Deposit in lieu of rent arrears

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    Deposit in lieu of rent arrears

    My problem is as follows: -

    Tenant moved out with rent arrears of £1875 without leaving a forwarding address so I have no way of contacting the tenant. She acknowledged the rent arrears and, between us we formulated a plan to pay off the arrears (£100/month). She made the first payment but then moved out.

    The letting agent I used was using TDS (Tenancy Deposit Scheme) to protect the deposit but at some stage during the tenancy the agent was bought out by Countrywide who switched to using MyDeposits for the deposit protection.

    MyDeposits don't allow the landlord to make a claim against the deposit only the tenant.

    So, we're at a stage where the letting agency has the deposit and I have no way of getting the deposit in lieu of the arrears.

    I can't go down the legal route because I don't have the address or date of birth of the tenant.

    Has anyone any ideas?

    #2
    You can sue your tenant in the small claims court using the last address you have for them, which is your property.
    Getting their mail redirected is their issue.

    As they probably won't receive any paperwork, they'll lose by default, and you can register the ccj.
    Which might get their attention next time they apply for credit.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      If the letting agent has the money, then it was insured rather than custodial, then just ask the agent for it. The scheme don't have a process for you to claim the money because as far as they're concerned the landlord already has the money.
      I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

      I do not answer questions through private messages which should be posted publicly on the forum.

      Comment


        #4
        The landlord can't simply seize the tenant's money to pay off a debt.

        In practical terms, it would probably work and resolve the issue, but it's not actually 100% legal
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          Originally posted by rcsltd View Post
          MyDeposits don't allow the landlord to make a claim against the deposit only the tenant.
          I can't beleive that this is the case, otherwise what is the purpose of the deposit? Check with MyDeposits what the process should be for you to claim the deposit against rent arrears

          Comment


            #6
            Originally posted by DPT57 View Post
            I can't beleive that this is the case, otherwise what is the purpose of the deposit? Check with MyDeposits what the process should be for you to claim the deposit against rent arrears
            If it's an insured scheme, there's nothing for a landlord to claim from, the landlord already has the money. The tenant can make a claim from the scheme on the basis that the landlord isn't returning the deposit, the amount of deductions are disputed etc., in which case the scheme would request the money from the landlord which the landlord is obliged to turn over, and the parties can go through arbitration. If the tenant doesn't raise any issue with the scheme, then as far as the scheme is concerned, there's nothing for them to do because presumingly the landlord has returned the money with whatever deductions that the tenant is happy with.
            I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

            I do not answer questions through private messages which should be posted publicly on the forum.

            Comment


              #7
              The agent shouldn't turn the deposit over to the landlord (and, I guess, in practice, won't).
              They're holding it on trust for the tenant and shouldn't give it to the landlord until the tenant agrees to that.

              The landlord can't simply use whatever money of the tenants they can lay their hands on to settle a debt.
              English law doesn't allow that.

              In reality (if the agent does hand over the deposit) it might simply never be an issue in real life.
              But that doesn't make it legal (even if the outcome seems "right").
              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

              Comment


                #8
                The agent isn't an independent third party, they're the agent of the landlord. All their action is supposed to be on behalf of the landlord. The money in reality may have been paid into an agent's bank account or whatever, but the money was paid to the landlord as security, hence the landlord being required to protect it in an authorised scheme in accordance with the Housing Act.

                The agent is not holding the money on trust for the tenant (assuming the whole trust thing to be correct for deposit), they are holding the money by agreement with the landlord / on the landlord's instruction, who is in turn holding the money on trust for the tenant.

                As the agent of the landlord, if the landlord instruct the agent to hand over the money, I don't see how the agent have any grounds to refuse their principal's instruction.

                The landlord can't simply use whatever money of the tenants they can lay their hands on to settle a debt.
                All that mean in reality is that the landlord must produce an equivalent amount of money if demanded by the authorised scheme or the court. And if the landlord and the tenant agree a different amount to be returned, pay such an amount over. It's not like they have to hand back over the exact same banknotes the tenant handed over that has since been sitting in a vault (or under a bed) somewhere.
                I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

                I do not answer questions through private messages which should be posted publicly on the forum.

