letter of intent - please give your advise

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rexwrx
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Post by rexwrx » Tue, 02 Mar 2010 10:25 am

macaroonie wrote:You know it's not even the condition that you pay extra deposit and get it back after 1 yr- it just seems like these people are swindling you. If they can get away with this they may try extra tricks down the road. I have never heard of this before and i've met many many agents in my years here.

I would probably find another place and use another agent, more honest, decent ones.

Are you desperate to find a new place or do you have a bit of time on your hands?
u think? ok, it's just that i've read some of the other internet sites, they seem to say 1 month security deposit for 12 months lease

did u have a 12 mths lease? well, i'm kind of looking for one urgently.

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Seasoul
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Post by Seasoul » Wed, 12 Jan 2011 3:55 pm

It can be a bit confusing all these terms for the local rental system, my 2 cents to help clarify a few things (and this is from my personal experience after being on the hunt for an apt to rent for now about 3 weeks so please feel free to correct me if I'm not getting it):

Good faith deposit
: this is to be given with the Letter of Intent. It is part of the "security deposit". Common practice is to give half of the security deposit as good faith deposit, although there is no law that forces you to do that: you could give any amount you want. The good faith deposit is supposed to indicate to the landlord that you are serious about wanting to rent his apartment.

Security Deposit: this is equivalent to 2 months if the lease is for 2 years, 1 month if one year. This will be kept by the landlord in case you leave the apt before the end of your lease or if there are any damages to the apt. Some suggest that you should consider it as lost, I urge you not to: if you make a clear condition assessment report BEFORE signing the tenancy agreement and report within the first 30 days of your lease any defects or maintenance to be fixed/done by the landlord, you should get your deposit back at the end of the lease (assume you are taking of the apt is if it was your own).

Advance rent: you pay the first month of rent as you sign the Tenancy Agreement, regardless of when you will start to occupy the apt. This can be negotiated to be paid on the first day on tenancy.

Agent fee: if the agent is representing the landlord you do not pay them fees. It's now illegal for an agent to get a commission from both sides. If you have your own agent and the landlord has his, then you will probably have to pay your own agent 1 month rent as a fee for 2 years lease and half a month for a 1 year lease.

Letter of Intent: Supposedly the only way to communicate to the landlord your interest in renting the apartment. It is filled by you, with your particulars (passport number and address), along with a check for the good faith deposit and your passport photocopy as well as employment pass. Or IC photocopy if you are a PR. The letter will indicate how much you are willing to pay for the monthly rent, and how long you want to rent. It will also stipulate the amount of the good faith deposit given and the security deposit you are agreeing to. This letter will also be useful to record any requirements you want the landlord to fill for you to rent the apartment: for example if you want the apartment to be painted, or cleaned, or furniture provided/replaced/removed, this is where you indicate it.
Once you filled and signed it, the agent takes it to the landlord who signs it if they accept all of it, or reject it and gives you back your good faith deposit.

The tricky part about the LOI is that it usually states that a tenancy agreement HAS to be signed 7 days after the LOI is signed by both parties. In case the landlord decides after these 7 days to not go on with the tenancy agreement, you get your good faith deposit back. If however you decide not to sign the tenancy agreement after the LOI is signed by both parties, the landlord can keep your good faith deposit and rent to someone else.


So your "costs" when you want to rent an apartment are likely to be :

Agent Fee + Good faith deposit (which is considered part of the Security deposit) + Rest of the security deposit + 1 month rent in advance.

So for a 2 years lease, you actually have to fork out the equivalent of 4 months rent by the time you sign the tenancy Agreement and move in.

The nest expat that tells me living in Singapore is cheap will get my hand on their face.

Seasoul
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Post by Seasoul » Thu, 13 Jan 2011 3:14 pm

Additional info from the CEA - www.cea.com.sg - (we went to ask them directly..):

The LOI can be written by the buyer/tenant himself.
It should not mention any fees to any agent and is not binding the tenant to any agent even if the LOI is done by the agent. So at this point, nothing is due to the tenant's agent unless tenant and agent sign a separate contract about the agreed commission before doing the LOi (which no tenant in their right mind would do).

Also funny the CEA said an agent who presents himself as the "tenant's agent" after being contacted for an ad he posted, have to put the potential tenant in contact with the landlord's agent if the tenant do not want to be represented by an agent. If they refuse, they should be reported to the CEA.

Agents always makes it look like "co-broke" means there are two agents, one is the landlord's and the other must be the tenant's but the CEA was very clear by saying that if the tenant does not want to be represented by an agent, then the agent must back of and let the tenant and the landlord's agent deal directly.

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