My agent lost the deposit, can I cancel the lease?
If an agency has been the victim of fraud and the tenant deposits have been misappropriated can the landlord cancel the lease agreement and appoint another rental agent? – Tina
Hi Tina, it is important to note in the first instance that the lease agreement is a legal agreement between the landlord and the tenant. The letting agency is not party to the agreement. The answer to your question would therefore be no, the landlord cannot cancel the lease agreement.
The landlord may however decide to cancel the mandate, which is the legal agreement between the landlord and the letting agency. The landlord would then be able to appoint another agency to manage the property on their behalf. This would have no effect on the lease agreement or the tenant’s right of occupation.
It is important to further note that although the agency has been a victim of fraud, the landlord remains liable to the tenant for the deposit. The landlord would have a claim for the deposit against the letting agency however. Further to this, if the letting agency is correctly registered with the Estate Agency Affairs Board, and holds a valid Fidelity Fund Certificate, the landlord would have a claim against the Fidelity Fund for the deposit amount.
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Who is Grant Smee?
Grant Smee, MD and franchisor at Only Realty, has been operating as a property investor since 2005. He has a solid financial foundation gained through tertiary studies in finance and accounting, and experience gained in large international financial institutions. Extensive property investment and rental knowledge has been gained through personal property investments and property business ventures since 2005 in both South Africa and the UK. Smee’s specialties include property investment and rentals in the residential housing market.