Deposit protection obligation: LPA Receiver or original landlord?

[SE1 Tenant]

Hi all,

Let me first summarise the situation at hand:

- Landlord ("LL") defaulted on the mortgage and LPA Receiver ("LPA-R") was appointed in july 2008.

- LPA-R has received rent on time from me ever since their appointment and has accepted the STA has it was originally signed with LL, in which the deposit is documented (i.e. no new STA has been issues/signed after the LPA-R was appointed, but they have reviewed and accepted it)

- LL originaly protected the deposit through mydeposit.co.uk but this protection has now expired

- I paid my deposit originally to LL and LPA-R has not successfully transferred it from LL (nor have they made any serious attempts to do so)

I am now in a situation where the LPA-R says they won't protect my deposit as, according to them, the original LL still holds the deposit.

Personally I believe that to be wrong as the LPA-R has accepted me as a tenant, on the basis of the original STA in which the deposit is document and I have timely been paying the rent to the LPA-R ever since their appointment. The LPA-R having the powers to collect rent I believe they should also be obliged by all the landlord's contractual and statutory dutys toward the the tenant - but is this really the case?

Who has the legal obligation in regards to my deposit (to protect it and to return and at the end of tenancy) and who can I, if needed, file the 3 times deposit claim in the County Court against? The LPA-R (and defacto landlord) or the original LL (who still holds the deposit)?

Many thanks in advance for any information that could help me with this situation.

[westminster]

Who has the legal obligation in regards to my deposit (to protect it and to return and at the end of tenancy) and who can I, if needed, file the 3 times deposit claim in the County Court against? The LPA-R (and defacto landlord) or the original LL (who still holds the deposit)?

I don't know who is now technically responsible for deposit protection, and IANAL but I'm replying as nobody else has. I assume that by STA you mean Assured Shorthold Tenancy (AST).

However, it's unclear from your post as to whether anyone is obliged to re-protect the deposit; you say the mydeposits.co.uk protection has "expired" - are you sure of this, because AFAIK LLs are not obliged to re-protect unless a new tenancy agreement has been issued - and from the sound of it this hasn't happened - is it now a periodic tenancy? If so, then the protection may still be in place.

Back to the original question, the deposit legislation is in the following link:
http://www.opsi.gov.uk/ACTS/acts2004..._en_19#pt6-ch4
(N.B. It is notoriously poorly drafted, and leaves some room for 'interpretation').

You'll note that under s.214 "Proceedings relating to tenancy deposits" it says in s.214(3) that the court can order "the person who appears... to be holding the deposit to repay it to the applicant".

So, if the LL hasn't handed over the deposit to the LPA-R, he would seem to be the person responsible.

If you issue a claim for return of the deposit only, you could always name both LL and LPA-R as co-defendants; that way, they'll have to argue it out as to who is liable (not really your problem). The claim will be allocated to the small claims track where court fees are low and you are not exposed to the defendant's legal costs.

If you want to claim for the 3x penalty, it would be highly advisable to seek legal advice first as you may be exposed to the defendant's legal costs if you lose - don't even think about issuing a claim without first establishing beyond doubt 1) that the deposit is not protected, 2) the identity of the defendant.

[SE1 Tenant]

Many thanks for your response.

A few follow-up questions and some clarifications:

1) Yes, you are right, I did indeed mean AST

2) The AST has expired but we continue to pay, on LPA-R's instruction, the rent accoridng to the AST. Does that mean that is not a "periodic tenancy"?

3) In regards to LLs obligation to the deposit (protection and return of it), does it differ if I now have a "perioic tenancy" instead of an AST?

4) Yes, I'm pretty sure the mydeposit.co.uk has expired as I have received a letter from them saying that the LL "is no longer a Member of this Scheme" and continues "As a consequence, the deposit held by them on your behalf will cease to be protected by the Scheme......."

5) Question then remains is it the original LL (who still holds the deposit) or the LPA-R that is obliged to protect (and return when that time comes) the deposit? Again, personally, it seems more logical to me that if the LPA-R has been given the powers and beneft to collect rent and step into the LLs obligation in all other respects, that they should also inherit all the obligations related to the deposit and it should therefore be in their best interes to recover/transfer the deposit from the original LL. Having failed, or as in this case not even attempted to do so, should not relieve them from the obligations of protecting and returning the deposit. But, again, this is the core of my problems. Unless I know who I can legally make my claim for deposit return + the 3 times deposit they can just keep on playing me off against the other. Which they do.

Again, many thanks for any further information or clarification that could help me get to the bottom with this and protect my deposit.

[SE1 Tenant]

Additional info: The last AST that was signed was dated September 2007 so the Periodic Tenancy effectively started September 2008.

Thnx

[westminster]

2) The AST has expired but we continue to pay, on LPA-R's instruction, the rent accoridng to the AST. Does that mean that is not a "periodic tenancy"?

You have a periodic tenancy. It began the day after the fixed term expired. All terms in the original contract still apply, except for those relating to giving notice. Statutory notice periods now apply - 1 month for you, 2 months for LL, notice to expire at the end of a rental period, i.e. if fixed term expired 15th September, periods run 16th - 15th of the month.

