The Landlord and tenant signed the tenancy contract, however tenant has not paid the security deposit. Is the contract valid?
In most cases, the landlord is a busy person. When the tenant confirms taking the premises by paying a booking fee (a month of rental), the landlord considers the property has already been rented out. However, the tenant (or landlord) may not follow up with the sequence of events closely. This will sometimes result in complication.
The landlord is outstation. The booking fee has been paid to him via online transfer. The tenant drafted the tenancy agreement and emailed to the landlord. The landlord prints it out and read through. Satisfied with it, he signs the tenancy agreement and send back to tenant. Over another few weeks, the tenant has not paid the the security deposits and utility deposits. Yet, tenant asks to move in to the premises.
Is the contract (now signed by both parties) effective? Should the landlord give vacant possession to the tenant? The tenant said, you give me vacant possession and I will pay you the remaining monies. After all, I have signed the tenancy contract, why are you so scared?
This is actually a voidable contract. Why? Because what the promisor (tenant) said he would do was not completely done. He said, he offers to rent this place, the terms were told to him (2 months security deposit and half month utility deposit with 1 month advance rental), but yet he did not complete the payment of deposits. Although landlord has signed the tenancy agreement, it was signed with the intention that these payments be made immediately – being a contingent contract. Without it being paid, the landlord has all the rights to void the contract as in S.40 CA50.
S.40 Effect of party to perform promise wholly.
When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee (in this case the landlord) may put an end to the contract, unless has has signified, by words or conduct, his acquiescence in its continuance.
Tomorrow, we see how should the correct sequence be.