Is my estate agent misleading me?

[Lawcruncher]

I have to disagree with post 15.

If the tenant's consent is required but not forthcoming then it is no use going to court. The court will say it cannot order the tenant to give consent. The position is no different from the deposit payable on the purchase of land. If the purchaser defaults the vendor gets to retain the deposit without the purchaser's consent. If the purchaser defaults and the deposit is held by a stakeholder, the stakeholder has to make a decision about what to do with the deposit. The way to look at it is that the duty of the stakeholder is to the deposit and to ensure that it goes to the right person. If there is a dispute and the stakeholder does not see the issue as clear-cut he can apply to the court for directions: https://www.justice.gov.uk/courts/pr...d-applications. A letting agent who does not want the responsibility ought not to take deposits.

The above is the default. The parties are free to agree any procedure which needs to be gone through to determine liability. Complications are though best avoided in the case of residential property.

[jpkeates]

If the tenant's consent is required but not forthcoming then it is no use going to court. The court will say it cannot order the tenant to give consent. The position is no different from the deposit payable on the purchase of land. If the purchaser defaults the vendor gets to retain the deposit without the purchaser's consent.

The court can both award compensation and instruct a third party to release funds that they hold in order to satisfy it.
They do this fairly routinely where a deposit protection company has a deposit in its control and the court awards it (or some of it) to the landlord and/or the tenant.

I don't agree that the situation is the same as the deposit payable on the purchase of land.
That follows a wholly different and well established set of rules.
And the outcome there is reasonably binary, either the sale proceeds or it doesn't.

With a tenancy deposit if there are terms on which it is held they are a combination of the tenancy agreement (plus any deposit protection terms), but essentially the deposit is being held on trust for return or to be used to satisfy a possible liability.

There is no presumption of offset in English law, so, even if the tenant owes something to the landlord that is not disputed, the landlord can't simply make use of a sum of money that they, essentially, owe the tenant.

[Lawcruncher]

Assuming the wording is all it should be, consent is not required because the agreement will say that the landlord can draw from the deposit when the tenant is in default. Go here: https://www.lexisnexis.co.uk/legal/g...s-but-does-not. Whilst referring to commercial deposits the position is the same for any tenancy deposit not required to be protected. As the article points out, the whole point of a deposit is that if a tenant defaults a landlord has funds immediately available to draw on without taking legal action. The fact that that was the case in respect of ASTs is the very reason why deposit protection was introduced.

[jpkeates]

That conclusion makes the assumption that the wording of the tenancy agreement contains an agreement about the deposit which is enforceable, that the reason for the default is not in dispute and ignores the issue that a tenancy agreement is a consumer agreement, which a commercial lease is (usually) not.

[Lawcruncher]

That conclusion makes the assumption that the wording of the tenancy agreement contains an agreement about the deposit which is enforceable, that the reason for the default is not in dispute and ignores the issue that a tenancy agreement is a consumer agreement, which a commercial lease is (usually) not.

A point worth considering. If the CRA 2015 applies it will be a question of whether (a) a deposit is intrinsically unfair (b) the unfairness depends on the terms on which the deposit is held. We can also ask if section 72 prevents deposit provisions coming under the Act. Do deposit provisions relate to "a settlement of a claim"? Any court case which answered the question in favour of tenants would have to apply to all deposits notwithstanding the statutory protection of deposits paid in respect of ASTs because the CRA 2018 applies to residential tenancy agreements.

The point does not though need considering for this particular thread as the tenant is a company and is not a consumer for the purposes of the CRA 2015.

Whether or not the CRA 2015 applies, a very practical point is that there are no sanctions of the kind set out in the Housing Act 2004. The only recourse for a non-AST tenant who disputes the retention of a deposit is to apply to the court.

The question here is in any event not so much what the tenant's rights are, but who should be in control of the deposit. If the tenancy agreement says the deposit is to be paid to the landlord then it really ought to be in the landlord's hands notwithstanding any agreement between the landlord and the agent because the tenant is not a party to the management agreement. Abimsalabim needs to ask the agent where it says in the management agreement that the agent controls the deposit. If there is no such provision there is no justification whatsoever for the agent to retain the deposit. If there is something then the next question is how does the management agreement override the tenancy agreement. If the agent is still insistent that he must retain the deposit then tell him it is down to him to apply it as he sees fit or make an application to the court for directions as to its application.

[jpkeates]

The point does not though need considering for this particular thread as the tenant is a company and is not a consumer for the purposes of the CRA 2015.

Good point - I'd forgotten that!