Letter of Intent - What if the Landlord backs off?

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prekha2005
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Letter of Intent - What if the Landlord backs off?

Post by prekha2005 » Fri, 20 May 2011 8:24 pm

I signed a Letter of Intent a few days back and paid the security deposit in cash (because we did not have a bank account right then). The LOI was accepted by our landlord and a signed copy of the same was emailed to us by our agent.

Its exactly seven days today from the day that we recieved the signed copy of the LOI and we are yet to hear on the Tenancy Agreement. Also, our date of moving into the premises is gearing closer. As per the LOI, the landlord has also agreed to give us the keys to the premises two days before we start out lease.

We have been trying to get a final viewing of the unit we are renting, to check if the house has been cleaned up before we take charge of the keys...but our agent is not able to arrange for the same and keeps telling us that he is not able to contact the landlord / landlord agent.

I am hoping that nothing is wrong and that we won't get to hear at the last moment, that the landlord does not want to rent out his house to us!!!

We have a receipt from the agent / agency, against the deposit money we paid in cash towards the Landlord and ofcourse, the LOI signed by the landlord with her NRIC number ect.

Just to be prepared, I would like to know, can the landlord back off after accepting the deposit money and signing the LOI? And if so, can I sue him / her? Because, we would be facing a financial loss apart from wasting time and energy, since we stopped looking for units after the LOI was signed and would have to pay from our pocket at the Service Apartment we are currently living in if we are not able to move to our rented apartment in time!

I have no wish to sue anyone in a foreign country, but I just want to know what rights I have as a tenant, if such a circumstance occurs.

Any help on this would be appreciated!

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Post by BillyB » Fri, 20 May 2011 8:31 pm

I thought you only paid monies once the tenancy agreement was signed? A letter of intent doesn't convey much in terms of legal framework. It could be legally binding I'm not sure.

There should be procedures in place to address any issues you might be facing, but, as you say, it's a waste of time and effort on your part and you are the one losing out because the landlord is sitting on your dollar.

I think you'll get better clarity on the state of play from some of the more experienced property guys here.

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Post by prekha2005 » Fri, 20 May 2011 8:45 pm

BillyB wrote:I thought you only paid monies once the tenancy agreement was signed? A letter of intent doesn't convey much in terms of legal framework. It could be legally binding I'm not sure.

There should be procedures in place to address any issues you might be facing, but, as you say, it's a waste of time and effort on your part and you are the one losing out because the landlord is sitting on your dollar.

I think you'll get better clarity on the state of play from some of the more experienced property guys here.
One month's rent is paid alongside the Tenancy agreement when the tenant physically occupies the premises. But the Security Deposit is given alongside the LOI, as a token money of sort to book the premises / unit! Only a LOI without any deposit would have no validity, I suppose.

What I want to know is that since I have paid the deposit and also got a signed LOI in return from the landlord, how safe am I against a last minute backing out by the landlord?

PS : We would be incurring multiple financial losses...paying to the Service Apartment if we overstay, paying for storage cost of our stuff that is being shipped to Singapore and incurring loss on interest for the security deposit that has been sitting with the landlord for the last ten days.

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Post by BillyB » Fri, 20 May 2011 9:16 pm

I paid everything together when I moved in / got the keys. I understand your dilemma but if I were you I'd be straight on the blower to the agent saying what the f*ck is going on and you want it sorted ASAP as its causing quite a bit of hassle with balancing other things dependent upon getting accommodation.

In Singapore, I would imagine, although don't quote me on that, that a letter of intent would provide you with the basis of legal comeback if he were to mess you around and renege on the 'agreement'. And if that is the case, no money should have really changed hands as signing the letter means entering a contract.

I get the impression that some landlords here like to bully people thinking they don't know the rules and not expecting any challenges. And like most bullies, stand up to them and they usually back down. Threaten to go to the housing bodies and/or take legal action if he continues to mess you around and you'll probably be moving in there next day!!

