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Real Estate Agent asked for cheque before contract being made and will not return it

4000

Posts

EW MASTER

Latest post on 30 July 2011 - 15:04

Trying to search out any info on this for a friend. Friends viewed a villa and were asked b the RE agent to give a cheque of 5k which they have done. The receipt does not state what this 'deposit' is for (ie. whether its towards rent or security or commision to agent) and at the time of handing over the cheque they were not offered to sign a contract nor have they signed anything yet. They subsequently discovered certain things that have put them off wanting to rent that villa and asked for the cheque back. The agent refuses to return any money. We have called RERA and asked what their rights are, but RERA hotline are unable to advise their legal status in this case. Anyone have any experience like this and can give us a clue as to where they stand?

TIA

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4000

Posts

EW MASTER

Latest post on 31 July 2011 - 08:51

This happened to us - albeit we paid a 2000dhs holding fee. They told us it would be refunded once they received the security deposit. We changed our minds also due to some negative aspects, but we had to forgo our money. It was better to do this than continue with a contract and villa that we were unhappy with. Since this happened to us, we were very conscience about the whole deposit thing. I don't believe it is normal practice to ask for a holding fee, but it not illegal or uncommon either. Thems the breaks!! As for the actual security deposit, this is normally non-refundable if you decide to not go ahead with the contract, but refundable at the end of the tenancy. What is the value of the rent? Is the 5k equivalent to 5% of the rent? 5 % is usually the amount of the security deposit, which would be non-refundable in this case (but should go to LL and not agency - and you can always speak to the LL about this as well - they may opt to refund if it was indeed passed on to LL), but 5% is also equivalent to the agency commission, in which case, this should be refundable if they do NOT sign an actual contract (probably why the agent wants them to sign ASAP!). Does it have anywhere on the receipt that the amount is NON-REFUNDABLE? If not, then they probably have a case to claim it back with the police if it is considered an an agency fee. If considered as a security deposit then I would say it is gone... Thanks SD for your input, No the receipt does not have non-refundable on it anywhere, so what you explain gives me hope for them, as for what the deposit represents is not certain, as you say 5k it could be the security deposit or the commission as that exact amount could be for either considering its 5% of the rent and the receipt does not specify either. However the cheque was made out to the Agent not the LL. They have filed an online RERA complaint form explaining it all and they wait to see if RERA will intervene at all.

498

Posts

EW EXPLORER

Latest post on 30 July 2011 - 21:23

This happened to us - albeit we paid a 2000dhs holding fee. They told us it would be refunded once they received the security deposit. We changed our minds also due to some negative aspects, but we had to forgo our money. It was better to do this than continue with a contract and villa that we were unhappy with. Since this happened to us, we were very conscience about the whole deposit thing. I don't believe it is normal practice to ask for a holding fee, but it not illegal or uncommon either. Thems the breaks!! As for the actual security deposit, this is normally non-refundable if you decide to not go ahead with the contract, but refundable at the end of the tenancy. What is the value of the rent? Is the 5k equivalent to 5% of the rent? 5 % is usually the amount of the security deposit, which would be non-refundable in this case (but should go to LL and not agency - and you can always speak to the LL about this as well - they may opt to refund if it was indeed passed on to LL), but 5% is also equivalent to the agency commission, in which case, this should be refundable if they do NOT sign an actual contract (probably why the agent wants them to sign ASAP!). Does it have anywhere on the receipt that the amount is NON-REFUNDABLE? If not, then they probably have a case to claim it back with the police if it is considered an an agency fee. If considered as a security deposit then I would say it is gone...

