Council Getting Funny Over Return of Deposit

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    Council Getting Funny Over Return of Deposit

    Last year we took on a tenant from the local council's Rent Assistance Scheme. Basically through the scheme the council provide a deposit for a tenant who otherwise can't afford one. The tenant left at the end of the tenancy owing a chunk of money (more than the deposit value) and so we withheld the deposit towards the debt. We've now received a letter from the council demanding the return of the deposit under threat of legal action. The agreement we signed regarding the deposit states that the deposit can be used to cover 'uninsured loss or damage'. I thought unpaid rent was an uninsured loss! Please could my fellow landlordzoners read the attached correspondence from the council and give me your opinions? If there's a solicitor amongst you that thinks I am in the right, would you be interested in representing me? Tje letter I received from the council is included in this post, but for some reason I'm only allowed to host one image in this post. To see the agreement in question please click on the following links (one link per page of the agreement):

    http://i239.photobucket.com/albums/f...2008_00001.jpg

    http://i239.photobucket.com/albums/f...2008_00002.jpg

    http://i239.photobucket.com/albums/f...2008_00003.jpg



    The text of my reply to the solicior went as follows. Comments appreciated!:

    Dear M*********,

    I was passed your letter regarding the return of the deposit for the tenant ***** **** of ** ********* Square. Obviously, if possible, we would like to come to an amicable conclusion before we have to go to court to settle the matter. With this aim in mind, could I have some clarification from you regarding some points?

    You refer to paragraph 3.16 as justification for us returning the deposit, but I don’t see how it fulfils that. My interpretation of the meaning of the paragraph is that a landlord agrees not to blame or seek compensation from the council if the tenant defaults. If your interpretation is correct and the words ‘the council cannot be held responsible for any default by the Tenant in performing the terms of the Tenancy Agreement’ actually mean ‘you cannot use the money provided if the Tenant defaults in performing the terms of the Tenancy Agreement’ then the whole agreement must be null and void, as one of the terms of the tenancy agreement is not to cause damage to the property.

    I also draw your attention to paragraph 1.3 ‘The damage deposit represents the sum that would usually be required by the Landlord from the Tenant as a refundable deposit against uninsured loss or damage caused to the Property during the term of the Tenancy for which the tenant is responsible’. Unpaid rent is an uninsured loss. Also it is perfectly legal and acceptable to withhold a tenant’s deposit to cover money owed in unpaid rent and, despite your assertion to the contrary, I cannot see any specific exclusion of that legal right in this contract.

    If you would be so good as to get back to me with further clarification I would be most grateful. If you feel we could clear things up better by talking on the telephone or face to face then please say so and I will contact you directly.

    Kind regards,

    #2
    I read Section 3.16 as the deposit being for damage only.
    I think you are stuffed on this one !
    Sorry.

    Comment


      #3
      Can I just point out that your attempts to render the scanned letters anonymous have failed completely?

      Comment


        #4
        As a casual observer it's an interesting one as 1.3 to me reads that the 'damage deposit' is the equivalent of the normal deposit that the tenant would normally pay and that 3.16 is stating that the Council cannot be persued in relation to any other breaches of the tenancy agreement that do not relate to the deposit.

        1.3 The Damage deposit represents the sum that would usually be required by the Landlord from the Tenant as a refundable deposit against uninsured loss or damage caused to the Property during the term of the Tenancy for which the tenant is responsible

        Comment


          #5
          Is unpaid rent an uninsured loss?

          Comment


            #6
            I think the Landlord could argue quite legitimately that that's what he interpreted it as, it's not very clear.

            Comment


              #7
              Thanks for everyone's advice. Does anyboy know/have experience with a good property/comtract lawyer? Where's Jeffrey when you need him? :-)

              Comment


                #8
                Originally posted by greengriff View Post
                Where's Jeffrey when you need him? :-)
                If you wish to engage his services then send him a PM!

                Comment


                  #9
                  Originally posted by greengriff View Post
                  Thanks for everyone's advice. Does anyboy know/have experience with a good property/comtract lawyer? Where's Jeffrey when you need him? :-)
                  I do go home occasionally- can't stay at work permanently just for you lot.
                  JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                  1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                  2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                  3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                  4. *- Contact info: click on my name (blue-highlight link).

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