Forgotten to protect deposit

[olibird]

Yep, I’ve forgotten to protect a new deposit in time, it’s now 21 days late. The deposit was paid by a credit union rather than the tenant and is due to be repaid to them. I am required, of course, to protect the deposit within the time limit as well as informing the credit union and the tenant of this.
So…… do I:
- protect the deposit late and then serve the prescribed information
- return the deposit (and hope the tenant isn’t alerted to this fact).

If I protect it late, my understanding is I’d still have to return the deposit if I wanted to serve a section 21 anyway, so is there any advantage to protecting it late as opposed to just returning it?

[theartfullodger]

Return it then pray..

[DoricPixie]

If it’s protected late not only does it cause problems with the Section 21 but you can be sued by the tenant. The court must award the tenant 1-3 times the value of the deposit.

No deposit doesn’t mean that you can’t claim damages once the tenancy has ended just that you’d need to go through court rather than a deposit scheme to do it. I think in this case I’d backtrack on the deposit rather than protecting it late.

Out of curiosity, why is a credit union paying the deposit? Is it a CU loan the tenant took out specifically for paying the deposit or some other CU scheme for tenants?

[ash72]

You have 30 days from the day you receive the deposit, from the post it is not clear if the 21 days is after this 30 day period or not. If you are late, the best course would be to return the deposit to avoid issues further down the line.

[olibird]

DoricPixie,

Thanks. The deposit is effectively a loan to me from a credit union as the tenant was previously in temporary accommodation. The deposit and first month’s rent were organised by the council where he was living before.

[jpkeates]

If it's a loan to you, it's possibly not a deposit.

Could you describe the arrangement?

[theartfullodger]

Was it a loan that tenant took out with credit union that was then paid to you?

But, as before, return now and pray. Or risk bigger penalty when judge realises you found out about problem but then delayed...

[olibird]

If it's a loan to you, it's possibly not a deposit.

Could you describe the arrangement?

It’s a deposit bond agreement, so is a deposit.

[theartfullodger]

Was it actually money transferred to you or what I think it might if been, a promise to pay up to a certain amount, depending?

[olibird]

Was it actually money transferred to you or what I think it might if been, a promise to pay up to a certain amount, depending?

Money transferred to me. I’ll be following the advice of most on here and arranging to repay it tomorrow.

[olibird]

My tenant’s deposit was paid to me by a credit union under a ‘cash deposit agreement’.

I forgot to protect the deposit in time (which was of course one of the conditions of the agreement). When I realised, I repaid the deposit to the credit union, this was around 3 weeks after the date I had to protect it by.

My tenant has now discovered this and is planning to take me to court (he has basically also told me he won’t be paying any more rent after this month until he plans to leave at the end of the tenancy in 4 months time).

Can he take me to court over this do you think or would it only be the credit Union that could do this?

[olibird]

Also, if tenant leaves with rent arrears, assume I can take them to court, would it be via the Small Claims Court? Don’t know if I’d do this, but want to know what I have in my hand as it were.

[DoricPixie]

The deposit did appear to belong to the tenant albeit it was getting paid to you via a credit union. Presumably if the tenant had money deducted from the deposit at the end of the tenancy he would then have owed that money to the credit union.

He could sue you but as you decided to return the deposit when you realised your error then I wouldn’t expect a court to award him any more than 1x the value of the deposit.

As soon as the tenant owes you 2 months rent issue a Section 8 ground 8. You can either include the arrears as part of the Section 8 claim or you could do it separately through MCOL.

[jpkeates]

The section 8 would simply bring the matter to a head early.
The court is able to award the penalty to reduce any rent arrears during the possession claim hearing.

There is no possible way in 2021 to "forget" to protect a deposit.
It takes about 5 minutes online (ignoring the Prescribed Information).

[DPT57]

The tenant can't successfully both not pay rent and sue you for a deposit penalty. The one is going to be offset against the other in either your possession hearing or his claims hearing.