How to claim deposit back from Estate Agent

tameinbayan

Hi,

This is my first post and need to help from all of you.

3 months ago, My wife and I (first time buyers) and found a nice property which is ex-local flat in high rise building. We was so excited to make an offer and the agent said in order to secure our offer, we had to put down deposit (£1000). We thought it is normal and we paid £1000. When we paid the agent, he said it is just his company policy and both buyer and seller have to pay deposit for a good gesture. If buyer or seller withdraw the offer, s/he will lose that deposit.

After that, we could not find a lender who is willing the high rise ex-local building with that price. The flat is £190,000 in North west London and we have £30,000 deposit. We don't have any credit probelm and both of us are working with decent salary. All lenders ask us to find a different property.
We had 2 valuations from two different lenders and both of them said no to that property.

We told the agent about it and he kept sending us to his mortgage brokers which are going charge us a lot with high interest rate (between 7%-8.5%).
I went to those brokers but I told them I am not interested in high interest rates.

A week later, the agent put the property on market. I phoned him and asked about it. He said he will not show to anyone but I have to see another one of his brokers. I didn't agree and asked him to take off the property from market or give us our deposit.

Now, he is not answering my calls and emails. As we found ourselves a nicer property, I need to get that deposit back.

I think what the agent do to me is unfair. Could you please show us how to make an complaint and get back that deposit back?

As far as I know, that agent seems not belongs to any agent organization like
oea. I will provide you all any information you need.

BrixMorta

This does sound fairly unusual. Is the property being sold by a developer, is it a refurb? Were there any T & C in writing relating to the so called holding deposit. After all if you couldn't go ahead because lenders were not prepared to lend then thats hardly your fault. Why should you pay above the going rate for a dodgy mortgage for a property that most consider unmortgagable. Write to EA stating that you expect your money back by a preditermined date or you will take them to court/complain to the naea/ombudman. establish from the naea or ombusdman iof they are members if not it looks like the courts are the way forward.

sounds like the ea / seller has had number of previous abortive sales and is endeavouring to stop this happening again by using this form of financial lock in.

Best of luck.

tameinbayan

Thank for quick reply. The property seems to be sold by an investor. We have a recepit of £1000 but there is no really T & C included. I also couldn't find that agent is memeber of naea/ombudsman. Anyway, I will wirte to EA like your advice. To be honest, I don't want to go court but if it is necessary, I will.

Jorgan_2

This sounds very strange, what was signed on receipts etc? It all depends on what you were told at the time the deposit was taken & if any reasons were given for the non return of the deposit. This comes under the 1979 Estate Agency Act, so it doesn't matter if the agent is part of the NAEA or OEA.


The EA Act 1979 states the following
*Deposits should be held in a designated client account
*Audited annually
*held at an authorised institution
*The account should be in the name of the estate agency with the words 'client' or 'client account' included in the title.

Interest has to be paid if the deposit exceeds £500 and the amount of interest is at least £10.

The receipt given for the deposit should contain the following information:
The date of the receipt
The amount of the deposit
The name and address of the person paying the deposit
The address and interest of the land or property to which it relates
Whether it is a contract or pre-contract deposit.

If you don't get any joy with writing to the EA, speak to your local trading standards office. From what you have said the EA may have broken the EA Act 1979 a couple off times.

Edit: The EA cannot force you to use his broker.

tameinbayan

Thanks, Jordan.

We got a recepit with EA letter head. In receipt, the Description is " Deposit to take the propert off of the market".
Also, at the bottom, It stated " This is declare that the payment of £1000 to the comany XXX (henecforth 'the company') is made only on the basis that these monies are to act as a gesture of intent on behalf of Mr.& Mrs. A (henceforth the 'buyer') to signify ture and genuine intent to purchase the above name propery (henecforth the 'property') from its legal seller, and nothing more.
Change of genuine intent from the buyers to buy the property, which do not arise from any change in circumstance (as outlined above), would result in forfeit of the monies of the buyers to the company."

We lost two valuation fees because of this property. He keeps saying that we didn't get the mortgage because we didn't go with his broker. We did our best as a genuine buyer. I think we should get our deposit back.

Jorgan_2

From what you have said, I also think you should get your deposit back.

Did you pay by cheque? If so, was it made payable XYZ estate agents client or client money? If you paid by cheque & didn't make it out to a client money account, the EA has broken the law.

Am I right in thinking from what you have posted, that the EA company get to keep the deposit monies? "would result in forfeit of the monies of the buyers to the company."

The EA can not make a secret profit, it needs to declare to its vendor that it is receiving monies/commission from other sources in relation to the sale of the vendors property. In the same way that they should declare if they are arranging a mortgage for a buyer or selling conveyancing services.

As far as the mortgage side of things go, you need to speak to a whole of market mortgage broker who won't charge you a fee. Explain to them from the outset that the property you are interested in is in a high rise & is local authority. There will be a limited number of lenders for this type of property, you need the broker to find them.

If the EA doesn't pay up, don't threaten them with Trading Standards, go & see Trading Standards& explain exactly what has happened.

nelly_2

Personally I'd smack them with a baseball bat, then sling a load of petrol on them and pull a lighter out then say

Right, about my deposit and the interest I'm charging you......

tameinbayan

Thanks for all your advices.

We paid £400 by cheque payable to EA name and £600 cash. I think he is keeping that money. Also, he told me that he asked £1000 from seller as well but I don't believe that.
About mortgage, we have already tried with a whole market broker but most of lenders want more than %20 deposit for this type of property and high interest rate (nearly 7%). Our broker also advised that it will be difficult to remortgage later on.

We found a better property without any of these problems. Now, our offer has been accepted without deposit.