30 Day Deposit Payment Question

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    30 Day Deposit Payment Question

    I was interested to read the following by a senior member on a previous post from 2018

    “There are two different interpretations of the start date of the 30-day deadline.

    One is that the date the deposit is received by the landlord or the agent starts the clock, because that's what the legislation looks as if it says.
    But the deposit has to be received "in connection" with a tenancy, and the tenancy doesn't exist until it starts.”

    My scenario -

    1. tenant makes two payments prior to tenancy commencing. First is a small holding deposit pending referencing etc. Second is a large payment of 6 months up front rent including deposit for lodgement with DPS.

    2. First payment (which isn’t enough to cover the deposit amount) received by me on 6th October. Second larger amount received by me on 22nd November.

    3. Tenancy commences on 12th December.

    4. Tenants immediately reject the property (they didn’t view and were overseas moving the UK) and there are several days of backwards and forwards conversations/emails etc, but bottom line is tenants were looking to rescind the contract and I was negotiating that and was prepared to agree to a cancellation of the contract.

    5. Tenants remained indecisive about whether they were staying or going and 2 days before the 30 day time limit was up on basis that the 30 day requirement started from 22/11 when the upfront rent and deposit payment was received, I emailed the tenants asking them what they were wanting to do and explained that I had not as yet lodged their deposit due to the ongoing uncertainty as to whether the tenancy would be continuing and also explained that part of my rationale for not lodging was that should the tenancy be cancelled then they would have to wait 30 days before receiving their deposit back, this being a standard issue with the DPS.

    6. I received no immediate decisions from the tenants and on day 31 I lodged the deposit and issued the PI.

    7. The tenants did stay at the property.

    8 I have now received a letter before action claiming I have breached the 30 day deposit lodgement requirement.

    I have two questions;

    a) the opinion I have copied above would defend me position entirely since I did lodge the deposit within 30 days of the actual tenancy commencing on 12.12. Is there any case law to support this interpretation?

    b) assuming my best defence (a) isn’t available to me, in the circumstances I have described is there a defence?

    TIA DashCam1





    #2
    You are clutching at straws.

    because the below is not correct. Well each half of the sentence is correct, but the one has nothing to do with the other.

    "But the deposit has to be received "in connection" with a tenancy, and the tenancy doesn't exist until it starts.”"

    Comment


      #3
      Thanks AndrewDod, are you saying that there is definitely no case law as far as you know to support that part of the previous post I saw? Are you aware of any case law where it has specifically ruled out the scenario that the 30 days commences from when the tenancy date commences?

      if the senior member ‘jpkeates’ has seen my post I wonder whether they have a view? As it was their comment in the 2018 post concerning the 30 day rule that has led me to wondering whether there might be support somewhere (case law) to support such a proposition?!? Tia

      Comment


        #4
        It doesn't need case law. It is the law. "In connection with" simply states the purpose of the deposit. All sorts of other bits of legislation works in the same way (holding deposits can be held in connection with a tenancy that might never occur). Why else was the deposit collected if not in connection with a tenancy.

        YES the legislation is stupidly worded (as is often true), but deposits might be collected months in advance of a tenancy (sometimes).
        YES your tenants are obviously execrable characters unless you did something to deserve this.
        YES I agree that is a pity landlords have to think so much about legal linguistics and irrelevant hoop jumping instead of focusing on providing decent, safe and cost effective housing.
        YES it is a pity that some tenants give those seeking accommodation a bad name, and make it hard to marginal tenants to find anywhere to stay.
        YES this sort of thing is great for landlords who know what they are doing because it drives out their competition and drives up rents.

        The housing act mentions the importance of the date "received" no less than 4 times and is totally explicit
        "(b)within the period of [F2 30 ] days beginning with the date on which the deposit is received by the landlord."
        https://www.legislation.gov.uk/ukpga...34/section/213

        Once the deposit is paid there definitely a tenancy contract (whether it is signed or not), albeit not a tenancy.

        Comment


          #5
          IMO Deposit 30 day deposit protection date apples from when first T deposit payment was received.
          A Holding Deposit is not part of the T Deposit, unless stated otherwise
          This thread explains why no keys should be provided before agreed T start date..

          Comment


            #6
            Thanks AndrewDod, is the following arguable?

            The tenants made it clear they were wanting to rescind the contract on what they claimed were misrepresentation grounds having arrived at the property on day 1 of the agreement and having seen the property for the first time at that point. I was prepared to allow that to happen (subject to some deductions for the time they had spent in occupation of the property), is it not arguable that the tenancy agreement had been terminated due so those quite unique circumstances and therefore the Deposit wasn’t any longer subject to the Housing Act Requirements? Or am I clutching and now scraping!!

            Comment


              #7
              Does anyone know where the authority for distinguishing a ‘holding deposit’ from ‘tenancy deposit’ that has been mentioned... and is there authority that says that a holding deposit isn’t subject to the 30 day lodging requirement. thanks again

              Comment


                #8
                Holding deposit must be 1week rent or less.

                But tenancy deposit could be one week.

                Usually distinguished by wording on receipt or exchange of emails including words "holding deposit".

