Direct Debit

[asif49]

Does the following sound safe....

I'm moving along with my family to Birmingham this July. I've spoken to a landlord whom has asked me to place a deposit of £300 (via Direct Debit) to his account to secure the house although we have yet to sign a contract or anything of the sort.

I do however know his name, as well as the bank he is with, his account number and sort code as well as knowing the house that he has for rent.

I'm not too sure on how direct debit work but the fact I have his account number and sort code, if someone tries to run away with my money I can probably contact the bank and they can get him done for fraud. Because of my limited knowledge of how banks and direct debits work I can't really say if placing this deposit will be safe so advice please!

[Dani]

No, don't send any money without a signed lease.

His account number and routing number appear at the bottom of every check he would ever write, so it's not exactly privileged information. If you send money to his account, it wouldn't necessarily be considered bank fraud and there's nothing a bank can do.

This sounds more and more like a scam, to be honest.

For example, I can scope out houses on Google Maps and pick a nice house. I can tell you that I own it, and give you my bank's account number. If you deposit money to my account, great! I can then go on and close the account, or deny having told you I own that house in the first place. Banks do not police bank and wire transfers.

[|-|x]

I believe Dani is correct in this assessment. Direct transfers have little to nothing you can fall back on in the case of fraud, as I have experienced myself through a bad ebay purchase. In that case, I was able to claim back through ebay's own buyer protection program, but the Banks are not able to do anything as I was responsible for transferring the cash myself.

Credit Cards are another matter, in most cases the credit company/bank will be able to claw back the funds, and there are greater restrictions on the merchant receiving the funds in the first place.

You are right to be wary. My advice in general, never give out cash (direct bank transfers included) without a contract and formal invoice/receipt.

[jwenting]

Indeed. In such cases, placing the funds in escrow with a mutually trusted 3rd party is the way to go.
Or get a contract under which you pay him a fee for securing you property, repayable in part or full towards the lease on that property.
Any trustworthy estate agent will offer such a contract (or simply work on an hourly wage).

There have been many cases of people scammed into paying for houses that the "agent" didn't own, in several they were even given keys and moved in on the property only to find the legal owners return later and demand they leave (the 'agent' in those cases had stolen keys or broken in and replaced locks).

[happygeek]

You need to ask yourself, and the landlord, a number of questions before releasing any money in his direction:

What happens to the deposit if you do not proceed with the rental?
What happens to the deposit if the landlord decides you are not a suitable tenant?
Is the deposit refundable against your first rental payment?
Is the deposit to be used as the bond against damage to the property?
What are the terms of the rental contract for the property?
Will the deposit be held in escrow, and if so with which company?
Will the landlord accept payment by credit card instead of direct debit? (this provides you with much greated protection in case of fraud in the UK)

Some questions I would ask of you include, how did you find the property and landlord? If it was just a classified ad online then I would be very tempted to walk away. Have you seen the property itself, met the landlord in person, spoken to him over the phone? If you are too far away to see the property before signing a rental agreement, then I would strongly suggest you use a rental agent to find a suitable property.

[asif49]

I've actually gone and seen the place. Its a really brilliant deal so I don't want to let it go. There definitely won't be anything this convenient that I can find for the price that it's being offerred at.

Plus I have the emails to prove all of this incase something went wrong. As well as messages from this person's number.

[happygeek]

I'd still be asking the questions I set out. The landlord shouldn't worry if he is genuine, and it shows you are serious about wanting to rent. The property might be great, but if the rental agreement sucks it could be a financial albatross around your neck... Check the contract before handing over any money would be my advice...

[asif49]

The place is amazing for the price and very convenient for me in terms of distance to nearby shops/gym etc. I phoned on the same day the advert was put up and since then he has had several other calls from people wanting to take the property.

Thanks for the advice guys but I'm gonna have to go for this one. I'll come back to this thread if something goes wrong and then you can say 'I told you so'.

But I highly doubt someone will show a house around (the same house i found advertised) and then write up a rough draft of the contract specifically tailored to me, and then give me their account number + sort code to direct debit the deposit over. I think if someone was going to con another person they can do so with a lot less hassle, I.E just asking me to hand over the deposit in person with no trace left that a deposit was given. Especially when the deposit is reasonably low - you can buy a playstation 3 with the deposit and won't have anything else left to spend it on so I don't think this can be a con.

If it is I'll let you all know.

[happygeek]

In your original post you didn't mention that you had met the landlord face to face (just 'spoken with') nor seen the property with him, nor seen a draft contract. All those things change the perspective somewhat. You really should confirm what happens to the deposit if you don't go ahead though, at the very least being happy that it is non-refundable if that is the case.

[G_Waddell]

Hi,

Ask the landlord would he take a bankers draft for the deposit - If I understand it correctly it will take time to clear the payment but unlike a cheque it is guarenteed by the bank. This means you have time to cancel if not contract is produced but he knows it will not bounce unlike a cheque as the bank would not issue unless they have funds best of both worlds for you both. Although I admit you may need to check with the bank if I'm correct.

I just know when paying for a car etc. I've always been advised to pay by bank draft.