Letter of Intent - Can I be sued?

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revhappy
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Letter of Intent - Can I be sued?

Post by revhappy » Tue, 16 Mar 2010 2:10 pm

Hi Guys,

I was looking for a new house because my wife got a job at jurong east and I am working in changi business park. So we decided to stay somewhere in middle and chose a house at commonwealth. We currently stay in Tampines.

We found a house in Commonwealth and I signed a letter of intent to rent the house and paid the deposit by cheque. 2 days later my wife tells me that her office is going to shift to AMK in a months time :x Now commonwealth is far from both AMK and CBP.

I go and check my account and find that the cheque has not been encashed yet. So I go ahead and do a cheque - stop payment.

I have told my situation to my agent and asked him to explain to the owners agent(Owner is in Australia).

Please let me know if I could get into trouble because of this.

Thanks,
Revhappy.

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ksl
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Post by ksl » Tue, 16 Mar 2010 3:17 pm

A letter of intent is not normally binding, unless it has specific details of condition, like the deposit paid will be forfeited or anything to do with administartion costs being deducted in the event the new tenant pulls out before finalising the agreement. Though it needs to be clear in the letter of intent.

http://en.wikipedia.org/wiki/Letter_of_intent

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Post by sundaymorningstaple » Tue, 16 Mar 2010 4:25 pm

ksl wrote:A letter of intent is not normally binding, unless it has specific details of condition, like the deposit paid will be forfeited or anything to do with administartion costs being deducted in the event the new tenant pulls out before finalising the agreement. Though it needs to be clear in the letter of intent.

http://en.wikipedia.org/wiki/Letter_of_intent
Does anybody know the liability of a letter of intent within the context that the OP is asking. Specifically, are the laws of Singapore identical to those of the US. The Wiki link pertains to US law.
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

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Post by revhappy » Tue, 16 Mar 2010 4:58 pm

I just spoke to another agent friend of mine. He told me that the LOI is not valid.

Any contract comes into force only after the money transaction takes place.

If the owner had recieved the money from me only then he is legally obligated to block the house for me untill the said move-in date.

But the owner hasn't recieved any money so the contract itself isnt valid.

Like KSL mentioned "the deposit paid will be forfeited or anything to do with administartion costs being deducted in the event the new tenant pulls out before finalising the agreement"

This clause comes into effect had the owner recieved money from me. In that case If I decide to not rent the house then legally the owner has the right to keep my deposit.

So the LOI is more like letter to protect the tenant and not the owner.

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Post by ksl » Tue, 16 Mar 2010 6:22 pm

sundaymorningstaple wrote:
ksl wrote:A letter of intent is not normally binding, unless it has specific details of condition, like the deposit paid will be forfeited or anything to do with administrative costs being deducted in the event the new tenant pulls out before finalising the agreement. Though it needs to be clear in the letter of intent.

http://en.wikipedia.org/wiki/Letter_of_intent
Does anybody know the liability of a letter of intent within the context that the OP is asking. Specifically, are the laws of Singapore identical to those of the US. The Wiki link pertains to US law.
International commercial laws cover it SMS, it's also used in business agreements. its only binding if monies have changed hands a sign of good faith, and because it is not a finalised contract, the supplier is entitled to any form of costs incurred after deposit is paid, with regards to the handling, if the money is not paid, no binding contract is initiated in the letter of intent, and the supplier would not have incurred any costs, if he'd have taken cash, it may have been difficult to get the money back, hence he would lose all or a portion of the deposit.

The difficulty with a letter of intent, is that both parties are involved in arranging it and a payment is made in good faith to cover any foreseen costs, in case the one party drops out, it is not normally binding, but depends largely on the agreed details within the document.

It has nothing to do at all with specific country laws, it is a commercial transaction, and falls under commercial contract laws. The wiki just points out the very basics of a letter of intent, what is actually in the letter of intent is what matters and no doubt it states that on the said day of a memorandum a payment of such and such is paid as a sign of good faith and will be forfeited if the other partner drops out.

Black and white SMS unless it says, the other partner promises to pay the sum of in which case, he would have to hand over the cheque. The money is the key and the terms of how it is agreed to be paid in the letter of intent would seal the letter of intent, make it binding though for property, slightly different.

Its all in front of your eyes SMS on the expatriat property website, though take your time, you are not young anymore :lol: but you still come out of the woodwork :P

http://www.singaporeexpats.com/guides-f ... rental.htm

He did the right thing by cancelling the check, it send a direct signal that the letter of intent doesn't exsist and the Landlord can do what he wants. Had they got their hands on the money in Singapore, well what do you think! and even then it is not binding until the housing contract is signed, but do you really believe he would get it back :P

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Post by revhappy » Thu, 18 Mar 2010 8:25 am

Thanks KSL,

Thats very reassuring :)

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Post by sundaymorningstaple » Thu, 18 Mar 2010 9:42 am

ksl wrote: Its all in front of your eyes SMS on the expatriat property website, though take your time, you are not young anymore :lol: but you still come out of the woodwork :P

http://www.singaporeexpats.com/guides-f ... rental.htm
Yeah, but unfortunately, unlike some who have other means of support, I don't have that much leisure time to spend my whole life looking up URLs all over the internet. So I had a quick look at your initial link, found it wasn't Singapore specific so asked for further information/verification. Which you provided. Some of us still have to work for a living........ :wink:
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

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Post by revhappy » Tue, 30 Mar 2010 10:19 am

Hi Guys,

As a follow up to my original post. The agent is now claiming the agent fee from me. And threating to take the legal route in case I refuse to pay.

