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Joshua
Joshua, Lawyer
Category: Property Law
Satisfied Customers: 25358
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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Good afternoon In Feb 2013 I paid 12k to a property company

Resolved Question:

Good afternoon

In Feb 2013 I paid 12k to a property company as deposit for a property they were advertising.

After several months this fell through (they told me the vendor changed their mind). No surveys or searches had been done at this stage due to issues with them (sourcing company) arranging access to the property.

I was then offered several other properties, and selected one (which again required a 12k deposit), the same 12k. Come September this one fell through, apparently because the existing tenant did not want to take time off work to meet the surveyor (understandable, but by this point I was wondering how rubbish the existing landlord or agent was if they couldn't get access to their own property!).

After another month or so another suitable (location, value, and likely market rental) alternative property was offered. I made it very clear both on the phone and in emails that this would be the last chance. After a lot of chasing by myself, I was told at the beginning of March 2014 that this one has fallen through due to a change in the vendors circumstances.

Given a failure rate of 3/3 over 12+ month I asked for my 12k to be returned and we will go our separate ways. Since then they have confirmed they will repay the 12k in full, however as yet (March 18th) I have not seen a penny.

On March 14th after a week of chasing them, they sent me a repayment schedule for 2k/week for each of the 4 weeks in April - obviously this only totals 8k. I have pointed out the error in their maths and requested the other 4k be returned in March (ie 2k in each of the following 2 weeks) but so far have had no response.

What are my best next steps to get my 12k returned? I am a reasonable person and accept that while unfortunate, the 3 properties falling through were not entirely their fault, although it does raise questions over their sourcing quality.

However since 5th March when the last one ended surely they have no reason to hold my 12k any longer, and should be paying interest or something if they are using it elsewhere (presumably if it was in a proper Client Account they could have paid it back immediately then).

While I would like to believe they will return my money in the next 6 weeks I have had enough of this and feel I should be taking legal action to enforce this now.

What action is best and what timescales are we looking at (and costs?).


Regards
Submitted: 3 years ago.
Category: Property Law
Expert:  Joshua replied 3 years ago.

Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

May I ask what kind of company this is please? Is it a property search agent or something else please?

Joshua :

Was the deposit paid to them as stakeholder or agent? Don't worry if these terms are unfamiliar.

Customer:

Hi Joshua.

Customer:

10 years ago they just did property training (aimed at novice landlords). More recently, at least the last 3 years they have branched out into also sourced properties from home-owners looking to sell, and packaging these up for landlords to buy. They advertise they will arrange the finance (they have connections with mortgage brokers) and arrange for a letting agent in the area of the property to handle day-to-day tenant find and management. They also invest in property themselves. They are a UK Ltd company. My communications over the last 6 months have been primarily with their Finance Director.

Customer:

I'm not familiar with the terms stakeholder and agent (presumably different than an estate agent). I suppose agent though as they never actually own the properties they are selling. They basically bring the seller and the buyer together and help arrange the finance and solicitors for the purchase, so at a guess i'd say agent.

Customer:

I did training with them 10 years ago and they were a decent company then, so I am disappointed with the way things have panned out over the last 12 months - not just that it was unsuccessful with regards XXXXX XXXXX but also their poor communication, and now poor customer service.

Joshua :

Sorry for the delay in reverting to you.

Joshua :

Thank you for the above. Regarding the £12K deposit was this to be their fee in the event that a deal was successful or would some or all of this go against the purchase price? If the latter how much was their fee and when was this to be paid?

Customer:

Hi. The property was advertised as 12k 'all in' - as i understand it, part of it was their fee (either directly or as commission following a successful property sale), the remainder (the majority) would be the deposit towards the property purchase itself. A BTL mortgage would then cover the remainder of the purchase price.

Joshua :

thank you. based upon what you say, I agree your assessment that they are in breach of contract and accordingly are liable to return all of the money to you that you paid and in addition, you would have a claim potentially towards interest on the same. in the assumption you have not agreed any form of interest payment when you paid the money, section 69 County Courts act provides a basis for you to claim interest on unpaid debts at 8% per annum

Joshua :

accordingly, you may wish to consider writing to the companyadvising that you are disappointed that the balance remains outstanding and asking them to provide substantive proposals for settlement within the next seven days failing which you will need to consider issuing proceedings for recovery of the balance together with court fees and statutory interest under section 69 County Courts act in the County court

Joshua :

if necessary, you can issue proceedings using the courts online issuing service www.moneyclaim.gov.uk. The process is straightforward and if you are claiming more than £10,000, there is a basis to recover some legal fees should you choose to retain a solicitor though in truth that should be required in respect of such a straightforward claim

Joshua :

there is an alternative approach which you may favour which would involve you serving something known as a statutory demand on the company. This is a warning that unless they pay the money owed, you can make an application to wind up the company ( the equivalent of bankruptcy for a company). there is no charge to issue such a notice and such notices can be effective in bringing reluctant debtors to pay however it is unlikely you will wish to take the next step and actually apply for a winding up petition as this will set you back the best part of the thousand pounds however they are not to know that you will not do so and so and accordingly serving statutory demands is a popular way to try to force people to pay even though most people do not follow through on them

Joshua :

if you chose to serve a statutory demand, the following is the form you would need to do so:
http://www.bis.gov.uk/assets/insolvency/docs/forms/ew/form4-01.doc

Joshua :

is there anything above I can clarify for you any further?

Customer:

Thank you for the answer you have provided.

Customer:

They have sent me an email saying that from 4th April they will repay the full 12k at a rate of 2k per week. My concern is firstly that they may not stick to this schedule, and secondly that will make is 2 months they have essentially held my money as an interest free loan - something I certainly did not agree to at any point.

Customer:

What are the typical timescales for the moneyclaim route (the first option you gave). Obviously if this will take longer than 8 weeks then i'm no better off at the end of it (and will have paid fees to moneyclaim, which i believe are several £100 when the claim is of this amount).

Joshua :

I am glad the above is of assistance. A Small Claims Court action through money claim online if the matter goes to hearing can take 2 to 3 months however as you have an admission of the debt, you could seek summary judgement on this basis which is a process whereby you submit the evidence of admission of the debt owed to the judge and ask him to make summary judgement on the basis that the defendant has no defence. This can be obtained in a matter of a few but so it is up to the judge's discretion as to whether to grant summary judgement or not.

Joshua :

as above, you are entitled to claim statutory interest at a rate of 8% per annum on the money that is owed from the point it should have been repaid

Joshua :

is there anything else I can help you with?

Customer:

That is all, thank you.

Joshua, Lawyer
Category: Property Law
Satisfied Customers: 25358
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
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