Can we cancel rent after paying deposit?

Discussion in 'Property Management' started by FirstTimeBuyer, 13th Jul, 2017.

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  1. FirstTimeBuyer

    FirstTimeBuyer Well-Known Member

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    We recently paid deposit for a rental apartment in NSW. We recently found a cheaper but larger place and considering switching over if the we're allowed.

    Is this possible? What are the legal and financial ramifications? I'm prepared to lose the 1 week deposit but wondering if we actually have to pay more financially.

    Thanks
     
    FirstTimeBuyer, 13th Jul, 2017
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  2. FirstTimeBuyer

    FirstTimeBuyer Well-Known Member

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    I came across this on the NSW fair trading act website which seems to answer my question:

    What does a holding fee do?

    Acceptance of a holding fee means the agent or landlord must keep the premises for the prospective tenant for at least 7 days. The property must not be offered to anyone else during this time.

    What happens if the tenant changes their mind after paying a holding fee?

    If the prospective tenant decides not to go ahead with the tenancy they forfeit the full amount of the holding fee, not just a portion of it, as was the case under the old ‘reservation fee’ system.
    ​
     
    FirstTimeBuyer, 13th Jul, 2017
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  3. Foreshadow

    Foreshadow Well-Known Member

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    Did you sign a tenancy agreement?
     
    Foreshadow, 13th Jul, 2017
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  4. Simon Hampel

    Simon Hampel Founder Staff Member

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    Several years ago our landlord gave us notice to vacate (their son needed somewhere to live), so we found another house to rent and paid a deposit.

    The day before we were due to go in and sign the lease, our old property manager contacted us to say there had been a change of plans and would we like to stay in our existing place.

    We forfeited our holding deposit on the new place, but since it was cheaper to stay where we were and we avoided removalist costs and the hassle of moving, it was kind of a no-brainer.

    So yes, you will lose your 1 week deposit, but if you haven't yet signed a lease, there will be no further costs.

    If you have actually signed a lease, you will be obliged to fulfil the terms of the lease (or pay break lease costs, which can be significant).
     
    Simon Hampel, 13th Jul, 2017
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  5. FirstTimeBuyer

    FirstTimeBuyer Well-Known Member

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    Thanks Simon, reassuring to hear that. I believe we have only signed the application form and not the lease form. Is the lease form signed after moving and having inspected the place?
     
    FirstTimeBuyer, 13th Jul, 2017
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  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It depends on your agreement with the landlord.
     
    Terry_w, 13th Jul, 2017
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  7. Simon Hampel

    Simon Hampel Founder Staff Member

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    Lease would generally be signed before moving in.

    You should have a copy of whatever it was you signed - what does it say on the top?
     
    Simon Hampel, 13th Jul, 2017
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  8. FirstTimeBuyer

    FirstTimeBuyer Well-Known Member

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    It says "Application form". Down the bottom it does say keys won't be handed over till the lease agreement starts, all applicants signed and all payment has been made. So Looks like I've signed only the application form but not the lease form yet.

    Thanks!
     
    FirstTimeBuyer, 13th Jul, 2017
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  9. DaveM

    DaveM Well-Known Member

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    No lease, you just forfeit deposit as above. You cant contract against legislation regardless of what agreement was made with the agent/landlord.
     
    DaveM, 13th Jul, 2017
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  10. Zepth

    Zepth Well-Known Member

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    Did you pay deposit when you handed in the application form or after you were approved by the way?
     
    Zepth, 17th Jul, 2017
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  11. FirstTimeBuyer

    FirstTimeBuyer Well-Known Member

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    Paid after when they told us our application was successful and we needed to pay deposit to hold onto the apartment.
     
    FirstTimeBuyer, 17th Jul, 2017
    #11
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