In regards to LLs obligation to the deposit (protection and return of it), does it differ if I now have a "perioic tenancy" instead of an AST?

No. You still have an AST, just a periodic one. Your deposit should still be protected.

Yes, I'm pretty sure the mydeposit.co.uk has expired as I have received a letter from them saying that the LL "is no longer a Member of this Scheme" and continues "As a consequence, the deposit held by them on your behalf will cease to be protected by the Scheme......."

I've never heard of this happening before. I think what would normally happen is that, when a fixed term expired and became periodic, no re-protection would be required; re-protection only necessary if you'd signed a brand new contract.

Question then remains is it the original LL (who still holds the deposit) or the LPA-R that is obliged to protect (and return when that time comes) the deposit? ....Unless I know who I can legally make my claim for deposit return + the 3 times deposit they can just keep on playing me off against the other. Which they do.

As I said before, you must get legal advice if you wish to pursue a 3x deposit claim.

On the face of it, you do not have grounds to make an application under s.214(1) - LL originally complied with protection - so this is another potential stumbling block. It could be argued that the obligations only arise when a deposit is paid, and it hasn't since been re-paid (either to LPA-R or in relation to a new contract).

There is also the possibility that mydeposits.co.uk is in some way liable. One might question their ability to arbitrarily cancel protection. It may breach their obligations under Schedule 10 of the Housing Act 2004
http://www.opsi.gov.uk/ACTS/acts2004...34_en_34#sch10

In short, it's potentially a legal minefield. Although *somebody* is responsible, you may end up having to accept that it's inadvisable to proceed with such a claim, and settle for the low-risk option of issuing a claim just for return of the deposit at the end of the tenancy against LL & LPA-R.

[SE1 Tenant]

Westminster, many thanks for your extensive response! Incredibly helpful!

One clarifying point/question:

==============
Quote:
Yes, I'm pretty sure the mydeposit.co.uk has expired as I have received a letter from them saying that the LL "is no longer a Member of this Scheme" and continues "As a consequence, the deposit held by them on your behalf will cease to be protected by the Scheme......."

I've never heard of this happening before. I think what would normally happen is that, when a fixed term expired and became periodic, no re-protection would be required; re-protection only necessary if you'd signed a brand new contract.
===================

I called mydeposit.co.uk and asked if the deposit was protected and they confirmed that, no, it had expired.

I had the impression that LLs pay for this protection on a periodic basis, usually in line with the dates of the tenancy agreement, and will need to be renewd on a periodic basis - either if new tenancy agreement is signed or if not in line with Periodic Tenancy on some ongoing basis.

But, are you saying that when it becomes a Periodic Tenancy that no new "insurance fee" need to be paid by the LL to mydeposit.co.uk (if then now use his scheme)?

Again, many thanks for your, and anyone elses, input!

[westminster]

I called mydeposit.co.uk and asked if the deposit was protected and they confirmed that, no, it had expired.

I had the impression that LLs pay for this protection on a periodic basis, usually in line with the dates of the tenancy agreement, and will need to be renewd on a periodic basis - either if new tenancy agreement is signed or if not in line with Periodic Tenancy on some ongoing basis.

But, are you saying that when it becomes a Periodic Tenancy that no new "insurance fee" need to be paid by the LL to mydeposit.co.uk (if then now use his scheme)?

I honestly don't know how each of the schemes operate, as my letting agent handles my tenants' deposits. Perhaps LL was indeed obliged to pay an annual fee, failing which the protection was cancelled.

It just struck me as very unusual; we get a lot of posts on the forum about LLs failing to protect the deposit, I also read a few landlord&tenant/legal blogs which report deposit protection claims and I've never heard of this scenario before. It also seems counter-intuitive to the purpose of the schemes, (i.e. to protect the deposit against LL or agent disappearing with the money etc), if protection can be cancelled at the drop of a hat.

[worzelgummage]

I'd be tempted to hold back the last x months rent to cover the deposit in this situation.

[havensRus]

fallen between the cracks

SE1Tenant, I believe you have unfortunately fallen between the cracks on this matter. As I use mydeposits myself, I've had a look at the rules, and think I can explain what's happened.

1. The LL is now subject of a receivership, which is against the rule A1.3.6 of MyDeposits.co.uk

2. MyDeposits have cancelled the LL membership as per their rule A3.1.5 because of the appointment of a receiver. It may also be that the LL did not renew his/her membership, as required in A2.1 and A2.2.

3. However, having had the membership cancelled, in accordance with Rule A5.1, the deposit continued to be protected but only for 90 days maximum, after the memebership was cancelled. Which is when you probably received the letter informing you of the cancellation.

The normal process is that once a deposit is registered, it is protected for the lifetime of the tenancy, whether in fixed or periodic status. If a new AST is issued, then the deposit needs to be reprotected. You have no new AST, so there was no need to reprotect it.

