Letting fee problem

Question from Ron updated on 19th November 2015:

A few days after looking at a rental property, the agent said "please pay now so we can secure the property and take it off advertising". We paid the letting fee to the agent. The agent sent us the agreement via email five days later. We didn't feel comfortable about the property and some parts of the agreement and decided against it. We did not sign the agreement.

At no stage was it ever explained to us prior to paying the letting fee that it was non refundable. I then got two emails, one from the agent and one from the rental business owner saying I would be liable for all rent until they find a tenant suitable to them. At no point was I made aware by anyone of any of these rules and clauses! This cannot be right or fair. What can I do?

Our expert Bernard Parker responded:

A letting fee is intended to allow recovery of the costs a rental agency incurs in processing a tenancy application. You haven’t said whether you paid the fee prior to your application being reference-checked, or after the tenancy had been approved. A letting fee is usually payable after an application has been approved and the tenancy agreement is prepared.

If you did not sign a tenancy agreement I think the property manager would have some difficulty in establishing that you have a binding contract that requires you to pay rent until a new tenant is found. However, the payment of a letting fee is generally not refundable if your purpose in paying it is to secure the tenancy and permit the agency to cancel Internet advertising.

Bernard is principal of Quinovic – Kapiti-Mana. Quinovic's outstanding people and systems provide the most professional, effective and reliable residential property management service in the NZ market for over 30 years.

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