Agent failed to protect deposit

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    Agent failed to protect deposit

    Can anyone advise me on my options, please.

    The letting agent I was using has "ceased trading" but owes me money. They are still listed in Companies House as active so may not have dissolved yet.

    They basically owe me one month's rent and the deposit which they failed to protect. Been communicating via email to director but think he is stalling saying the bank account was closed and he is having trouble getting bank to re-open it.Just to complicate matters he has now taken up residency in another country!

    Do I send an invoice to the registered address or do I need to make a claim through the courts etc.

    What's my option with the deposit. Tenants have been in property since July so 6 month short term ending soon. Should I send them a cheque for the deposit now explaining the situation. Then assuming they want to stay, draw up a new contract and ask for a new deposit which I will then protect?

    Thanks in advance

    #2
    Is your contract with the agency in the name of the limited company or in the name of the director?
    Although you could start court action against them, I suspect they will be dissolved by the time anything happens It may be wise to notify Companies House that a debt is owed because, before being allowed to dissolve, the company has to advise CH that there are no debts. If there are debts, they can not dissolve, they have to be liquidated - ie the companies assets split between creditors. Having said that, even if liquidated your debt may not be paid if all the assets are used paying debts that have priority (liquidators fees / tax bill / etc etc)

    With regard to the deposit, it is not clear whether starting a new tenancy agreement will re-start the clock with regard to the 30 days protection (no case law) and your only safe way forward is to either refund the deposit and leave it be, or start a new tenancy with a new tenant*. Neither option removes the threat of non-protection claim under section 214.

    * If tenants are Mr & Mrs Smith and you grant a new tenancy (with new deposit) to Mr Smith or Mr, Mrs & Miss Smith, then that would be a new 'tenant' but I still can not guarantee a court would not see it as a way around the statute. It would still not prevent Mr & Mrs s214'ing you for the original tenancy)

    Comment


      #3
      let's concentrate on an urgent matter. Your deposit should be protected by you, or your agent, by law. If your LA is unscrupulous (like my previous one) they may have used your tenants money to prop up the business. This does not release you from liability. So firstly, check to see if the deposit is protected. If it is, check that the scheme have your details as landlord and leave it where it is. You're the landlord and the protection is between you and the tenant, not the agent. If the deposit is not protected, I'm sorry to say you will have a battle on your hands. See many previous threads regarding non-protection. Sadly this will become your problem, and possibly an expensive one. If you have a good relationship with your tenant, you might want to discuss it with them but, ultimately, you'll have to find the money and protect it yourself, at your expense. Or, as you've suggested, just send them a cheque with a covering letter releasing them from the deposit obligation.
      I, personally, had exactly the same issue with a former LA of mine (who was later prosecuted on fraud charges) who never protected deposits, funded a Middle East business and finally absconded with deposits and rent payments from dozens of tenants. He left loads of LL's exposed to deposit protection claims and with tenants being challenged for rent arrears (LL never received rent). I had been issued a S21 notice as the LA had told my LL that I always paid a couple of months late! I'd paid six months up front!!
      I may be a housing professional but my views, thoughts, opinions, advice, criticisms or otherwise on this board are mine and are not representative of my company, colleagues, managers. I am here as an independent human being who simply wants to learn new stuff, share ideas and interact with like minded people.

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        #4
        Thanks for replies so far. Contract is with the Ltd company. I wrote to Companies House yesterday objecting to the dissolution of the company so hopefully that may help. Means I can go down the legal claims route.

        As to the deposit, I'm lead to believe it is too late to protect the original deposit so guess I may just have to refund them and hope they don't damage the property when they more out in the future.

        Comment


          #5
          Agent failed to protect deposit

          I touched on this in another post but thought it needed it's own thread so forgive me.


          Basically my LA took a deposit from my tenant but did nothing with it. It was not put in a protection scheme or passed on to me. So they still have it. They have since ceased trading. Now looking on the Government site and others it states "From April 6th 2007, all deposits paid under an AST should have been protected within 14 calendar days of receipt by the landlord."

          Now technically, I haven't received it. However, in court is "receipt by the landlord" likely to be interpreted as when the tenant pays or LA acting on landlord's behalf receives it?

          The AST will soon be coming to an end. A periodic tenancy is considered to be a new contract. So my thoughts were sent tenant back amount equivalent to his deposit at end of AST. Then request new deposit at start of periodic. Then protect it.

          Would I be free from the risk of prosecution if I give this deposit back?

          Just want to do the right thing and avoid further financial loss!

          Comment


            #6
            Unfortunately 'received by the agent' is the same as received by the landlord.

            Giving the deposit back does not remove the risk of the tenant suing you for non-protection by your agent.

            The penalty is between 1 and 3 times the value of the deposit, presumably the quicker you act to correct this the more lenient a judge would be (no promises). If a claim were brought against you you would probably also be liable for the tenants court fees (c£1k) and legal costs (solicitor £200/hr?). Therefore at the first suggestion of trouble I would be looking to negotiate a settlement.

            If you give the deposit back, there is nothing to 'make' the tenant pay it back to you - and an 'unfair' eviction may prompt the tenant to look for ways to 'hurt' you (ie start a claim).

            Comment


              #7
              Two related threads have been merged.
              I also post as Mars_Mug when not moderating

              Comment

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