cancelling agreement???

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    cancelling agreement???

    Just wanted some advise please?

    After being unable to sell our property, we have agreed to let our house out to a tenant in 4 weeks time, taken a deposit but not signed any contracts.
    We have now had an offer of sale, which we would be foolish to refuse.

    Where do we stand as we have taken a deposit? are we liable for anything or is just a case of being very apologetic and handing back the deposit??

    #2
    Originally posted by kitty10 View Post
    Just wanted some advise please?

    After being unable to sell our property, we have agreed to let our house out to a tenant in 4 weeks time, taken a deposit but not signed any contracts.
    We have now had an offer of sale, which we would be foolish to refuse.

    Where do we stand as we have taken a deposit? are we liable for anything or is just a case of being very apologetic and handing back the deposit??
    Do we assume that your purchasers want to buy with vacant possession?

    It sounds as though you may have made an oral offer of an AST, in which case you are bound by contract law to keep your part of the deal and make the property available to them, or risk their suing you if you do not. Have you broached the subject with the prospective tenants yet? You may need to provide a financial incentive to persuade them to look elsewhere and let you out of the contract.

    You seem to be paying the price for wanting to have your cake and eat it, I'm afraid.
    'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

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      #3
      Since no agreement has been signed there is no tenancy. Give back deposit with apologies and hope sale goes through.



      Freedom at the point of zero............

      Comment


        #4
        Originally posted by Interlaken View Post
        Since no agreement has been signed there is no tenancy. Give back deposit with apologies and hope sale goes through.
        I agree there is no tenancy yet, but there was an agreement to provide one (albeit an oral agreement) , supported by the payment of a deposit. I still think OP is liable to honour the contract.

        Anyone else any thoughts...?
        'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

        Comment


          #5
          Whether or not there is a tenancy depends on the facts of the case. The only reason why there is usually no tenancy granted until a final agreement is signed is because, at some point, the parties have made clear in communications between themselves that this is to be the case.

          For example, I recently rented a new property and the agents made it very clear that all money was paid 'subject to contract'. Other common ways of making it clear an agreement is not final are to require a credit check beforehand (and explaining this to the prospective tenants) and by giving the tenants 'application forms' ('application' implying that the LL/agent has some discretion to decline the tenants, therefore there isn't yet a contract). There is no immutable rule that a tenancy has not been granted until an agreement is signed. A tenancy can be granted orally with no formalities whatsoever and if the circumstances would cause a reasonable person to conclude there has been a contract formed for the rental of a property then it is so.

          So, OP, you need to provide us with more details. What exactly was your agreement with the tenants? What percentage of the deposit did they pay? Did you say anything that explicitly or implicitly said there was some final contract to sign before they would be given the keys?
          Disclaimer:

          The above represents my own opinion, derived from personal knowledge and should not be relied upon as definitive or accurate advice. It is offered free of charge and may contain errors or omissions or be an inaccurate opinion of the law. I accept no liability for any loss or damage suffered as a result of relying on the above.

          Comment


            #6
            Based on the fact that a deposit has been taken, there is obviously an oral contract in place - an offer to create a tenancy. Therefore I would direct OP to this post by Lawcruncher (a legally experienced member) which seems to corroborate MTGs stance that not offering the tenancy would be breach of contract http://www.landlordzone.co.uk/forums...372#post278372

            Comment


              #7
              Originally posted by Snorkerz View Post
              Based on the fact that a deposit has been taken, there is obviously an oral contract in place - an offer to create a tenancy. Therefore I would direct OP to this post by Lawcruncher (a legally experienced member) which seems to corroborate MTGs stance that not offering the tenancy would be breach of contract http://www.landlordzone.co.uk/forums...372#post278372
              Snorkerz, how do you remember all them links, in yer 'ed, like?
              'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

              Comment


                #8
                Originally posted by mind the gap View Post
                I agree there is no tenancy yet, but there was an agreement to provide one, supported by the payment of a deposit. I still think OP is liable to honour the contract.
                I tend to agree. A letting (for 3yrs. or shorter) need not be in writing; an oral contract is binding.
                JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                4. *- Contact info: click on my name (blue-highlight link).

                Comment


                  #9
                  What unfortunate timing.