                Comment


                  #9
                  The role of the agent in these matters is always complicated.
                  They are the landlord's agent (and owe them the duty of an agent etc).

                  But they are also an independent company carrying out lots of other activities for other people, which makes their role as an agent complicated.
                  It's implicit in the role of any agent with more than one principle and has caused issues ever since there were agents.

                  A tenant walks into a branch and says do you have a two bedroom property available?
                  The agent has two owned by two different landlords.
                  The agent will almost certainly offer details of both properties, thereby (technically) breaching their fiduciary duty to both principles and fulfilling a duty to the prospective tenant (who isn't even a customer).
                  And no one would expect them to do anything different.

                  How the letting agent holds a deposit isn't always the same, many explicitly hold the deposit as a stakeholder, which means it's held on trust for both the tenant and the agent.

                  The agent relationship doesn't allow the principle to tell the agent to act incorrectly or illegally.
                  As the money is the tenant's. it's one thing for the landlord to ask the agent to transfer the money they hold on trust into the principle's care, and another to ask them to transfer it to the principle to be used to settle a debt.

                  All that mean in reality is that the landlord must produce an equivalent amount of money if demanded by the authorised scheme or the court. And if the landlord and the tenant agree a different amount to be returned, pay such an amount over. It's not like they have to hand back over the exact same banknotes the tenant handed over that has since been sitting in a vault (or under a bed) somewhere.
                  Good luck with that*.
                  "In reality" is doing a lot of work in there 8-)

                  You can't (and really shouldn't) offset a debt with some of the debtor's money or other property you have access to.
                  It's just not legal.

                  And it makes financial reporting a mess. When you complete your accounts or tax return, how do you report the debt and the "income"?

                  *"If the bank had only asked for the money back we'd have returned it, your honour".
                  When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                  Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                  Comment


                    #10
                    Let's take away the existence of the agent for a moment, since your underlying argument about how the landlord can and should deal with and financial report the deposit doesn't depend on it.

                    Now let us get hypothetical. Your tenant leave at the end of a fixed term or by notice, somehow the property is in perfect condition, only problem they didn't pay last month rent. You hold a month deposit. The lease explicitly say a tenant can't use deposit as last month's rent but hey ho that's what they're trying to do anyway. You send them letters, emails and text messages "hey you owe me a month's rent" or even "I propose per the tenancy agreement to deduct £XYZ from the deposit of £XYZ due to you not paying your rent of £XYZ". No responses. The deposit was protected in an insurance scheme, so you've got the money sitting in your bank account. You've informed the scheme the tenancy end date, and in accordance with their rules, they've send the tenant a letter/email saying they've got X months to raise a dispute. Like you, the scheme don't hear anything.

                    Are you seriously suggesting you would issue a claim in court for £XYZ, for the court to make a declaration that you are entitled to the money?
                    I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

                    I do not answer questions through private messages which should be posted publicly on the forum.

                    Comment


                      #11
                      I'm (very seriously) suggesting that it's not legal to take the money.
                      Lots of people think it is, but they're wrong, so it's best to make sure people know that.

                      What someone does in their particular situation armed with that knowledge isn't something I control.
                      Lots of people would take the risk (the downside seems remote in this case).

                      People need to know where they stand and then can decide to act knowing the risks.
                      Because the risks and rewards vary with the situation and the law doesn't.

                      However morally justified and however fair the outcome, what's being suggesting is actually theft (assuming there's intent to keep the money).
                      And, in this case, the existence of the agent does change the risk, because now you need an accomplice.

                      And moving from the hypothetical to the actual, yes, I'd sue the tenant.
                      The resulting ccj has a value beyond the £50 and the admin time (and, as you note, I have their money).
                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                      Comment

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