Mistake to cancel cheque?

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  • Mistake to cancel cheque?

    Hi there, I hope somebody can help?

    My girlfriend signed a six month tenancy agreement last week (with, according to the landlord a clause that allows either party to give 2 months notice). When I went to view the property I did not believe that it was safe for a girl to live there alone, so I had her cancel the deposit cheque.

    She has not moved in and I need to speak with the Landlord, where does she stand as regards to the contract and also the cheque that has been cancelled? i.e. would it be ok to make a 'reasonable' offer to him to walk away? Also, could he make a claim for the full cheque amount and still claim more for the contract?

    Any accurate information as regards the legal situation will be greatly appreciated.

    Thank you.

  • #2
    When you write a cheque out, you admit through that act that you owe the person to whom it is payable, the amount of money that it is written for. So to answer your question, yes the landlord can sue, based on the cheque alone and also he can sue for any loss caused by your girlfriend changing her mind - but, he is under a duty to mitigate that loss, in this case by attempting to find a replacement tenant.

    Your best way through this is to try and work it out with the landlord - if he is not amenable though, you must give him the required notice and bear the cost of two months rent - after all, it is not the landlords fault that you think the area is not safe for your girlfriend - and this reneging of the agreement is simple a changing of mind by the tenant who has signed paperwork and paid over a deposit and then wishes to "get out of it".

    I would start by offering a couple of weeks rent for the landlords trouble - in cash but making sure you get a written agreement that this ends your liability!


    • #3
      David, the landlord could have changed his mind at anytime without any liability other than refunding the deposit. It goes both ways doesn't it?

      I believe that as the girl hasn't moved in yet then there is no tenancy yet. She should be refunded her deposit and walk away without having to pay rent.
      She would however lose her holding deposit and any referencing fees she paid.


      • #4
        Jennifer - I think you are wrong here and davidjohnbutton is right. If either withdraws it is a breach of contract; so the other can claim whatever loss has been occasioned (in the case of a LL's breach the tenant could claim additional and/or alternative accommodation costs; in the case of a tenant's breach the LL could claim the costs of finding a replacement tenant and losses occasioned by a void period or reduced rent).

        Chops - Cancelling cheques is not to be done lightly; it is indeed a good idea to speak to the LL, but you should have done so before taking precipitate action. At this stage a bit of apologetic grovelling might be in order.
        Disclaimer: What I say is either right or wrong. It may be advisable to check what I say with a solicitor. If he says I am right then I am right, unless he is wrong in which case I am wrong; but if he says I am wrong then I am wrong, unless he is wrong in which case I am right


        • #5
          As lawstudent says Jennifer, a landlord cannot simply change his mind and expect to walk away if he has signed a contract/agreement with the tenant and taken a deposit.

          I have been on the receving end of tenants who changed their mind - they saw property, were given time on their own to consider it, signed agreement and gave me cheque for bond and 1st months rent - I made sure they were aware I was on holiday in the UK on the day they were due to move in, so any problems please phone my mobile. 4 days later, the cheque appeared to bounce - on phoning bank, found it was countermanded on payers instructions! No phone call, letter, no nothing to let me know and I was unable to do anything for two weeks because they failed to return keys and it took that long to get in touch with the tenants. After warnings, I sued them for all losses including the two windows they put through (another tenant of mine got the fleeing car's number after hearing glass smash!) It ended up costing the tenants well over £1000 and some heavy police warnings!

          Once you have signed the agreement - whether you be landlord or tenant - you have an obligation to fulfil that agreement - however, I as a landlord would be sympathetic to a very good reason such as serious illness or death in family as long as I was promptly notified.


          • #6
            I stand to be corrected but past threads seem to disagree with you guys. It would be interesting to get the legal point of view on this.


            Also Paul F's answer to question 1 in this thread seems to disagree


            In this case the girl hasn't moved in and the cheque sent was for the deposit apparently. Any contract signed therefore isn't effective.
            Or am I missing something?


            • #7
              In the first thread you mention, the agreement had not been signed - this differs from the current thread where the agreement HAS been signed by both parties.

              In the second thread, I presume you are looking at Q1 - here the tenant failed to take up the tenancy and thus by non-performance lost his right to it. Again this differs from the current thread where we are looking at a written contract which has been broken by the tenant backing out of it. In the second thread aforesaid, the tenant who failed to appear would have been liable for damages in contract breach had there been any loss to the landlord.

              And finally, in the third thread you mention, the tenant and landlord had not agreed a date to move in, so time was not of the essence in performance of the contract. As Paul F stated there "Three elements are required for a contract to be valid 1. Offer 2. Acceptance 3. Consideration." In this current thread the three components above are present - the landlord made an offer, the tenant accepted it and paid over a cheque which is the consideration - that consideration was then cancelled but not before the three components were complete, so there is therefore a contract and if that contract is broken, then the breaker must pay compensation.

              This is slightly different from "performance" - if I pay you £50 to mend my roof and you fail to do so, I would sue you for breach of contract by way of performance, in other words you have not done what you agreed to do and for which I have paid you.

              Hope that helps what you have apparently misunderstood Jennifer?


              • #8
                Jennifer. Lawstudent and DJB are right. I know what you mean by being effective in possession it is not the law of landlord & tenant here but that of contract. If all parties have signed their respective tenancy agreements and rent has been paid it would be effective in possession as a tenancy agreement can be signed in advance. It's only if the tenancy agreement hasn't been signed by the landlord would the tenant be able to possibly rescind the agreement as that is the one that counts.

                Only if a tenant hadn't been given a signed agreement by the landlord by the time they were due to move in, would I say that a tenancy hadn't been created.
                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.


                • #9
                  Thank you David and Paul for making this clear to me, I obviously confused different situations. Letting/renting really is a mine field

                  Anyway apologies to anyone if I've misled you.

                  So just to clarify: if a tenant has signed an agreement, paid a deposit and 1st month rent and agreed a move in date, can the landlord back up without having to pay compensation providing he hasn't signed the agreement yet?


                  • #10
                    Jennifer - if the tenant has returned all the documents and the only thing left is for the landlord to sign the tenancy agreement and bank the cheques and before he does that, he can indeed back out because without his signature to the tenancy agreement, there is no written contract - however, if the tenant had other proof that the landlord had accepted him as a tenant, he could argue that there was a verbal or parol contract in force and extract any compensatory loss that way.

                    If the landlord banked the payment (i.e. by cheque say) and failed to sign the agreement - the tenant could use that as evidence that there was a parol contract and likewise as above, recover any losses from the landlord of finding other acommodation and for other "forseeable" expenses like storage of furniture until a new place could be found.

                    This all points to why Paul F suggests agreeing everything "subject to contract". I can agree to sell you my house but until contracts are exchanged - whatever I say or promise - it isn't yours and you cannot sue me if I withdraw even as I am about to sign the contract and despite the purchaser having undergon the expense of surveys and valuations and obtaining a mortgage - many a purchaser has been left high and dry because of gazumping or the vendor simply changing his/her mind!


                    • #11
                      Right... So the lesson for tenants is don't make any arrangements before you have the agreement back and signed by the landlord.


                      • #12
                        Many thanks guys and girls, I will go ahead and see what I can do now. Cheers.


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