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VIC Short Term Accommodation Owner Demanding Deposit or Report to VCAT

Discussion in 'Property Law Forum' started by Nelly, 29 April 2015.

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  1. Nelly

    Nelly Member

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    I was looking for short term accommodation and posted an ad on Gumtree. I got a response and went for an inspection.I liked the place and told the owner I would move in and would pay the deposit the next day. But I decided against it the next day and informed the owner within 24 hours that I wouldn't move in. He is now demanding that I pay the deposit or one week rent or I will be reported to VCAT.

    Is that possible? He says since I agreed to pay on SMS it is legally binding.
     
  2. Ivy

    Ivy Well-Known Member

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    Hi Nelly,

    I would be interested to read other responses to your situation.

    However this is my interpretation of the facts:
    Common law contracts have four basic elements: offer, acceptance, consideration (for example, payment) and intention to create legal relations
    You have clearly accepted an offer to move into the accommodation and from all the circumstances it appears that this has evoked an intention to create legal relations.
    The only thing you haven't done is pay (consideration). However you did promise to pay. And presumably the person offering you the room has acted in reliance on that promise by, for example, taking down the ad and telling other enquirers that the room is no longer available. Therefore, even though you may not have a binding legal contract, the person who advertised the room may have what is known as an "equitable" remedy. The law of equity presumes done that which ought to be done.
    On this basis, the person who advertised the room, might be able to claim money from you equivalent to his reasonable costs caused for example by his reliance on your promise.

    So if I were you I would negotiate an amount to pay him out of goodwill to avoid further legal hassles. Is the deposit or one week of rent cheaper?

    I'm not sure if there is tenancy law in Victoria which modifies the common law of contracts.

    If you want, you can also call Consumer Affairs Victoria to see if they have any other suggestions. Renting - Consumer Affairs Victoria
     
  3. Ivy

    Ivy Well-Known Member

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    *
    *Which modifies the common law in this situation.
     
  4. Nelly

    Nelly Member

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    Thanks for your response. But in this case he has replied to my ad. I don't even know if he is actively advertising for his room. And also isn't there some sort of cooling off period?
     
  5. Sarah J

    Sarah J Well-Known Member

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    Hi Nelly,

    There are indeed four elements that need to be met to create a contract. Oral contracts are just as legally binding as written ones. Further, for a lease to be binding, you must be told a number of additional terms (e.g. lease price, lease term, property details, parties, possibly deposit). This is because a land contract is more serious than the ordinary contract to buy and sell.
    • Have you been told the additional terms, mentioned above?
    • What is the term of the lease? If it for a long fixed-term period, a written agreement may need to be signed
    Depending on what exactly was communicated via SMS and verbally (and otherwise), there may be a lack of intention to enter into a legally binding agreement.
    • Did you make a counter-offer?
    • What exactly was communicated via SMS (and verbally)?
    Even if there was a contract, the damages suffered by the landlord would likely be very low. Gumtree is free to advertise, you gave notice within 24 hours, there was unlikely a missed opportunity turned down because of your agreement. Even if the landlord claims for compensation, he would have nothing to claim. If you were to forfeit the deposit, this could be argued as a penalty. Further, it would be unlikely that a court or tribunal would force you to lease the place against your will based on what you told us (general principle at common law that courts will not force individuals to do something against their will except in extreme circumstances). Finally, you can argue that this was all part of preliminary negotiations.
     

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