Tenancy Agreement Cancellation

Posted by pekoepekoe (33 days ago)

Hi, I just have some questions for the better informed.

Today I went to see apartments with a real estate agency. I found a place I liked, signed the tenancy agreement, paid $2K deposit. However, the landlord has not signed the agreement because he wanted to meet me face to face first and he wouldn't be available until later at night. The real estate agency has my name, phone # and passport #.

Later on in the day, I realized I wouldn't be able to pay for the place. So I called to cancel the agreement and I said it was okay if they keep the $2000 deposit. The agency called me back and said I needed to pay them $8000 for cancelling the contract, I argued with them that I think $2000 should be enough to cover the cancellation since it is still the same day, about 5 hours since I first went to find them.

Agency man threatened he would come find me at work, but I'm not sure if he actually has my work address. He went down to saying I only need to pay $4000. He said the landlord took the $2000 deposit but I still need to pay the agency for their work because they went to get the contract stamped and authorized. But I think that is a lie because he didn't have the landlord's signature and I don't think the landlord would have signed since he didn't meet me yet (which he said was very important before he could rent the place to me).

I'm just wondering if legally the agency is entitled to the money, if the agreement was not stamped by the government? Also, will they be able to find me by using my passport #?

Your feedback would be greatly appreciated!

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Posted by sghkcn (33 days ago)

If you have a copy of the Tenancy Agreement, can you reproduce the clause relating to the agency fee for us to take a look?

But generally, the agent doesn't get a fee until there is a concluded agreement. For a tenancy agreement to be concluded, the landlord and tenant must both sign.

Moving forward, I would suggest that you draft a short letter to the landlord (copy the agency) and deliver it to him/her ASAP, stating that you hereby unrequivocally withdraw your offer and demand the return of your tenancy deposit. You must turn up at the agency's office with this letter, otherwise he can use delaying tactics and get the landlord to sign. Please use a letter. A SMS or phone call will be useless in this situation.

Posted by pekoepekoe (33 days ago)

hi there, thanks so much for your prompt reply. actually i didn't get a copy of the agreement (incredibly stupid i know) because i thought that i would go back later to sign... i don't want to go back to the agency because i'm afraid they might find some ways to blackmail me and I have not contact with the landlord since i never met him or talked to him before...

Posted by ldavy (32 days ago)

pekoepekoe, did you sign the agreement or didn't you? In your first posting you said signed, but in the last one you said you didn't get a copy because you "thought you would go back later to sign". This is a very, very important point. Did you sign? And was it a Tenancy Agreement, or a Provisional Tenancy Agreement?

You MUST get a copy of whatever you signed. You can't argue with them unless you know exactly what was agreed.

Usually, you will sign a Provisional Tenancy Agreement first and this will contain a clause saying that, if the tenant backs out, they will lose the deposit. But it's only the deposit, which in your case was 2K. It has nothing to do with whether the Agreement was stamped or not.

I am sending you a pm with my mobile phone number. Give me a call and I'll try and help you with this.

Posted by pekoepekoe (32 days ago)

thanks for your reply! i'm sorry i didn't make it clear. I did sign the tenancy agreement but the landlord did not sign it. i was going to go back later to pay the 2 month deposit and the first month's rent, however i backed out before going back.

i thought i would forfeit only the deposit since it was the same day, but the agency said i needed to pay them their fees ($8000 for my part and the landlord's part). after i disagreed, the agency said he will take it down to $4000. he said i need to pay it because they already went through all the work of getting the agreement stamped and authorized, but i'm thinking it's not possible because the landlord had not signed for it yet...

he also threatened that he would come to my work and ask for the money, is this legal in hong kong? i am not resident here, so i don't really know how this all works...

Posted by cookie09 (32 days ago)

look it's possible that they come to your work if they find out where you work - but it's very unlikely.
tell them to get lost and forfeit your 2k

Posted by punter (32 days ago)

Obviously they're just trying to get more money out of you. I agree with Cookie09 though, forget them.

Posted by ldavy (32 days ago)

Yes, I think cookie09 and punter are probably right. Don't even think about giving them any more money, just say goodbye to the 2K. On the provisional tenancy agreement which my company uses, which is pretty standard, there is the clause "Should the Tenant fail to take up the tenancy of the said premises in the manner herein contained, the initial deposit shall be forfeited to the Landlord ....." So yes, the 2K deposit is lost, but this is for the landlord, not the agent.

