Tenant has backed out

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    Tenant has backed out

    3 weeks ago we advertised our one bed flat to be let. The second couple to see it agreed to take it for their son who was currently abroad so couldn't sign a tenancy agreement there and then. In order to show commitment to the agreement they paid a deposit equivalent to one month's rent and signed a rough piece of paper giving their names and addresses and agreeing that they would guarantee the tenancy and agreeing a start date of 21 April. Last weekend we called them to arrange things for this week to be told that their son had let them down and was now not coming home so they would not be able to take up the tenancy.

    We now have to readvertise and will be without rental income from this week as a result. We have their deposit but they are asking for it back less our advertising costs. We think we should also be able to deduct an amount of money for every day that we are without the rent after the previously proposed start date and only return them the balance once we have secured a new tenant. They have now called us and said that they have a friend who might want the flat and could move in straight away. We have agreed that they can view the flat first but feel we are being cornered in to accepting someone who may be an unsuitable tenant and would like the ability to say no to this person. However, they have said that if we don't accept their friend as our new tenant they will expect all their deposit back.

    Please advise where we stand...we don't want to rip anyone off but feel that we trusted them and that they have withdrawn from our agreement.

    #2
    As the receipt given did not state that the deposit was non-returnable, or the conditions on which deductions could be made, then the deposit has to be returned.

    That they are offering to cover re-advertising is a silver lining.

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      #3
      Thank you for your reply. I am confused though...the deposit was given as a guarantee by the parents that their son would duly come back and take on the tenancy. They wanted to secure the flat for him and wanted to make sure we did not show it to anyone else after they had agreed to take it. As he did not take the tenancy, surely we have a legal claim on the deposit. Their signed note clearly states a start date and is signed by them. If we have no claim on a pro rata deduction on the deposit for financial loss and costs, what is the point of taking a deposit?

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        #4
        If they signed a 'rough piece of paper', maybe that's not enforceable; was it executed as a Deed, for instance?
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          #5
          Originally posted by HelenP View Post
          Thank you for your reply. I am confused though...the deposit was given as a guarantee by the parents that their son would duly come back and take on the tenancy. They wanted to secure the flat for him and wanted to make sure we did not show it to anyone else after they had agreed to take it. As he did not take the tenancy, surely we have a legal claim on the deposit. Their signed note clearly states a start date and is signed by them. If we have no claim on a pro rata deduction on the deposit for financial loss and costs, what is the point of taking a deposit?
          A deposit without the proper paperwork is useless.

          If you find yourself in this situation, make sure the paperwork gives you specific rights to the money.

          This isn't a 'cut & paste' suggestion, but something along the lines of...

          This deposit will be refunded in full if a tenancy is signed. If not, deductions will be made in respect of re-letting and loss of rent for the period the property is held for you.
          The above may also have legal holes in it - hopefully others will come along with better ideas or it might be worth spending a few quid on getting a solicitor to draft a template that would be effective.

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            #6
            See this post by one of our legally qualified members, lawcruncher
            http://www.landlordzone.co.uk/forums...90&postcount=1

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              #7
              Reading Lawcrunchers post it appears that had your deposit been non-refundable you might have been forced to accept the son, no matter what references or credit checks said - he could have been a psycho! Lucky escape.

              Comment


                #8
                Thank you everyone for your comments. It appears that we have been somewhat naive and too trusting in people's good intentions.

                However, I would appreciate your comments as to what we should have done given the circumstances.....ie. tenant not able to sign on the day, parents ask us to hold for him etc.......or is the simple answer that we should have said to them that we couldn't hold it and that a contract would need to be signed straight away, and thus continued to market it (we had about 20 calls in a week from people wanting to see it) and we could have probably let it easily to someone more conventional....

                By the by, we ourselves are facing renting for the first time and it is odd being on the other side of the fence (due to having sold our family home and can't find anything to buy!). Some of the agents I have been speaking to offer a 'hold' scheme and their wording goes something like this.

                "A deposit of £.........(usually 2 weeks rent) will be taken as a holding deposit and will be deducted from the first month's rental payment once the tenancy commences. The deposit will NOT be refunded if, through no fault of the Landlord or agent, the tenant withdraws or the tenant's references are unsatisfactory."

                This is not the exact wording as no agent would let me take a copy with me.....I just read it when in their office. But I think it is pretty close.

                Any comments? I would be interested as we are facing a tricky timing situation with signing the exchange documents for the sale of our house and a rental agreement...we can't commit to either without the other if you see what I mean!

                Many thanks.

                Comment


                  #9
                  You need to remember that it works both ways. If there is no contract then not only is the tenant not bound, but neither is the landlord.

                  In this case they have agreed to pay for the advertising and they do not need to do that. Accept the offer and put it down to experience.

                  Clauses such as you quote are in my view unenforceable. It is as I summarised it in the thread mentioned above:

                  The problem in all property negotiations is this:

                  A. Neither party is bound to the other until there is a contract.

                  B. If no contract is concluded neither party is liable for any expense or loss that may be incurred by the other.

                  You cannot get round B. Property lawyers have had a go, but no workable scheme has emerged to square the circle.

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