pay any interest on the money held!
    6. If the applicant fails to take up the tenancy but he/you find a replacement then you ahve to give him the money back.
    7. You can make an administration charge but make it an hourly rate [say £20] and you must tell him/her in advance what the maximum will be in GBP's, and it MUST be reasonable.

    Hope this helps.
    The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

    Comment


      #3
      Holding Deposit

      I've had a quick look around the site for the answer to this question but can't seem to find one.

      Having found some really nice tenants who passed their reference checks etc with flying colours and ticked all the right boxes with regards to what we want in a tenant we happily offered them an AST only to be told they could not move in straight away. Not a problem, I took advice and told them that we would take it off the market if they were prepared to show goodwill by paying a holding deposit to the tune of 1 weeks rent for every week we held the property for them. Fortunately they were more than happy to do this and promptly produced a cheque equal to one months rent, which we agreed would be used as the first months rent when they took up the AST. Next thing we know they are saying they want us to hold the property for a further two weeks and once again produced a cheque.

      The question is; although we agreed we would use the first cheque against the first months rent we did not agree the same for the second payment, do we have to refund the second payment?

      I have no wish to upset these tenants in anyway but by holding the property for six weeks we have potentially lost revenue. Are we allowed to recoup some of these potential losses or is there some legal reason preventing this?

      Any advice would be appreciated.

      Comment


        #4
        I would answer the question with another question. What will you do if they withdraw leaving you without a tenancy?
        The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

        Comment


          #5
          Originally posted by Paul_f View Post
          I would answer the question with another question. What will you do if they withdraw leaving you without a tenancy?
          Good question!
          Fortunately that isn't an issue as they have signed the AST this week but had the worst happened; in all honesty I would probably still be checking the legal position. This is the first time of doing this on our own and I want to be sure we're going about it the right way. Point taken though.

          Comment


            #6
            The trick here is simply to ensure you have a written contract specify the facts.

            For example, how long will you hold the property for? What deductions might be made from the money (lost rent, reference costs etc), what circumstance might trigger these costs (eg tenant not taking the property by the agreed date) etc.

            This will then give a firm contractual basis from which you can discuss further extensions to the time but under an new agreement.

            You have ben kind and generous and have simply lost the rent to save them the money. There is no reason they could not have taken on a tenancy of the property at the end of the first month, even if they did not move in for another 2 weeks (you don't have to live in the property to be a tenant!).

            Comment


              #7
              Thanks David.

              We did send a letter specifying the facts you mention and more including that only the equivalent of one months rent would be credited to them however long we agreed to hold the property for, so I guess by dint of the fact that they paid up a contract was formed and accepted. Therefore there is no recourse to be had.

              Comment


                #8
                Holding Deposit

                Hi, I've looked through previous posts on the topic of 'Holding Deposit' but still not found the help I need with this. On the Landlord Zone Tenancy Application Form (page 5) which I was going to use with my prospective tenant it states ...

                'I understand that if I lodge a holding deposit I will be given a written receipt and details of any penalties should I fail to commence the tenancy. Also that the holding deposit will be credited as a portion of my security deposit or rent once the tenancy commences'.

                All well and good but is there any standard text that I can use on my receipt relating to 'details of any penalties' or indeed a 'standard holding deposit form' which covers all of this that both myself as LL and my prospective tenant can sign? Thanks for any information.

                Comment


                  #9
                  'Holding deposit' questions

                  I assume that the ability of a landlord to insist on an upfront 'holding deposit' is unaffected by recent legislation?

                  Are there any limitations to the size of such a deposit, does anyone know?

                  Comment


                    #10
                    The costs shoud be reasonable if any are to be deducted, and does any of this money go towards the first months rent? Also the landlord would not be able to retain all of this money if you were unable to go ahead unless he can show that it mitigated his loss.

                    Do not under any circumstances pay more than is reasonable, the amount of which I cannot advise as I don't know how much the rent is and how much you are being asked to pay.
                    The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

                    Comment


                      #11
                      Agent holding deposit

                      My landlord, through the letting agent, gave me notice last Feb but I refused to go. He employed a solicitor to get an eviction order which has been served - I have to be out by the 12th August or face the bailiffs. I have paid the rent in full and the house is in good shape.

                      The agent now tells me that the landlord has requested the deposit be given to him as he is out of pocket - he cant claim solicitors fees only fixed costs. He is quoting Section 2 of the AST agreement :

                      " the tenant pays the deposit as security for the performance of the tenants obligations and to pay and compensate the landlord for any breach of those obligations "

                      He says that I have not met my obligation to vacate the property when requested. Can he do this please?

                      Comment


                        #12
                        The L/L should not end up out of pocket due to a tenant. If you were given a correct valid legal notice to quit and decided to stay you wont get any sympathy from me. I am basing that opinion on the info supplied.

                        Comment


                          #13
                          Landlords DO NOT serve a Notice to Quit but a Notice Seeking Possession (NSP) i.e. a S.21 Notice. The only way a tenancy can be brought to an end legally is by an Order of the Court which has been obtained. The tenant hasn't breached anything if he's paid rent and is moving out on 12 August. He will probably be liable for the fixed court costs, and any dilapidations assessment.
                          The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

                          Comment


                            #14
                            What he is saying is that he gave me 2 months notice in Feb and I failed to leave. Then a Section 8 was issued and I ignored it, then a Section 21 was ignored and THEN a solicitor was used to get the court order. HELP!

                            Comment


                              #15
                              No, you've got it all wrong.
                              The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

                              Comment

                              Latest Activity

                              Collapse

                              Working...
                              X