                  Whilst you are sensible to try to establish what your legal position is in case it all goes wrong, in reality your own suggestion of apologising profusely and handing back the deposit is fairly unlikely to throw up any big problems - particularly as there are still 4 weeks until the move-in date. The potential tenant will be annoyed, you will feel a bit mean, they will find another place, you will sell and everyone will forget about it.

                  As you can see on here, even amongst experienced landlords and legal experts there is quite a lot of uncertainty about the matter of whether the deposit creates an obligation on either party and, if so, what that obligation is. Due to the lack of clarity I doubt it would not be worth T's time and effort to pursue you (though you never know, they might anyway).

                  I would hand back the deposit as soon as possible, judge their response and, if they kick up a stink there is plenty of time to get advice and backtrack if you have to.
                  Assume I know nothing.

                  Comment


                    #10
                    There's actually not a lot of disagreement - everyone agrees that some kind of obligation has probably been created. Judging by the other posts I was wrong to say a tenancy has begun, but my post should be read to say that a contract to grant a tenancy may have been created depending on the actions of the parties.

                    Your suggestion to hand back the deposit and judge their reaction is probably the best practical advice anyone has given though. The T is under a duty to mitigate any losses caused by the LL's breach of contract, so they actually have to try and find other accommodation. Any damages payable by the LL would therefore be minimal or nonexistent.
                    Disclaimer:

                    The above represents my own opinion, derived from personal knowledge and should not be relied upon as definitive or accurate advice. It is offered free of charge and may contain errors or omissions or be an inaccurate opinion of the law. I accept no liability for any loss or damage suffered as a result of relying on the above.

                    Comment


                      #11
                      Originally posted by bhaal View Post
                      There's actually not a lot of disagreement - everyone agrees that some kind of obligation has probably been created. Judging by the other posts I was wrong to say a tenancy has begun, but my post should be read to say that a contract to grant a tenancy may have been created depending on the actions of the parties.

                      Your suggestion to hand back the deposit and judge their reaction is probably the best practical advice anyone has given though. The T is under a duty to mitigate any losses caused by the LL's breach of contract, so they actually have to try and find other accommodation. Any damages payable by the LL would therefore be minimal or nonexistent.
                      Not disagreement but lack of certainty. Yes - everyone seems to agree that some sort of agreement has been made between L and T the terms of which depend on what was said at the time (if L&T disagree about what was said at the time then this will introduce additional uncertainty). It is unlikely that everything will have been agreed in advance so if there was a commitment to provide an AST what would the terms of that AST have to be? Etc..

                      In the unlikely situation that T took action against L I think there would be quite a lot of problems proving what their expectations were, what performance they were entitled to and what their losses (which you rightly say have to be mitigated) were.

                      Hence, in practical terms, just let them down as reasonably and considerately as possible.
                      Assume I know nothing.

                      Comment


                        #12
                        Thanks all very much for your feedback.

                        We are certainly not trying to have our cake and eat it, we are just trying to do what is right for us.
                        As you say it is the uncertainty of the matter, and the fact that we have morals which make it a difficult one.

                        Having spoken to my solicitor, they dont feel there would be any case for further action as no agreement has been signed.

                        We have given back the deposit, apologised profusely and hopefully this will be enough.

                        Thanks again, for your comments

                        Comment


                          #13
                          Originally posted by kitty10 View Post
                          Having spoken to my solicitor, they dont feel there would be any case for further action as no agreement has been signed.
                          That's great - providing your solicitor is an expert in Landlord & Tenant Law - most 'High Street' solicitors aren't

                          Comment


                            #14
                            Originally posted by kitty10 View Post
                            We are certainly not trying to have our cake and eat it, we are just trying to do what is right for us.
                            Um. I think that in this case it probably amounts to the same thing. You want to reserve the option of selling your house; yet you want to rent it out and to generate some money. They are mutually exclusive scenarios, as are having one's cake and eating it.

                            I am however glad that you have been able to extricate yourself from the situation and hope that your propsective tenants are not too disappointed.
                            'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

                            Comment


                              #15
                              Originally posted by mind the gap View Post
                              Um. I think that in this case it probably amounts to the same thing. You want to reserve the option of selling your house; yet you want to rent it out and to generate some money. They are mutually exclusive scenarios, as are having one's cake and eating it.
                              A bit unfair IMO.
                              Assume I know nothing.

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