rent disscussion

Rental Deposits: Can I cancel after making the payment?

For every rental, there must be a lease agreement in place between the tenant and the landlord. With this, there arises a particular issue on the legal implications in the event of a cancellation of lease agreements. This can be brought about by a number of reasons – financial or otherwise – where the tenant decides to not take up the agreement, even after paying the requisite deposit.

But the biggest question is: If you paid a deposit on securing a rental property and decided you no longer wanted the place, would it be possible to get your deposit back?

The Head of Legal at TPN, Peter Mennen says in the event the lease agreement has not been signed or concluded you are not yet bound to the terms of the lease. There is only the hope of reaching an agreement, and at this point, you can request that your deposits be returned to you without any cancellation penalty. Ultimately there is no cancellation as there is no lease and no leasing relationship in play.

It’s important to note that nobody should have to pay a deposit without vetting the validity of both the property for rent and the landlord. This ensures that you avoid any risk of falling victim to any potential issues. As a tenant, you must also take note that a lease is a legally binding document, and make sure you understand all the points you agree to upon signature thereof.

Whether you’re a first time home buyer on seasoned, ensure there are no misunderstandings regarding the tenant-landlord relationship by understanding and discussing the following areas before paying any deposit:

The costs

The monthly rental amount must be clearly stated in the lease agreement, and it must explicitly explain any deposits that need to be paid as well as the terms and conditions surrounding the refund of deposits. Included in this, the water and electricity payment should also be clearly noted.

The rules

Know the rules. If the property is a complex, apartment building, or within an estate, there will be certain rules and regulations set out by the complex or estate that tenants will be obliged to adhere to.
Tenant behavior rules must be clearly stated in the lease, and it is important for tenants to understand and agree to any clauses which outline specific behavior that is prohibited.

The duration

The duration of the lease should be clearly indicated with specific dates included where applicable to avoid confusion around exactly when tenants can move in or should move out.

The termination clauses

A clear outline of the renewal process should the tenant and landlord wish to extend the lease must be included in the initial agreement. Clear terms and conditions for the termination of the lease – including early termination clauses – must be well stated. As a tenant, you need to be aware of renewal and notice clauses as some leases may require a certain notice period, even if the tenant plans to vacate the property after the initial lease has expired. As is the case with any legal document, you – as a tenant – should be very sure of the contents and clauses in the lease agreement, as well as the terms and conditions. You must be satisfied with them before signing in order to avoid any surprises later on.

Lease Cancellation - contract form, selling and buying home or condo concept

Understanding Lease Cancellations

A. Scenarios for Lease Cancellation After Paying the Deposit

There are various circumstances under which a tenant might find themselves needing to cancel a lease after having already paid the deposit. These scenarios often include personal reasons such as unexpected job relocation, financial difficulties, family emergencies, or finding another property that better suits their needs. Sometimes, the reason for cancellation might be due to dissatisfaction with the final inspection of the property, discovering that the actual living conditions do not match what was advertised or promised.

B. Legal Perspective on Tenant’s Rights

From a legal standpoint, a tenant’s rights before and after signing the lease agreement can vary significantly.

Before Signing the Lease Agreement: Until a lease agreement is formally signed, the tenant generally retains the freedom to withdraw from the prospective rental agreement without legal ramifications.

In most cases, the deposit should be fully refundable if the tenant decides not to proceed, provided no binding agreement has been entered into. However, the tenant should ensure this is clearly stated in any preliminary agreements or receipts related to the deposit.

After Signing the Lease Agreement: Once the lease agreement is signed, the tenant and landlord are both legally bound to its terms. This means that cancellation is not as straightforward and will usually involve certain penalties or requirements as stipulated in the lease’s termination clauses. Tenants may have the right to cancel under certain conditions, such as a breach of contract by the landlord, but this can require legal action and prove costly.

Early termination clauses may allow a tenant to exit the lease early but often involve forfeiting the deposit or paying a specified amount in fees. It’s crucial for tenants to fully understand and agree to these terms prior to signing to prevent any unexpected consequences later on.

Vetting the Property and the Landlord - African American real estate agent talking to male

Conducting Due Diligence

A. Importance of Vetting the Property and the Landlord

Vetting the property and the landlord before paying any deposit is crucial for tenants to ensure they are entering into a fair and secure rental agreement. This step is fundamental not only for validating the legitimacy of the property listing but also for confirming the credibility and reliability of the landlord. It protects tenants from potential frauds, scams, or any misleading information regarding the property’s condition, location, and amenities. Furthermore, understanding the landlord’s expectations and their history of tenant relationships can offer insights into what one might expect during the tenancy period, including responsiveness to maintenance requests and flexibility regarding lease terms.

B. Tips for Tenants

  1. Verify Ownership: Conduct a background check to confirm that the person you are dealing with is the legitimate owner of the property or a legally authorized agent.
  2. Inspect the Property: Always visit and inspect the property in person. This helps in verifying the accuracy of the advertised features and condition of the property.
  3. Review Past Tenant Experiences: Seeking out reviews or testimonials from previous tenants can provide valuable insights into their experiences with the landlord and the property.
  4. Ask for Documentation: Request to see the property’s utility bills, maintenance records, and any other documents that can verify the legitimacy and condition of the property.
  5. Read the Lease Agreement Carefully: Ensure you thoroughly understand every clause and stipulation within the lease agreement, paying special attention to terms regarding deposits, lease termination, and renewal policies.
  6. Seek Professional Advice: If possible, have a legal professional or experienced realtor review the lease agreement to ensure your rights are protected and the terms are fair.
  7. Communicate in Writing: Ensure all discussions, agreements, and promises from the landlord are documented in writing to avoid any future discrepancies or misunderstandings.
Seeking Legal Advice - American African Lawyer or Real Estate Agent explain insurance details to the client, legally for the purchase, mortgage and rental of real estate.

Handling Lease Cancellations Effectively

A. Seeking Legal Advice: When and How Tenants Should Consult a Legal Expert for Assistance

Seeking legal advice is crucial in certain circumstances, especially if the tenant feels their rights are being violated or if the lease terms are unclear about cancellation policies. Here’s when and how to seek legal advice:

  1. When to Seek Legal Advice:
  • If the landlord refuses to acknowledge your cancellation notice or imposes penalties not stipulated in the lease.
  • If you believe there’s a breach of contract by the landlord.
  • When the lease agreement is ambiguous about cancellation rights or penalties.
  • If you are faced with an unexpected and significant change in circumstances legal doctrine might consider a valid reason for lease termination without penalty.
  1. How to Seek Legal Advice:
  • Contact a Tenant’s Union: Many areas have tenants’ unions or associations that offer free or low-cost legal advice and can provide guidance specific to local laws.
  • Hire a Real Estate Lawyer: Look for a lawyer specializing in real estate or tenant law. It’s beneficial to consult an expert who understands the intricacies of property law and can offer legal strategies based on your situation.
  • Use Legal Aid Services: If you qualify, legal aid organizations can provide free legal advice or representation to individuals in financial need.
  • Online Legal Services: Platforms like LegalZoom or Rocket Lawyer offer access to legal documents and advice from licensed attorneys at a lower cost than traditional law firms.

At MMR, we are committed to making your real estate dreams a success and helping you find your new home. contact us today and get the best advice on buying a house in your area. We look forward to hearing from you!

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