letting agent did not register the deposit

[rob0035]

Hi all,

I have two tenants who paid their deposits to the letting agent mid last year. He told me he had deposited them. I've now discovered they have not been deposited having searched in the schemes websites. The LA has closed his office and I have no address for him. He rang me recently to say he's still in business and is working from home and made various excuses. He was not registered with any estate agents bodies as far as I can see. He had been trading for nearly 20 years so I went with him as he was very helpful in advising me and was reasonable pricewise. He was still advertiising a property to rent on Zoopla in Jan15. Nothing now.
What are my options now to get the deposits off him back to the tenants so that we can deposit them correctly in a scheme. He also owes me initial rent paid to him from the tenants less his fees. I know he lives locally and could probably track his address down.

As you can guess I'm fairly new to this all hence naivity of not checking him out before dealing with him.

Thanks for any suggestions.

[mattl]

Was he dealing as a limited company or as a private individual? That's of crucial importance for you to understand whether you've got a chance to see any money back.

[rob0035]

I think he was a a private indivdual. I searched his name to see if he was a director and couldn't find anything, nor a company name same as his trading name although obviously his company name could be anything. He was a one man band operation. I have very little paperwork from him but nothing mentions a company name.

Thanks.

[Hippogriff]

You've spoken to him recently, did this topic get raised? If he has them, then surely he just gives them to you (doesn't help you with your liability, though) or is the implication that he has decided to 'have them' and is a thief?

[theartfullodger]

As the deposit was not protected you have a problem:
a) Any s21 will be invalid until deposit returned to tenant (yes I know you never got it) or you have tenant's written agreement to use deposit against arrears (yes I know you never had it). In your shoes I would immediately return deposit (from you £££) to tenant - NOW!
b) Tenant can sue you (and probably agent) for up to 3x deposit: Yes I know agent did it wrong not you, but that's the law: Tenant has up to 6 years from when it should have been protected (30 days after tenant paid it - to agent or you) to start court action against you.

Sorry: Move on & learn for future, hope it goes better in future!

[rob0035]

Hippogriff,

I spoke to him 3 weeks ago about the deposits and he came up with excuses about a temp working for him at the time not completing paperwork etc. Said he would have to look through his bank statements etc and get back to me. Can't get hold of him now. I guess he may well have used the funds at the time for other purposes as he most probably had financial problems. He doesn't seem to have been doing much trading if any now. So I need to put pressure on him to pay back the deposits or safeguard them. Could this be regarded as theft hence criminal case and should the tenants pursue this against him as they the funds to him or can I?

[Hippogriff]

Firstly, you know the deposits are not protected.

Secondly, are you 100% sure the Tenants paid the deposits to the Letting Agent... do they have receipts or did you see it happen?

Thirdly, if there is proof the Tenants handed over the deposits, they were never protected and now they won't be given back - that kinda sounds life theft to me.

Unfortunately, as alluded to by theartfullodger, this doesn't resolve your problem. As a Landlord you have now fallen foul of not protecting your Tenant deposits. I say "you" very deliberately, because a Letting Agent cannot actually be liable in the eyes of the law - it is solely the Landlord's responsibility. I hope your Tenants are on good terms with you and aren't going to get litigious in any way, because if they take you to Court it's going to be pretty bad.

How is the situation with the Tenants who paid their deposits to this Letting Agent? Are they getting ready to move on and want their deposit back? Are they just idly wondering if they're secure? Was this thread initiated by you because you were idly wondering about them? Is there an urgency here we're not aware of? In the original post you ask how can you get them back from the Letting Agent so you can correctly protect them... that's showing good intentions, but it does not help you with your predicament, I'm afraid... you are already at fault for not protecting them (and giving the Tenants various pieces of information) within 30 days of receiving the deposit. Protecting them now is the right-minded thing to want to do, but you are already in a bit of a pickle.

You ask if the Tenants should pursue him. Well, I don't think so... the Tenants recourse would lie with you. You can certainly chase him, but what you are really doing is trying to save yourself (if that makes sense?) as you are the one in the bind.

I think I would be heaping whatever pressure I can onto this Letting Agent (realise it may be difficult to get in touch)... just be aware you're liable for the safe protection and return of these deposits.

How many Tenants and how much £s are we talking about here?

[rob0035]

Hippo,
I can check with tenants regarding payment. They said paid by bank transfer but I don't think they have any paperwork. For one set of tenants (a couple)I don't even have a copy of the lease agreement and I don't think they have. One member of this couple wasn't around at time of signing so the agent held on to the paperwork until this tenant was available. I never got a copy.
This set of tenants would like to stay long term and we have a good relationship. So they were not chasing the deposit. When I informed them it hadn'r been deposited in any scheme they were obviously very angry towards to LA. They now realise that I am responsible for the deposit having made enquiries but we agreed to work together to try and get the money back off the LA. Current lease is to end of June15. Am I still liable if niether of us have a copy of the agreement ?
The other tenant I also have a good relationship with but I think she still believes we can still get the funds back as she can't believe the LA would do such a thing as this (she's being a bit naive). "He didn't seem that type". I have a copy of a the lease agreement. Not sure whether she is likely to stay long term yet. Lease is to 31jul15. She's probably not aware I am still responsible for the deposit.
Total amounts involved are around £1400 x 2 for tenants deposits plus around £600 the LA owes me for iniitial rental they paid him less his fees (I've been chasing this for months).
I did find a review on a site from a landlord posted back in Aug14 stating he threatened this LA with legal action for rent owed before the LA finally paid him the funds. Problem is now I don't have an address for the LA as he move out of his office around that time. I'll keep chasing him but I feel I need to add more pressure somehow.

[Hippogriff]

You are still liable, yes.

Your maximum exposure, if Court cases were brought against you, would be £1,400 plus (3 x £1,400) plus costs. Your minimum exposure would be £1,400 plus 1 x £1,400 plus costs. I'm sure these numbers would concern anyone. Your Tenants have the right to bring a case against you and they would be successful. Let's hope they don't decide to do that and are not opportunistic.

When one Tenant believes she can get the funds back, she is 100% correct. But that would be from you... it doesn't matter to the Tenants where the money really is as you are the person responsible for it. If it has to come from your pocket, that's where it will come from. I think you should contemplate what action you are going to take regarding the deposits sooner rather than later.

So, I agree, try to keep your Tenants on side and try to put pressure on the Letting Agent once you can make contact, easier said than done I know. You may wish to consider tracing the Agent and suing him. Just remember that if you get the £1,400 back from him and you protect it straight away, you're not in the clear.

Best of luck.

[rob0035]

Hippo,

Thanks for your advice. Looks like I need to deposit asap to reduce potential penalties if the tenants ever decides to sue. This should keep the tenants content hopefully and perhaps they won't delve any further into potential legal action they could take against me. I don't think they're that type but its a worry now.

[Hippogriff]

The thing is that it can be a worry for years now. Even when they're long gone from your property they may decide they want a windfall... you'll not make the same mistake again, I'm sure.

[jpkeates]

The agent is theoretically liable in place of the landlord.
"references to a landlord or landlords in relation to any shorthold tenancy or tenancies include references to a person or persons acting on his or their behalf in relation to the tenancy or tenancies."

The court would have to decide if the deposit was received by the landlord (with the Agent acting as his, er, agent) or that - from the sound of it - the agent simply received it on his own behalf.

[mattl]

I have very little paperwork from him but nothing mentions a company name.

Well, the letting agency agreement would be a good first point to start looking. I hope you have this in written form, as otherwise you'll struggle to bring any claim against him?