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Post by prekha2005 » Fri, 20 May 2011 9:52 pm

I am not really worried about getting the deposit money back! I know, I will get that back, if the landlord does back out!

What I am concerned about is the other financial loss I would be incurring in case the landlord goes back on the LOI! Can I sue the landlord and the agent then? Can I get the landlord to pay up for the loss I will incur because of having waited in the impression that I was going to get the house?

From what I have been reading on some property related websites, it seems that the LOI is not legally binding! That is, if the landlord back off, all he or she has to do is pay back the security deposit and nothing else!

I am so pissed off in general! Never did I think that of all the places, I could be potentially having such a problem in Singapore! Really hoping that everything is just fine and my agent will call anytime to tell me that the Tenancy Agreement has been signed!

In the meanwhile, please do let me know if I can take the Landlord to the Court or not? If I can, then I am definitely not going to hesitate! I have both the resources and the courage to do so!

@Billy, thanks for the words of encouragement :D

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Post by BillyB » Fri, 20 May 2011 10:40 pm

I wouldn't bother wasting your time and money going down the legal - as in the court route. Just understand your rights as a first step. And is the place you have agreed on really that desirable and unique to get so frustrated over? There is so much choice at the moment of units, why don't you hedge your bets and engage another agent to find you something similar? That way, you have other options available and aren't putting all your eggs in one basket. If you find something vacant, the paperwork can be completed in days so it won't hold things up too much.

Of course, you just need to ensure you can get that sweetener back off your cheeky landlord. I'd be more pissed with who told you that you need to do that in order to 'reserve' the unit without a signed and legally binding tenancy agreement.

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Post by JR8 » Sat, 21 May 2011 12:00 am

This is about as focused as a flock of seagulls.

For a start, what does this LOI say, precisely?

In my experience LOIs and holding deposits are a one way thing to protect landlords against dithering tenants. But since 99% of this story rests on what it specifically might say, I am rather surprised you have made no reference to it at all.

My own view? The LOI is worthless. You were a mug handing over any money. A delay in arranging a tenancy agreement is probably incompetence rather than subterfuge. Going to court re: non-performance on the LOI is a non-starter esp. as in the first place you don't even seem to know what the LOI says.

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Post by BillyB » Sat, 21 May 2011 12:25 am

Rome wasn't built in a day Delia, we would have got to the nitty gritty in the end!!

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Post by ksl » Sat, 21 May 2011 12:47 am

In Singapore you should be more careful with your money! Tenants have little or no protection here. The only recommendation i can give is to do a search in the Court records, to see if it's been tested. If there is a clear cut case on a letter of intent. It will be in your favour to know the result.

There is no real just anywhere, only test cases to set off the action and it's costly!

Though Singapore prefers to give benefit of doubt to it's own people too, your just another unfortunate statistic I guess, unless you can get some hard evidence in your favour, like a test case.

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Post by JR8 » Sat, 21 May 2011 2:52 am

BillyB wrote:Rome wasn't built in a day Delia, we would have got to the nitty gritty in the end!!
I'm a landlord with about 60 successful let/years under my belt, so even with the cultural peculiarities of SGn landlords (blinding greed, even to the extent of it losing them money) I do have some idea what is motivating them.

The guy has his holding depo down, he's mentally in transit to move ASAP. Needs an answer today. He's distracted and faffing about, so I gave him the answer.

If it wasn't clear enough 1st time around...
#1 WTF does the LOI say!

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Post by revhappy » Sat, 21 May 2011 7:55 am

prekha2005 wrote:I am not really worried about getting the deposit money back! I know, I will get that back, if the landlord does back out!

What I am concerned about is the other financial loss I would be incurring in case the landlord goes back on the LOI! Can I sue the landlord and the agent then? Can I get the landlord to pay up for the loss I will incur because of having waited in the impression that I was going to get the house?

From what I have been reading on some property related websites, it seems that the LOI is not legally binding! That is, if the landlord back off, all he or she has to do is pay back the security deposit and nothing else!