My view is that

1. Mydeposits should have informed you as soon as the LL's membership was cancelled or not renewed, not wait until after the 90 days. You would then have had 90 days to sort something out with the LL. This is another flaw in the deposit scheme. You should write to them and ask for an explanation of why the deposit protection has ended.

2. The LPA receiver should have asked for and collected the deposit from the LL as part of their management of the property, or at least ensured that protection was still in place. However, I suspect the LPA-R have no clue about the issues of the deposit protection anyway, and so did not take the steps necessary to secure it. Ignorance is not an excuse though!!

Conclusions:

1. Mydeposits have a case to answer for not informing you that the deposit was at risk. Big loophole there that needs plugging.

2. The deposit is still being held by the LL and you will need to issue a court claim to get it back. Whilst you may win, the LL may not have the readies to pay it back - hence the receivership!!

3. The LPA-R has been negligent, and I believe you have a case against them for not ensuring the deposit was secure or in a Client Account.

4. I think there is merit in a joint liability case LL and LPA-R.

5. You are not likely to get any of that money back unless you fight your corner hard.

[havensRus]

I'd be tempted to hold back the last x months rent to cover the deposit in this situation.

I will not advise doing that without first informing the LPA-R or giving them a chance to resolve the matter. Else the OP will find themselves being evicted for non-payment of rent. The LPA-R will not be merciful....

[havensRus]

I honestly don't know how each of the schemes operate, as my letting agent handles my tenants' deposits. Perhaps LL was indeed obliged to pay an annual fee, failing which the protection was cancelled.

Yes, an annual membership fee is required. The scheme can cancel membership if this is not received (Rule A2.1, A2.2 and A3.1.1)

It also seems counter-intuitive to the purpose of the schemes, (i.e. to protect the deposit against LL or agent disappearing with the money etc), if protection can be cancelled at the drop of a hat.

It is a major flaw that a scheme that is designed to protect the T's money, actually fails to do so in this case.
But its like any insurance scheme, non payment of premiums means insurance is cancelled. Or falling foul of one rule or the other. I suspect in this case, its a combination of receivership and non-renewal of membership.

[SE1 Tenant]

Again, what incredibly helpful these comments are. Thanks you so much!

A few more clarifying points/questions:

- To my knowledge I belive that the origional LL is still in business and defaulted on a select few of their morgages, incl the flat I rent is financed with. That's the impression I have but don't know for sure (website still up and running, people answer when I call office etc)

- Mydeposit.co.uk did indeed inform me when the LL were "no longer Member of this Scheme" so I am still within the 90 day period (roughly a month and a half left).

I called mydesit.co.uk and asked for the reason of why my original LL was no longer a memeber, but there were not allowed to answer that.

She suggested, with the caveat that she cannot give legal advice off course that:

1) Write to my landlord and ask for the deposit being reprotected or returned within 10 days,

2) if that doesn't happen use mydeposit.co.uk's claim procedure

How does that sound? Is there any point/can I use mydeposit.co.uk's claim procedure even if I still live in the flat (ableit pay rent to LPA Receiver)?

[westminster]

It is a major flaw that a scheme that is designed to protect the T's money, actually fails to do so in this case.
But its like any insurance scheme, non payment of premiums means insurance is cancelled. Or falling foul of one rule or the other. I suspect in this case, its a combination of receivership and non-renewal of membership.

It's also very different to commercial insurance insofar as the deposit schemes are, I believe, not-for-profit, and exist purely to protect deposits against failures by LLs/agents. What on earth is the point if the deposit is only protected so long as LLs dutifully pay their annual fee, or don't go bankrupt etc - doesn't protect against 'bad' LLs, the very thing it's meant to protect against.

It should be the case that, once a deposit is protected, it stays protected regardless of LL's failings.

I note that rule A3.1.3 says that members are forbidden from unprotecting a protected deposit without the knowledge or agreement of the tenant - yet it's okay for mydeposits to do this?! Further irony in the fact that the consequence of breaching rule A3.1.3 is...cancelling membership, thereby cancelling the deposit protection.

[westminster]

- Mydeposit.co.uk did indeed inform me when the LL were "no longer Member of this Scheme" so I am still within the 90 day period (roughly a month and a half left).

Meaning the deposit is still protected after all - ?

1) Write to my landlord and ask for the deposit being reprotected or returned within 10 days,

2) if that doesn't happen use mydeposit.co.uk's claim procedure

How does that sound? Is there any point/can I use mydeposit.co.uk's claim procedure even if I still live in the flat (ableit pay rent to LPA Receiver)?

I would follow this advice, and fast, before the protection expires. I think you could argue that tenancy with original LL has ended (assuming you can produce letter from LPA-R stating they are the new LL). Definitely worth a go - LL will have to lodge the disputed sum with mydeposits when you raise a dispute (failing which the scheme is meant to pay you). Send letter to LL first class, keep a copy, and get a free certificate of postage as proof of delivery.

[SE1 Tenant]

Great. Thanks.

Is email not good enough? Even with a "delivery recepit"?