Question
Deposit made, my client is moving in on lease commencement date. However, the landlord indecisive about their tenant moving out of the property on time.
Answer
Your client and the landlord are in a legally binding contract. Therefore, if the landlord is unable to provide commencement as per that contract, the landlord is in breach.
If your client just wants to get out of the lease at this point, I would suggest to the listing agent that if the landlord is unable to provide possession as per the agreement, then the landlord could potentially be liable for damages. Damages could include the cost of the tenant’s interim accommodations, etc. In order to avoid all of the above, it might be easier for all parties to sign a mutual release and have a clean break.
If your client, on the other hand, really wishes to proceed with this transaction (or if the landlord refuses to sign a mutual release), then they have to recognize that they may be placed in an awkward situation. If on commencement the previous tenant is still residing in the property, they will need to find alternative accommodations until the situation is resolved. And who knows how long that may take. Also, if the landlord is not forthcoming in providing compensation, then it is going to create a terrible relationship between landlord and tenant, as this may entail the tenant taking the landlord to small claims court for damages. Again, this is an awkward thing to do if you expect to have a relationship with somebody for one year+.
I would explain those options to your client and also have them call the Landlord and Tenant Board to get their take on the situation.
Question :
My buyer clients have their offer accepted today, its all signed and done. The deposit still has to be made tomorrow. But now my client want to back out of the deal because they have seen some other houses they think are at lower price (implicit assumption is they can get it at the listed price) and are better. Is their a way they can back out. They are thinking not to make a deposit tomorrow, is that a better option or mutual release should be done or …?
Answer :
Any offer accepted – whether conditional or not / whether a deposit has been received or not – is a binding legal contract.
If a deal is a firm deal but the deposit has not been received, the buyer is still entirely liable. The seller can choose to sue the buyer which could result in potentially tens or hundreds of thousands of dollars in damages… depending on the circumstances. (In other words, buyers can be sued for far more than their deposits whether those deposits have been submitted or not.)
If the deal is conditional but a deposit is not received, many people appear to be under an impression that this is fine because the deal was conditional anyway. This is not true. A condition can only be used to get out of a deal explicitly for the purpose that the condition was written.
As an example, a deal that is only conditional on a home inspection could not be used to get out of a deal in which the buyer could actually not obtain financing. In other words, conditions can only be used explicitly for the purpose that they were written.
That said, it may be challenging for the seller to prove that the condition was not used in good faith. But if they can prove it (maybe because of casual conversation you had with the listing agent or by some other means), then the results for the buyer (and you) could be devastating.
And a buyer who just gets cold feet or changes their mind is certainly not a valid reason.
So what’s the solution? Do not be cavalier with what you do for a living. You are helping consumers through the biggest financial transaction of their lives… and if you do this incorrectly, it comes with massive financial consequences. Before you do an offer with any client, make sure they have been fully educated on the market, understand exactly what they are buying, understand how conditions work and have full comprehension of just how binding the offer is.