I am so pissed off in general! Never did I think that of all the places, I could be potentially having such a problem in Singapore! Really hoping that everything is just fine and my agent will call anytime to tell me that the Tenancy Agreement has been signed!

In the meanwhile, please do let me know if I can take the Landlord to the Court or not? If I can, then I am definitely not going to hesitate! I have both the resources and the courage to do so!

@Billy, thanks for the words of encouragement :D
I would say dont get so worried so soon. Its isn't normal to request for a viewing before the move in date. That generally doesn't happen and the agent may be just trying to avoid the hassle. When is the move in date? Normally if the owner and agent are genuine they would honor the LOI and the move in date.

But say they are greedy and want to get a higher rent they might try to get another tenant, but then that takes time and the moment they get another tenant they would return your deposit back.

Its very unlikely that the owner/agent will tell you on the move in date that they dont want to rent it from you.

So what I would do if I was in your place is try to follow up like a week before the move in date. One useful way of determining whether they are genuine or not is to ask them to transfer the SP services account for the house to your name. You will get an sms alert if they do it. So try that ask them to transfer it to your name which can be done in advance and see their response.

Is the agent from a reputed agency like HSR, ERA, C&H etc?

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Post by x9200 » Sat, 21 May 2011 8:06 am

@prekha2005, we had here a very similar discussion some time ago. I was convinced then that LOI is a legally bonding document as it made completely no sense to me to go through all the troubles of signing it (and often paying some money like in your case) just to have a worthless piece of paper. Unfortunately it is enough to google the phrase out and you will find that indeed it offers no protection of any kind. LOI is like meeting minutes and nothing more.
In your case I would not expect anything sinister but rather that all the delays are caused by LL and the agents. LL does not give a s**t as he probably thinks your deposit already protects him. The agents here are the quintessence of the service quality you will more than often encounter around. Call your agent and give him a deadline, if he fails call him again and request to talk to his boss. This is how many things can get here miraculously fixed. If this still fails there is one top regulatory/controlling body - CEA where you can complain and they can even revoke the agent's license in more severe cases.

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Post by prekha2005 » Sat, 21 May 2011 7:33 pm

New developments!

The landlord apparently wants to sell the house and wants to add a clause to the TA, that the house which we will occupy as tenants will be open to viewing by potential buyers!!! We were obviously horrified by the turn of events and after a lot of shouting, threats and arguments, nothing really came out!

Our agent told us that he had no idea about such a clause, the owner's agent told us that the landlord insists on this, even though nothing of this kind of mentioned for the last so many days since negotiations were going on!

From what we could make out, the landlord has got a potential buyer and now wants to back out from the rental agreement with us and instead of being upfront about it, they are now putting up impossible clauses, so that we have no option, but back out on our own!

There is no way we are going to give the landlord written permission for letting random people view the house we would be living in anytime they want!

Such a disappointing experience...we lived in Hongkong for 5 years and in New Delhi for 2 and never had any trouble!

We are going ahead with filing a complaint against the landlord's agent for not telling us the facts beforehand, but we know that nothing is going to come out of it!

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Post by sundaymorningstaple » Sat, 21 May 2011 7:56 pm

So you are going to throw good money after bad? Sounds like a lose-lose more proposition to me.
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 BillyB » Sat, 21 May 2011 7:57 pm

I don't understand your frustration on your first point. It's pretty normal for such practice. After all, they own it, you just rent it. If they want to sell it, it's their right as owners. They can't throw you out on the street until your tenancy is up. They can offer to buy you out and give you notice and offer compensation but you still have your rights. Unlike other Countries, in Singapore, tenancy agreements can simply be transferred over to the new owner without having to vacate the tenants.

You can have viewings during the evenings and weekends if you don't want someone in there without you being present.

IMO, your agent sounds like a complete moron/bullsh*tter who is fobbing you off. I do hope he isn't charging you a fee for all this?

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