                Look it up on Shelter's legal website
                I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                Comment


                  #9
                  The holding deposit should ideally by covered by a signed holding deposit agreement and must now be a maximum of one weeks rent. You would have to show some evidence that the first payment was intended as a holding deposit. However, that looks to me like a separate problem as its the 30 day limit on the second payment that has been exceeded and has triggered the claim. Sadly there is no court discretion in this matter save for how much the judge awards, (1x - 3x the deposit). I would have thought that in this case it's likely to be at the lower end of that scale so if I were you I would offer 1x the deposit in full and final settlement through a solicitor.

                  Comment


                    #10
                    Originally posted by Dashcam1 View Post
                    if the senior member ‘jpkeates’ has seen my post I wonder whether they have a view? As it was their comment in the 2018 post concerning the 30 day rule that has led me to wondering whether there might be support somewhere (case law) to support such a proposition?!? Tia
                    Don't put too much faith in the Senior Member status, it just means I post a lot.

                    You received a deposit, it was in connection with a tenancy, even if, at that point, the tenancy hadn't begun.
                    Over time we've had a number of discussions about what "in connection with" actually means and whether something can be in connection with something that doesn't exist.

                    I think the landing point was that the words "in connection with" are used is because they are deliberately loose. The money is being handed over for a reason and that reason is connected to a tenancy.

                    The alternative reading is based on Superstrike, in which it was ruled that a landlord automatically received a deposit when they were already holding it and a new (in that case periodic) tenancy began.
                    If that logic was extended to brand new tenancies, you might argue that the deposit was received when the tenancy begins.

                    The problem with that (and there's no definitive case law that I know of) is that it's counter to common sense - the tenant hands over a large sum of money to the landlord.
                    There's no sense in which the landlord can't be "receiving" that money.
                    If the tenancy didn't go ahead, the landlord would have to give it back, which they couldn't do if they hadn't received it at some point.

                    On a practical note, who is the letter from?
                    If it's from the tenants, I might actually make the argument about receiving the money when the tenancy began and call their bluff.
                    The small claims court isn't meant to get involved in these claims, and, providing you don't owe them any money, the actual claim process is likely to be a bit off-putting for most people (which you might also point out to them).

                    If the letter is from a solicitor, settle, for god's sake!
                    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


                      #11
                      Thanks for all your comments.

                      Does anyone know when the 1 week holding deposit became law? This situation occurred in December 2018 and the holding deposit I took was equivalent to 2 weeks rent and it was clearly stated on the emails that it was a holding deposit.

                      The letter of claim is from a lawyer. I should add that the tenant was actually released by joint agreement from the tenancy agreement and I agreed to refund to the tenant £1000 on terms which we both agreed which were it was in full and final settlement of any alleged dispute, which at that time included this 31 day lodgement of the Deposit. So the tenant is now wanting two bites of the cherry, that can’t be right in itself can it?

                      Also I have just checked the emails received from the tenant and on the 2nd day of the tenancy he emailed me to say he was rescinding the contract claiming misrepresentation. Therefore am I right in saying that there was no longer a tenancy agreement in place at that point and my obligation to lodge any deposit is relinquished? The tenant later emailed to say he had decided to ‘move back into the property’ and affirm the contract at which point I lodged the deposit? Does this change things??

                      Comment


                        #12
                        As advised before, look it up on Shelter legal website
                        I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                        Comment


                          #13
                          The holding deposit regulation is from the Tenant Fee Act and applies from June 1 2019, so you're clear on that issue.

                          Whether the agreement to end the tenancy precludes this action would depend on exactly what it said.
                          For example, if the tenant wasn't aware of the deposit issue, they could argue that the agreement excluded that issue.

                          The issue with rescinding the contract is an interesting one and whether there was a tenancy at that point would depend on everything else that happened and was said.
                          But I don't think, ultimately it helps you.
                          The tenancy commences when the tenant takes possession of the property and that doesn't affect the deposit regulations.
                          If the tenant didn't move into the property until the end of the second month, there would still be no tenancy after 30 days, but the deposit deadline is unchanged because its based on when you receive the deposit.

                          Is the legal letter from an actual solicitor or from a deposit claim farm?
                          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


                            #14
                            But my thinking is that the recession by the tenant is a clear indication that the AST was no longer in place. I should add that the tenant also agreed to the property being readvertised and for me to contact other interested parties who hadn’t been selected for the property. I’m thinking no AST then no obligation to lodge the deposit money which the tenant had requested back within 7 days (which he wouldn’t have been able to receive had it been lodged due to the 30 day period for release), it was only lodged after he emailed to say he was ‘moving back in’ and affirming.

                            The deposit issue was a live issue at the time the tenant made the agreement to full and final settlement.

                            Comment


                              #15
                              Originally posted by Dashcam1 View Post
                              But my thinking is that the recession by the tenant is a clear indication that the AST was no longer in place. I should add that the tenant also agreed to the property being readvertised and for me to contact other interested parties who hadn’t been selected for the property. I’m thinking no AST then no obligation to lodge the deposit money which the tenant had requested back within 7 days (which he wouldn’t have been able to receive had it been lodged due to the 30 day period for release), it was only lodged after he emailed to say he was ‘moving back in’ and affirming.
                              Had the tenant moved in before he decided to "rescind" the tenancy?
                              Did you agree to that?
                              Did the tenant get any rent back for the period when you assert there was no tenancy.
                              The deposit issue was a live issue at the time the tenant made the agreement to full and final settlement.
                              That's your best point, I think.
                              Does the solicitor's letter make any reference to the settlement?
                              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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