I have signed a Preliminary Tenancy Agreement / Offer Letter and paid a holding deposit to the Landlord to secure a flat. Can I be refunded if the landlord decides not to proceed with the signing of the Tenancy Agreement in the end?
Pauline Klemberg
Technically it depends on the document you signed when you paid the holding deposit.
If the parties sign a Preliminary Tenancy Agreement ('PTA') and the signing of the Tenancy Agreement does not go through then the Landlord has the obligation to refund whatever deposit you paid to him if the Landlord is the defaulting party. The landlord shall also compensate the tenant with another one month rent as a penalty. However, if the prospective Tenant is the one who withdraws, then the deposit can be forfeited, ie. the Landlord is entitled to keep it.
If the parties sign an Offer Letter, the outcome can be different. An Offer Letter is a binding document only if the parties expressly stipulate in writing that it should be binding. Otherwise, an Offer Letter is not binding (the words 'Subject to contract' only reinforce this fact) so that either party can withdraw from the transaction without liability.
If you are sure that this is the right property for you and you only submit one offer, I always advise my clients to sign a binding agreement (PTA or binding Offer Letter) as it may outweigh other non-binding offers that a Landlord may have received.
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