Deposit

[owenant]

A took on an agency to "find only". They duly found the new tenants and took on months deposit, citing a second agent as the deposit holder.
I quote from the contract.

"XXXXXX Ltd shall hold the deposit as landlord agent hereinbefore referred to throughout the term of the tenancy hereby created as security for compliance by the Tenant under this agreement and the payment holding and use of the same shall be without prejudice to any other rights and remedies of the landlord whether expressed or implied"

The agency has since ceased to trade, my tenants are leaving in one month and obviously wish their deposit. The partner agency, which is still trading, says that they do noit have the deposit and have told the tenants to request the deposit off me.

I have never come into contact with this money - what is my legal position?
Am I responsable for the deposit?

[SteveP]

Complicated. PaulF may have some thoughts on this.

What occurs to me is:

You have a contract the letting agent L that says X will hold the deposit as your agent. So has X ever agreed to this? Has X ever held the deposit? If so what did they do with it? Did you ever check that X had agreed to this and indeed held the deposit?

You have another contract, the tenancy agreement, with your tenants. What does this contract say about the deposit?

Hard to say without a lot more information, in particular what the tenancy agreement says since this governs your obligations to your tenant not agreements you have with your agents, but I can see potential for the tenants to claim the money from you. Rememeber can be liable for the acts and ommisions of your agents.

[owenant]

Deposit

Thanks for your reply steve.

To clarify

The find a tenant service was agreed with the now defunct agency (Homes Direct) who used the partner agency (referred to as X as they are still trading) to do the reference checks. Homes Direct signed the tenancy contract on my behalf and took the deposit.

The tenancy agreement came on the headed paper of X and contained the quote previously shown.

X says that they do not have the deposit and advise the tenants to chase the accountants of Homes Direct.

I have never seen the deposit.

[SteveP]

Too messy to be certain of anything. But on what you have said I would say you are liable to return the tenants deposit.

You appointed Homes Direct as your agent and, unless you can show they were not acting as your agent then you are responsible for the consequences of thier actions. You still haven't said what your agreement with them said, but assuming it says the same as the tenancy agreement (that the agent will hold it as your agents) then it means what it says on the tin. They held the money as your agent, in common parlance they were looking after it for you.

You seem to have no evidence that the other agent agreed to hold the deposit, or that it ever had the deposit, or that it now has the deposit. I don't see how you can even prove that their letterhead was used with thier knowledge or consent.

It is imperative that you read agreements before you sign them, that they describe the services, how they are to be provided, how the agent is to be renumerated, etc, propertly. There are many many bad and unscrupulious agents out there sadly. Use one who is regulated, and if either of the two in this story are then complain about them.

Your story is so messy that nobody here can give you a definitive answer, so you had best consult a solicitor. He may well advise that you pay the tenants given the uncertainty and cost of litigation and that the only truly innocent (you are not innocent perse, perhaps gullible) parties are the tenants who paid the deposit to your agents (the people you, not they, chose to employ).

[Tax Accountant]

You need to establish if there is any relationship between the agent and X Ltd. Check Companies House website for further details of X Ltd. This may throw up some light.

I always insist on holding the deposit myself unless you could be vertain that the agent is accountable to his/her regulatory body and holds clients' money in a separate client account.

Ramnik