4000

Posts

EW MASTER

Latest post on 30 July 2011 - 19:06

The deposit could have been a holding deposit too. These can be requested to secure the property and stop anyone else renting it before you get round to signing the tenancy. They would normally be non refundable if the tenant decides not to go ahead, which is fair enough as the agent may have missed out on other prospective tenants plus the landlord might now have a longer void period. You can't have it both ways- bagsy a villa then want a refund if you pull out! Although if the cheque was made in the agent's name not the real estate co. Name or the lanlord's name then that does sound very dodgy. The reason they are not going to sign the contract is they discovered the villa has some negative aspects not shown to them during their inspection, so they are not just mind changing without good reason. I would have thought in this case that they would be entitled to some form of refund as they have not signed any contract yet, from what you explain it seems they stand to take a complete loss of the deposit for changing their minds. It does not seem fair in their case as they were mislead by the agent. <em>edited by Di@DXB on 30/07/2011</em>

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Posts

EW NEWBIE

Latest post on 30 July 2011 - 18:36

The deposit could have been a holding deposit too. These can be requested to secure the property and stop anyone else renting it before you get round to signing the tenancy. They would normally be non refundable if the tenant decides not to go ahead, which is fair enough as the agent may have missed out on other prospective tenants plus the landlord might now have a longer void period. You can't have it both ways- bagsy a villa then want a refund if you pull out! Although if the cheque was made in the agent's name not the real estate co. Name or the lanlord's name then that does sound very dodgy.

edna.welthorpe36638

516

Posts

EW GURU

Latest post on 30 July 2011 - 17:43

@m. you cannot stop a cheque even post dated in Dubai I believe you can, but it involves going to a police station and explaining why. If the police accept the explanation they give you a document authorising the stoppage, which you then take to the bank.

78

Posts

EW NEWBIE

Latest post on 30 July 2011 - 16:46

Yep, talk to the owner, and tell the them that if the agent doesn't refund, you will go to the police. And tell the agent as well that he is going to be reported to the police and that he'll receive a legal notice. A deposit towards the villa will be in action if the landlord gives a receipt saying the same. That is then non-refundable. A personal check to the agent is just a scam. Money never goes to the agent. Always to the real estate company.

4000

Posts

EW MASTER

Latest post on 30 July 2011 - 16:36

Who did they make the check out to - was it in the name of the agent of the real estate? Maybe they should make a trip to the real estate office and speak to the person who owns/runs the agency. The RE office may or may not be aware of the agent collecting the check if it was in his/her name. By going to the office they will make the person in charge aware of what happened, if they weren't aware of it, and if they are, you can ask for your money back or that the deposit be applied to another property. If made payable to the real estate office, you can talk to them and mention that if it can't be resolved, you would be reporting it to RERA to raise a case against them. I don't think there is much that they can do if the check is in the agent's name- more than likely they were scammed by the agent but they can try going to the police to file a report. The agent/RE agency would have to specify what the deposit is for. I am not sure who pays the agency fee - if it's the owner or the tenant, but agent's/agencies try to collect from both sides. edited by Crystil on 30/07/2011 Good idea too, thanks, the cheque was made out to the agent, they should go in and talk to the owner and at least get the amount transferred to another property.

4000

Posts

EW MASTER

Latest post on 30 July 2011 - 16:28

@m. you cannot stop a cheque even post dated in Dubai.As I said earlier, the poor OP'friends havebeen robbed. Fortunately they have a receipt. It may not be worth much but to the police it proves they paid out 5,000dhs. They can file a police case. Their chances of recovering their money may be slim but they can try. Thanks for the idea, I'll suggest they go file a police case if RERA cannot help, I think they may have some rights since the agent is trying to pressure them into signing the contract now. That makes me think he is hurrying them to commit to the contract becasue they still do have the right to change their minds before signing, I hope thats the case.

