Can I cancel the tenancy agreement if deposit not paid?

by Readers Question

11:43 AM, 4th September 2019
About 2 weeks ago

Can I cancel the tenancy agreement if deposit not paid?

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Can I cancel the tenancy agreement if deposit not paid?

We rent out a lovely one bed flat in a University town. A PhD student from overseas has recently agreed to rent the property for 12 months from 20th September and has signed an AST (electronically) accordingly. We have requested that she pay the deposit, which she claimed (by email) to have paid by PayPal on Sunday afternoon.

We have not received the deposit, and have emailed her several times since Sunday to inform her that it hasn’t been received. There has been no response to these emails.

We have reviewed all email communication with her, and we clearly stated “the deposit is required to secure the property” on the email in which the tenancy agreement is discussed. Meanwhile, we have prospective tenants continuing to enquire about the (now vacant) property, with one very keen to start their tenancy within the next few days.

Can we inform the first tenant that we are cancelling the contract on the basis that the deposit has not been paid, or would it be unwise to do so?

Louise



Comments

Rob Crawford

22:04 PM, 4th September 2019
About 2 weeks ago

Hi Louise, when an AST is signed prior to receipt of rent or deposit it should be done so on the basis the tenancy would not start until receipt of those monies. You mention non receipt of the deposit but do not mention any rent payment normally asked for at the same time. Not sure how long a PayPal transfer takes but I would give the tenant until Friday. I would also ask for proof of transfer now, the tenant should have a PayPal receipt. 3 to 5 days see: https://support.2go.com/hc/en-gb/articles/236226847-When-Will-My-PayPal-Transfer-Be-Available-in-My-Bank-Account-

WP

9:23 AM, 5th September 2019
About 2 weeks ago

As I understand it if she has not paid the deposit and you are not in receipt of any other monies such as a months rent in advance, the TA is void. I'd send her an email now saying she has had plenty of warning and as she has failed on her part of the agreement you are renting to someone else. Then get your new tenant signed up asap. The only way I get round this is asking for a flat £100 along with the return of the Application Form I ask them to fill in. This states the £100 will be held to secure the property for them for 14 days so that the deposit, RIA and TA can be all done. After that, I return the £100 no quibble. If they fail to agree to that at the Application stage then I don't progress with them.

Graham Bowcock

16:49 PM, 5th September 2019
About 2 weeks ago

Hi Louise
Whether you can cancel the agreement or not will depend on whether it has been completed. Completion usually requires both parties to sign the agreement and for it to be dated. Generally if only one party has signed then completion has not occurred. If you are now not willing to complete (for obvious reasons) then I suggest you confirm this clearly in writing to the tenant, advising that you do not consider the agreement complete.

Most landlords would not complete an agreement until all monies due (usually rent and deposit) had been paid and actually cleared.

I am assuming that the tenant has not moved in, of course - if they have then completion may well have occurred by virtue of the facts.

NB - if you have concerns please speak to a lawyer. I am merely an experienced chartered surveyor and landlord but not legally qualified.

moneymanager

8:52 AM, 6th September 2019
About 2 weeks ago

If the AST has been signed electronically (i.e. remotely) you have in all probability not seen the original Right to Rent documents (even if you have satisfied yourself with copies), the AST cannot be finalised until you have.

Our AST carries both our and the (prospective) tenant's signatures as an indication that both parties are happy to proceed on the terms stated. It also carries a "saeling date" which is the date inserted ONLY when it is intende to bring the agreement into legal effect.

Yours may well not have that but if you documentation states that a depoist is required (no holding deposit?) and that has not been paid then the AST conditions have not been fulfilled, my guess is that that would make it not void but voidable, void it.

Michael Barnes

23:52 PM, 6th September 2019
About A week ago

Reply to the comment left by Graham Bowcock at 05/09/2019 - 16:49
I believe you are wrong.

I understand that a contract is made when the LL provides a contract to the prospective T and the prospective T signs and returns.

To make the contract voidable probably needs terms along the lines of:
1. Deposit is to be paid on or before .
2. First month's rent to be paid on or before .
3. This contract will not take effect and no tenancy will be granted unless and until 1. and 2. have been satisfied. If 1 and 2 are not satisfied, then the LL shall not be bound by this contract and may let the property to any other party.

(but drawn up by a lawyer)

Michael Barnes

22:59 PM, 7th September 2019
About A week ago

Reply to the comment left by Rob Crawford at 04/09/2019 - 22:04
"when an AST is signed"

You cannot sign an AST.
An AST is an intangible object.

What you sign is a tenancy agreement.


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