(I read the disclaimer in the sidebar: I'm not looking for legal advice: I'm just curious as to the implications to both parties).

Pre-amble and context: So I'm trying to rent a property in the UK. The agent we're going through wanted a holding deposit when we agreed to start the process (fine), which came with an agreement that the deposit is returned if we sign the tenancy agreement (reasonable), but not returned if we don't (ok, so they're protecting themselves against some loon block-reserving their entire property listing. Fine). I agreed because the justification sounded reasonable (with hindsight: I am not a smart man).

The fees had to be paid before seeing the tenancy agreement. The agency has thus far refused to negotiate terms on any bit of paper it's got me to sign (so we're clear: not asking about that. I ultimately agreed to the conditions, I understood the implications).

The question: Is it legal to have a deposit that is non-returnable on the basis of not signing a contract that the consumer hasn't had a chance to read before agreeing to the deposit terms?

I understand that a contract, in principal, needs to be fair (http://www.legislation.gov.uk/uksi/1999/2083/introduction/made), but what if it wasn't fair? Could they have claimed it was fair, and refuse to amend any terms (at which point, I'd have had a "take it or leave it" contract that if I don't sign, I'm out of pocket)?

I'm aware the situation described is at least ethically dubious, but it seems to me that if they refused to negotiate, if I do sign it would be under some sort of duress (?) for the sum of money I'd be out-of-pocket by?

Likewise, this looks similar to the EULA sort of question that arises (pay money for a product behind terms that you can't read until you pay money).

(again, so we're clear: it's a situation that happened to me, but if I want actual legal advice I'll call a solicitor. The question is more that I don't understand enough about contract law to work out whether or not this was legally questionable rather than just the agency screwing me).

  • "The fees had to be paid before seeing the tenancy agreement." This strikes me as very odd. Letting agents typically have a standard template agreement that they use, which should be viewable on demand. What reason did they give for refusing to let you see it? – Steve Melnikoff Feb 12 '16 at 21:23
  • @SteveMelnikoff "They need time to prepare the agreement", although it does look like a boilerplate agreement they use with everyone. I imagine I could have tried to press the issue. Again, a bit of naivety on my part; it was the end of a long property search and I was a bit over-eager. – KidneyChris Feb 15 '16 at 10:18
  • Fair enough. Sounds like they were trying to put you under pressure to sign ASAP. I agree that this is ethically dubious, and their excuse is feeble, as they could have sent you the template. I'd keep a close eye on these guys... – Steve Melnikoff Feb 15 '16 at 17:45
  • It is fairly normal for letting agents in London.. and you are right about asking for the draft contract, but they have so many tenants to choose from that they feel they might as well save the paper and effort. Some will even try to include a condition that they won't return the holding deposit if you don't pass their referencing checks, but it is sometimes possible to negotiate that one away, so that if they reject you for whatever reason, you get the holding deposit back. – nsandersen May 11 '16 at 11:54

Competent parties can contract for any terms that are not forbidden by law, and a contract is valid if each party provides consideration (i.e., something of value). It sounds like the contract you're questioning is essentially, "I will give you money in exchange for you showing me an agreement and giving me the option to sign it." The act of "showing an agreement" evidently has some value, as does the "option to sign," so your counterparty has provided consideration. Therefore, the high-level answer is that the only way this contract would be inherently flawed would be if a law explicitly forbids it.

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  • "I will give you money in exchange for you showing me an agreement and giving me the option to sign it." is a succinct way of describing the question - when put like that, it does seem fairly clear cut. – KidneyChris Feb 15 '16 at 10:24

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