VIC Real Estate Agents - Claiming Contract Not Valid

[Twoteas]

Hi All, I hope you can help. Wanting to move to another residential rental property, we found a suitable house and then the following sequence started:

• Property advertised by agent at $440 per week
• Submitted an offer and rental application at $420 per week
• Offer accepted and confirmed by email at $1825 per month (not $420 per week although they're the same)
• Requested first payment to be made on 06 May.
• Request accepted by email
• Received a copy of rental agreement (contract) by email, stating $1825 per month commencing 06 May
• Signed contract returned by email to agent
• Gave notice to vacate current property which was accepted
• Real estate agents contacted me by text advising I had made a mistake on the application and should have submitted $440 per week
• Advised agent that there was no mistake, my offer was $440
• I queried the monthly calculation from the weekly offer to check the amount was correct and the agent advised it was - $1825
• Agent made further contact to advise that the monthly amount should have been $1911 ($440 pw)
• Agent advised that the owner would not accept the lesser amount and is now claiming that the contract is void and that the property will remain on the market.

The reason for the void claim is that "this was a simple, honest mistake"

I have contacted Consumer Affairs Victoria who have advised the following:
"Receiving the contract by email is an "intent to sign" and is treated as a binding document. They suggested an option to pursue via vcat. Note the contract is currently unsigned by the agent."

The situation we are now in is that we must vacate the property in a short period of time and it is looking extremely unlikely the real estate agents will honour the contract and provide the keys.

Aside from the legalities is the interesting concept of "mistake" by the agent. A weekly offer of $420 was made and an email confirms it was accepted The monthly figure of $1825 - by their own admission - was derived from the formula (($420 / 7) * 365) / 12.

Is there any advice on how we can proceed? Our worry is that the property will remain on the market and we will have no house to move into as planned. Or, is the agent acting appropriately?

Thanks

 

[Tracy B]

Hi Twoteas,

This seems like the real estate's mistake, as such, they should bear the extra cost. This is because you appear to have a binding contract. The real estate agent accepted the $420 counter-offer and proceeded to send you a contract stating this amount. In reliance of this acceptance, you gave notice to vacate your existing tenancy. If the real estate agent wishes to renege on this contract, they may need to compensate you for the loss (e.g. a few weeks rent while you find another suitable place). There have been cases in the past where the real estate underquoted to the tenant, the tenant accepted and even though the landlord did not wish for the lower price, they cannot vacant the tenancy and must honour the contract, once entered into. This does not fit into the concept of "mistake" at general law under which parties are allowed to vitiate a contract. It seems unlikely that the real estate agent can rely on this ground. Given you may suffer a loss (vacating your current place) if the estate agent refuses to honour the contract, you should look into pursing this with VCAT.

 

[Twoteas]

In response to the notion of involving VCAT:
On 2 May 2015, at 5:04 pm, [Moderator redacted] wrote:
Thank you for letting me know
I will wait to receive correspondence
I have tried my best here to sort this out however this is your decision not to accept
[Moderator redacted name] also consider that in the event VCAT awards in your favour the lease agreement has a clause which allows the rent to be increased after 6 months which will be exercised.
I am prepared to offer a $10 weekly rebate back to you for the first 6 months as a good will gesture for the honest mistake. (At the $440 weekly rent)
If you want to proceed at VCAT then do so

And now this. It seems everyone should change their plans based around [Moderator redacted] realestate's intentions.

As previously mentioned please go back to your current agent as I don't want you left without a place due to you not allowing the honest mistake we made to be corrected
Even if the property is for sale they should extend the period until you find another property

 

[Tracy B]

Hi Twoteas,

Legally, an honest mistake will still bind them to a contract. However, if there is the clause that allows rent to be increased after 6 month and they will exercise this clause, then you should think about (i) can you rent the property for 6 months and then terminate tenancy, and (ii) if not, can you afford the rent increase? It may be worth renting for the first 6 months until you find an alternative property.

 

[Twoteas]

Following submission of a VCAT application requesting compliance or compensation, the realestate agent offered to honour the agreement at the agreed monthly rate. Whilst this is something I would expect, it is a relief knowing that it actually will be done. I requested that a contract entry be made stating that the rental rate can not be increased for at least 12 months. This was done and I can't say fairer than that.
A very frustrating process but, in the end, a good outcome and we're looking forward to moving in to our new property.

 

[Tracy B]

Hi Twoteas,

I'm glad to hear you received a fair outcome in the end. Glad it is resolved! Thank you for updating us.