Just to give you a background. I had signed a letter of intent to rent a house and had give a cheque for the deposit amount, but did a stop cheque payment before the deposit amount was encashed. I believe the owner of the house has no intention to take any legal action and may have already rented the house to somebody else.

I had signed the letter of intent only, but haven't signed any Commision agreement or rental agreement. (I am not sure if it was mentioned in the LOI that I have to pay the agent fee)

I did some research and found that these real estate agencies do have qualified lawyers and they would not hesistate to file a claim.

I ve also read that the commission is payable only after the rental agreement has been executed, which hasn't happened in my case.

I am not very sure whether the agent is only threatening me or will they indeed go to the small claims tribunal.

I would like to know if indeed they do go ahead with lodging the complaint will do they stand a chance to get the agent fee?

Should I just let them file a complaint? What is the worst case situation? If I indeed lose the case is it only the agent fee that I will have to forego or will be penalised beyond that? Are there any other expenses involved with going to court?

Please advice.

Thanks in advance,
Revhappy

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Post by beppi » Tue, 30 Mar 2010 10:48 am

Agent's commission is due only when a rental contract is either signed or executed (not sure which). This has not happened in your case, so he's just threatening you in the hope to get some money.
As far as I know, the Small Claims Tribunal cannot be used against private persons like you. If he were to go the legal route, he would have to sue you in court, which would incur charges much higher than his agent fees and which are not recoverable from you, even if he wins. So he will not sue!
You might want to lodge a complaint against this dishonest agent with the Institute of Estate Agents, get him in trouble with his own trade association!

I hope you apologized (and maybe sent a little present) to the landlord. Since he took your change of mind without complaint or trouble, you should!

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Post by ksl » Tue, 30 Mar 2010 10:52 am

First of all check that the agent is in fact registered.

http://www.iea.org.sg/index.cfm?GPID=4

There is no contract executed, I just don't see how he can claim a fee, when it also states on the expatriate board, the policy of letter of intent.

I would call his bluff and go ahead with the case. Though that is me.

In fact I am also in dispute over an extended warranty, which isn't being honoured, again it's all about who gives in first, I am prepared to take it all the way.

The small claims court is only an arbitrary process too, so go for it! If you think you are in the right.

Forget the threat of court action it's about fair play and the court will look at that. The agent does have his marketing costs because he his self employed under a Realtors licence number if registered. However his fees are not covered unless a contract is signed. It will cost him at least 5 to 10k to take it to court and that is highly unlikely, because even if he does win, it doesn't guarantee he gets any money.

It is not a criminal offence but a civillian dispute....even if he does win, send him 1$ a week, or drag it out as long as possible, that way you are not refusing to pay.

You could send an email to the IEA for advice,

Just ask the question what if a letter of intent is signed but you had second thoughts and changed your mind and never handed the deposit over after signing the letter of intent making the letter of intent invalid. The agent is threatening you for fees.Take it from there!

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Post by carteki » Tue, 30 Mar 2010 11:32 am

If I read the link on Expats for LOI, you were not correct in stopping the cheque. You made payment - ie gave a cheque - therefore the LOI was in force. The fact that it wasn't banked (agent at fault here?) doesn't come into the equation.

I would take your chances with the agent. In other circumstances will an agent sue for their fee if the LOI is not completed? Not sure that the LOI mentions fees for the agent. The costs of recovery will probably outweigh the benefits as mentioned above. Just make sure they're not suing you for the stopped cheque as I think you'll lose that one.

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Post by revhappy » Wed, 31 Mar 2010 9:43 pm

Thanks a lot, KSL!

I had a look at the following link in IEA, but couldn't find the agent's name in any of the pdf files.

http://www.iea.org.sg/index.cfm?GPID=143

He is from HSR and I have seen his badge.
He appeared to be pretty naive so am quite sure he wouldn't take me to court, all by himself. If at all it would be the agency that could go to the SCT.
So the chances of me getting in trouble seem to be pretty remote.

For now I will just ignore the agent. All he has is my phone number, name and FIN number.

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Post by nakatago » Wed, 31 Mar 2010 10:06 pm

revhappy wrote:All he has is my phone number, name and FIN number.
that's quite an understatement...
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Post by Shrekie » Wed, 14 Apr 2010 4:58 pm

A cheque is considered a valid promisory note under Singapore law. I.e. you can be sued by the landlord for whatever was written on it.

IMO you need to worry about the landlord more than the agent. I think the agent has no case against you.

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Any update

Post by andywatts » Mon, 12 Jul 2010 8:06 pm

Hiya,

OP, any chance you could update us on how this played out?

Did they sue you for the deposit?

From reading the q&a section of . and talking to a lawyer, it looks like they can't, but would appreciate another data point.

Cheers
Andy

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