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  • Deposit Protection

    Who is responsible for repaying this deposit?

    Here's the scenario:

    Tenant takes tenancy with Agent A in 2005 and pays him a deposit

    2006 Tenancy management is taken over by Agent B. Tenant assumes the includes their deposit.

    2007 Deposit Protection Law comes in

    2009 Tenant moves to another property managed by Agent C. Agent C does not take a deposit from Tenant but tells them they will sort it with Agent B. Agent C includes the Prescribed Information from the DPS within the tenancy agreement and this is signed by both parties.

    2009 Agent A is dissolved.

    2009 Agent B doesn't pay Agent C.

    2014 Tenant moves to another property managed by Agent D and tries to get their deposit from Agent C. Agent C won't pay because they say that Agent B did not pay them it when requested back in 2009

    It should be added that Agent C says that they can show that no deposit money was paid by Tenant in 2009 even though they rushed them in to their property on the basis of an intention to 'sort out' the deposit with Agent B. They can also point out that their tenancy agreement only says that a deposit 'is to be' collected not that 'it has' been collected. However, just to remind you, the agreement does have the full Prescribed Information for the DPS attached as an annex and signed by all parties.

    FYI I am Agent D (and the landlord).
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    Hi John,

    Presumably the agents were just that and all the tenancies were in fact with the respective landlords.

    If so, the respective landlords are responsible for returning the deposit.
    Specifically, in 2009 the landlord should have returned the deposit held. That occurred 5 years ago so there is still time for the ex-tenant to go after his ex-landlord, starting with a formal letter (but he should not delay).

    Agent C (and his principal) might be in trouble (ie. liable) if there is evidence that the deposit was paid to them, but from what you say it does not seem to be the case.

    Lastly, if by prescribed information you mean the general package, it does not imply that any money was protected. I think only the protection certificate would prove that.

    In any case, it seems that agent C, and agent B, did not exactly do an outstanding job.


    All of that unless, of course, there is only one landlord--you--, in which case it somewhat simplifies the situation: you are responsible for the deposit. (Though I'm not clear on how you could be the landlord and the agent at the same time).
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    What do the various ASTs signed over the years say about the deposit? If the Deposit is not mentioned on each I believe (but may be wrong) that the LL that was detailed on the last AST that detailed the Deposit is liable. I say this because I bought a property in 2008 with a tenant in situ and after about 18 months it came to light that a deposit had been paid to the previous LL; the AST supplied as part of the Seller's Pack had been altered to remove the details of the deposit. The tenant had signed a new AST with me stating that no deposit had been paid.

    I checked with the NLA and their view was I could not be liable as I had no knowledge of the deposit and my contract with the tenant actually stated that no deposit was taken.

    Once this came to light we tried to get the money back from the previous LL but he was having none if it and became verbally abusive. In the end I allowed the deposit (it was only £200) to be credited to the rental acct to clear some arrears. I was not obliged to do so but felt sorry for the tenants, £200 was a lot of money to them.

    Hopefully one of the legal people will reply with a definitive answer for you.
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    Good point, Steven: Indeed if no deposit was agreed in relation to tenancy then it cannot none can be held.

    (30-10-2014 03:32 AM)steven_ball Wrote:  I checked with the NLA and their view was I could not be liable as I had no knowledge of the deposit and my contract with the tenant actually stated that no deposit was taken.

    I don't quite agree here.
    When you bought the property you became the landlord of the ongoing tenancy and thus liable to the tenant to return his deposit.
    The new tenancy you created with him is only relevant in that, since it states that no deposit was to be held, you should have refunded the deposit at that point.

    On the other hand, the guy whom you bought the property scammed you through a fraud (fraud) and you were entitled to go after him pretty hard.
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    Thanks Romain and Steven.

    Just to set the record straight Agent D is me, the landlord. The term 'Agent D' was used just to demonstrate another link in the chain so apologies for that red herring. The tenants paid me a new deposit which is lodged with the DPS.

    The Prescribed Information I mentioned is that given by the DPS and attached as an annex to the tenancy agreement by Agent C. It clearly states the deposit amount and that it is to be lodged with the DPS. They raised an expectation with the tenant, verbally, that they (Agent C) were going to get the deposit from Agent C. Remember - the original deposit was paid before 2007 after which the requirement came in to lodge it deposits in a scheme. This is what sullies the water a bit.

    The question is, can the agent be liable for a deposit they never actually received in their hand when they have gone to some lengths to describe the deposit in the agreement having raised an expectation with the tenant that they were going to obtain the deposit from the previous agent thus leaving the tenant that their deposit was safe?
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    The deposit is the responsibility of the landlord. The contract is between the landlord and the tenant.

    The agent is just that, an agent, who is legally acting for the landlord. They can commit the landlord or otherwise act as if the landlord was the person agreeing to the deal. They are in some sense one and the same as the landlord.

    The landlord might have a valid claim against their agent if the agent did not deliver on the services they were hired to perform by the landlord. That is a side matter to be settled between them.

    In some ways figuring out what everyone is doing is interesting. At the end of the day, the matter should be settled in a way that makes the best of a bad situation. If the tenant is paying on time and generally worth keeping, see what can be agreed. If the tenant is leaving anyway, the landlord is mostly going to have to focus on a CYA exercise to reduce their liability or to reduce the hassle of going to court to prove things.

    Boiled down, all the agents do not matter at some level as the contract has been between the tenant and the landlord.
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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.