379

Posts

EW EXPLORER

Latest post on 30 July 2011 - 16:21

Who did they make the check out to - was it in the name of the agent of the real estate? Maybe they should make a trip to the real estate office and speak to the person who owns/runs the agency. The RE office may or may not be aware of the agent collecting the check if it was in his/her name. By going to the office they will make the person in charge aware of what happened, if they weren't aware of it, and if they are, you can ask for your money back or that the deposit be applied to another property. If made payable to the real estate office, you can talk to them and mention that if it can't be resolved, you would be reporting it to RERA to raise a case against them. I don't think there is much that they can do if the check is in the agent's name- more than likely they were scammed by the agent but they can try going to the police to file a report. The agent/RE agency would have to specify what the deposit is for. I am not sure who pays the agency fee - if it's the owner or the tenant, but agent's/agencies try to collect from both sides. <em>edited by Crystil on 30/07/2011</em>

4000

Posts

EW MASTER

Latest post on 30 July 2011 - 16:18

umm - am not sure if i am misunderstanding BUT it looks like they gave the agent a deposit to hold the villa - they then withdrew, i understood that any holding deposit were non-refundable if you withdrew from the arrangement..... That is what i understood for here and the UK.... Are you sure that is the standard here and would that be the case even if no contract had been signed at all? It's not the standard here to hand over any money at all without contracts - so not really sure "standard" applies in this case - what does the receipt say? It just says 'deposit' but does not specify if its the security deposit or a deposit towards rent or the agent commission.

Princess_I45169

1953

Posts

EW EXPERT

Latest post on 30 July 2011 - 16:13

umm - am not sure if i am misunderstanding BUT it looks like they gave the agent a deposit to hold the villa - they then withdrew, i understood that any holding deposit were non-refundable if you withdrew from the arrangement..... That is what i understood for here and the UK.... Are you sure that is the standard here and would that be the case even if no contract had been signed at all? It's not the standard here to hand over any money at all without contracts - so not really sure "standard" applies in this case - what does the receipt say?

4000

Posts

EW MASTER

Latest post on 30 July 2011 - 16:09

umm - am not sure if i am misunderstanding BUT it looks like they gave the agent a deposit to hold the villa - they then withdrew, i understood that any holding deposit were non-refundable if you withdrew from the arrangement..... That is what i understood for here and the UK.... Are you sure that is the standard here and would that be the case even if no contract had been signed at all?

Princess_I45169

1953

Posts

EW EXPERT

Latest post on 30 July 2011 - 16:05

umm - am not sure if i am misunderstanding BUT it looks like they gave the agent a deposit to hold the villa - they then withdrew, i understood that any holding deposit were non-refundable if you withdrew from the arrangement..... That is what i understood for here and the UK....

542

Posts

EW GURU

Latest post on 30 July 2011 - 16:00

@m. you cannot stop a cheque even post dated in Dubai.As I said earlier, the poor OP'friends havebeen robbed. Fortunately they have a receipt. It may not be worth much but to the police it proves they paid out 5,000dhs. They can file a police case. Their chances of recovering their money may be slim but they can try.

4000

Posts

EW MASTER

Latest post on 30 July 2011 - 15:59

they should have given a post dated cheque that way they could have blocked it. why did they gave the cheque in first place?? is it their first time in dubai coz agents fees is around 5000....and before signing contract no fees is given! there is no way around this problem if they don't have any record or reciept. do they know RERA id no of the agent? They do have a receipt for the 5k cheque signed by the agent and the agent is registered with RERA, I got the ID number from the RERA hotline but thats all they could help with. Yes with hindsight they should not have given it at all at that stage as they have not entered into contract for the property, not sure if post dated would have helped in this case if the agent was not intending to refund it anyway, and now the agent is trying to force them to sign up on the contract a month earlier than the initial enquiry and refuses to return the cheque. So do you know if they have they right to ask for the cheque back? <em>edited by Di@DXB on 30/07/2011</em>

1381

Posts

EW OLDHAND

Latest post on 30 July 2011 - 15:49

they should have given a post dated cheque that way they could have blocked it. why did they gave the cheque in first place?? is it their first time in dubai coz agents fees is around 5000....and before signing contract no fees is given! there is no way around this problem if they don't have any record or reciept. do they know RERA id no of the agent?

542

Posts

EW GURU

Latest post on 30 July 2011 - 15:48

It looks like the EA was not registered with RERA hence RERA reluctance to get involved. Best is to file a complaint to the police as your friends have been scammed.

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