There is another clause, "If in any case either the Landlord or the Tenant fails to let or take up the tenancy of the said premises in the manner herein contained, the defaulting party shall compensate at once the Agent HK$ .... as agreed damages."

I would have thought, however, that neither of these clauses can stand until the agreement has been signed by both parties. It is possible that the landlord did sign; even though he said he wanted to meet you first, he could have changed his mind.

Basically, if you signed a Provisional Tenancy Agreement or a formal Tenancy Agreement, and if it contained clauses similar to the two I have quoted above, and if the landlord signed as well, then the agent is quite within his rights to demand payment of the full commission, which is normally equal to one month's rent. It has nothing to do with the agreement being stamped.

Next time, don't sign anything unless you are sure you can go through with it. Don't sign anything unless you understand it. And don't sign anything unless you are given a copy of it, immediately.

Posted by walkup2 (32 days ago)

Only after you signed did you 'realise' that you couldn't afford to rent the place? What did you think you were doing up to then? No wonder the agent is annoyed. You are very lucky that the landlord had not signed yet, but quite frankly you are a time-waster. As a general matter of practice it is better for both parties to sign an agreement together in the agent office.

Posted by pekoepekoe (30 days ago)

thanks everyone for their replies. i've definitely learned a lesson through this experience. i'm just wondering if the landlord did sign and the agency has a valid contract, and is entitled to the fees... are they entitled to come find me at work to collect the money? or would they go through lawyers? what if they come find me, am i allowed to take them to the police station and request that we settle it in court instead?

Posted by C (30 days ago)

Highly unlikely they would go through this trouble to look for you, visit your work etc. simply to try and squeeze another 2K from you. If they do show up at your door, call the cops as they're harassing you. If they call you and harass you on the phone, call the cops again to complain, they will take care of it. However the cops won't intervene to help you clear up a commercial issue between you two (this is hardly a crime, and you mention going to the station, etc) Its unlikely to come to that. I would just say that you paid $2k for your lesson, and don't worry about it anymore.

BTW, what is the name of this agency you are dealing with??

Posted by walkup2 (28 days ago)

If the agency has the agreement signed by the landlord then technically you are liable for 1 years rent PLUS the agency fee. Whether you changed your mind 5 days, 5 hours or 5 minutes after signing is irrelevant. However, I would suggest that you come to some agreement. If that requires agency payment to close the dispute then that would be reasonable. On the other hand, if the landlord has not signed then he is not entitled to keep the 2k. It could be expensive for you if it goes to court. Settle.

Posted by ken (26 days ago)

It sounds to me that the agency is lying about the landlord signing and getting the stamp duty taken care of, and they be missing some other paper work as required by the EAA (Forms 2/6) and a complaint to the EAA may be worth considering. All forms need to be signed by you in advance and the agency Must give you copies.

Posted by PizzaAce (22 days ago)

What garbage, the agency is going to go after you. Do you really think they are going to waste their time and more money pursuing you in court for something that is not a concrete win for them.

Since you are willing to give up the $2K, then just be done with it. If they approach you at work, tell your employer and get a restraining order or threaten them with trespass.

Most agreements aren't worth the paper they're signed on especially if no exchange of goods/services has taken place. If I change my mind about an agreement that I've signed for whatever reason, then I just walk away and just foreit any deposit given. If they want to chase you for some penalty provision, then I say bring it on. Why should I lose more money for something that I never enjoyed.

Posted by walkup2 (21 days ago)

PizzaAce's understanding of Hong Kong legal contractual obligations appears to be based on bravado and little else.

Posted by PizzaAce (17 days ago)

walkup2, this is the only way to play it in Hong Kong. Why follow the rules when no one else does. Its the Wild East over here so get used to it. Locals don't play fair so why should you.

Posted by walkup2 (16 days ago)

PizzaAce, you are a bad boy. Seriously I think you are mistaken in your approach re contracts. You can't have your cake and eat it. In this case the evidence is moot whether the landlord has signed or not. If he has, then the signing tenant is liable. This means that if the matter goes to court, not only will the tenant have to pay the contract but also possibly the other side's legal costs. Doing a runner or brazening it out is not good advice. Either take the risk that the answer is yes or pay something to the agent to make the problem go away. Hong Kongers do know how to negotiate. Sitting on hands is a risk not worth taking IMHO, but hey it might pan out.