Refund of a Booking Deposit

[greenbarncottages]

Has anyone taken legal advice on this topic, or can point to the relevant laws, and can provide solid facts rather than common sense or opinion, neither of which seem to relate to law! There are certain similarities with placing deposits for other goods and services, but although useful indicators, they are no more than that when it comes to understanding deposits in the context of holiday accommodation.

We can choose to set more lenient terms in our own T&Cs, and there are obviously circumstances in which we as owners would choose to do “the decent thing” regardless of what we were entitled to, but let’s set that aside and concentrate on the real hard-nosed aspect that would apply in contract law regardless of what we might state in our T&Cs.

My question relates specifically to taking a booking deposit, typically 25%, for a self-catering property, so we are considering a significant sum of money.

The sample booking terms on AKH include a line

Please note that your deposit is not refundable under any circumstances

but the document also has a disclaimer to the effect that it does not constitute legal advice.

So the questions:
Can an owner legally withhold the guest’s deposit if the guest cancels the booking before the balance has been paid? (Being entitled to claim for the balance is a separate topic, and somewhat clearer.)

If the owner re-lets, and incurs no losses, can the owner still legally withhold the deposit?

If the guest cancels after paying the deposit and then the balance, and the owner subsequently re-lets, is the owner legally required to refund all monies less admin costs, including the original deposit, which was deemed as non-returnable?

If the guest pays the full amount upfront, (ie no deposit involved) and then cancels, and the owner re-lets, is the owner legally required to return all monies, less admin charges?

Depending on the solid legal answers to the above, a deposit may just be pointless….. or a really Good Idea.

So – anyone have any definitive advice, or even know where we can find answers? I’ve spent a fair bit of time googling, but haven’t turned anything up yet, hence this post.

[Raincliffe1]

According to our hospitality association who have kindly compiled a very useful page in our members handbook about this, cancellation of a booking by a guest (whatever the reason) entitles the proprietor to claim compensation subject to the following conditions taken directly from the handbook as follows:

He must take all reasnable steps to re-let and, if successful for even part of the period, must reduce his claim accordingly.

As re-letting is possible up to the last day of the period booked, no claim should be made until that period has expired.

Any claim for compensation must exclude items such as food, which have not been supplied, but extra expense incurred in trying to re-let (e.g. advertising, telephrams, telephone casll, etc.) may be added.

If a guest had paid a deposit, this will not be returnable unless the proprietor's claim is less than the deposit, in which case any balance should be refunded.

I use these guidelines as my rule of thumb. Our hospitality association represents 200 (I think) businesses therefore I would assume that this information is legally correct.

Katherine

[Jules]

Thanks for posting this, I've also googled and googled and never found the definitive answer in law. I personally do what I feel is fair - to both parties, but often wondered what was the legal stance on deposits and cancellations.

[joyful]

On reading lots of self catering T&Cs to do my research I came up with: a 30% deposit and balance payable in full 6 weeks before commencement. Monies refundable if property relet less £30 admin fee (if owners are putting large sums through on a card machine they will incurr costs so these should be covered, plus time & energy etc).

If property relet at a discount hirer is liable for the difference plus £30 admin fee and if not relet at all then hirer is liable for the full amount. By booking a self catering hirer is entering a legal and contractural obligation. Therefore holiday insurance (which is relatively inexpesive) is worth taking out (give number of some firms to assist). For £10 you can insure up to £1000 holiday cover for a family! Who could possibly quarrel with that!

[Simon]

I apply reasonably strict T&C regarding deposits and refunds for my eight self-catering cottages. The deposit (30%) is never refunded under any circumstances, even if the property is re-let. This is made very clear to guests and insurance is their responsibility.

On paying the deposit the hirer is entering a legally binding contract and is still liable for the full balance even if they cancel, unless the property is re-let. If it is re-let at a lower rate (e.g. last minute discount to fill a late cancellation) then they are also liable for the difference. I believe that this approach complies with the legal details kindly provided by Katherine above while making the position very clear to guests and protecting my business from the more difficult customers we all come across.

I do offer concessions and discounts if they wish to rebook but they don't get their money back.

We're in business to make a profit and shouldn't have to accept losses due to a change of mind (or circumstances) by guests. I put myself in the position of a large corporate tour operator when dealing with difficult guests asking for refunds - would they allow changes to the booking or refunds without incurring penalties or fees. Imagine how easy it is to get any money back from a company like that....