Deposit protection claim/compensation - LPA Receivers

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    Deposit protection claim/compensation - LPA Receivers

    My basic question is, who should/can I file a claim against to 1) get my deposit protected/repaid and 2) the 3 x compensation?

    1) The Landlord ("LL") - in the process of being liquidated (no assets)
    2) LPA-Receiver ("LPA-R")
    3) Either LL or LPA-R
    4) Both LL and LPA-R

    And, subsequently, is the LPA-R's defense that they have never received/claimed/transfered the deposit from LL relevant/valid?

    Background:

    1) Assured short hold tennancy signed September 2007, now periodical and I am still renting it

    2) LPA-R appointed in August 2008

    3) Despite numerous attempts from me, the tenant ("T"), to urge LPA-R to ensure deposit is salvaged/transfered from original landlord ("LL"), LPA-R made little effort to make this happen

    4) LL has now is in the proceess of being liquidated, thus little chances that they could either pay me the deposit back, or transfer it to LPA-R

    5) I have received a notice from mydeposit 6 months back that my deposit is "unprotected"

    6) LPA-R refuses to protect deposit as "it was never paid to them"


    My understanding is:

    1) LPA-R is acting as an agent to LL

    2) LPA-R has accepted the tenancy agreement as it was originally worded by effect having accepted my rent payment, which started in Septebmer 2008 and has been fully and timely paid ever since. As such, they are liable my deposit, as it is, incl amount, stated in the tenancy agreement.

    As such, I should be able to file a claim against LPA-R.As there is no point filing against LL, as being liquidated and there are no assets to distribute. Or should I still claim against LL? Or both?

    Is the LPA-R's argument that they have never received the deposit a relevant/valid defense? My thinking is that it isn't for two reasons:

    1) The LPA-R act as an agent of LL

    2) LPA-R had more than a year to affect a transfer of the deposit from LL to themselves. But did no/very little attempt to make it happen. And does it even matter given their "agency status"?

    Any court ruling in this area yet, or will this be a first?

    #2
    Welcome to the wonderful world of deposit statute interpretation

    Originally posted by London Bridge View Post
    My basic question is, who should/can I file a claim against to 1) get my deposit protected/repaid and 2) the 3 x compensation?

    And, subsequently, is the LPA-R's defense that they have never received/claimed/transfered the deposit from LL relevant/valid?....

    Any court ruling in this area yet, or will this be a first?
    Yes, there has been a high court ruling. http://blog.painsmith.co.uk/2010/02/...cision-on-tdp/ Though the facts are different to your case (in the high court case, the agent had received the deposit), it does mean that whoever you claim against, the defendant can avoid the 3x sanction if he protects the deposit with the DPS before the hearing.

    The LPA-R is acting as the LL's agent so is theoretically liable (see s.212(9)(a) HA 2004), however, if you read the wording of s.214(3)

    (3)The court must, as it thinks fit, either—
    (a) order the person who appears to the court to be holding the deposit to repay it to the applicant, or
    (b) order that person to pay the deposit into the designated account held by the scheme administrator under an authorised custodial scheme,
    within the period of 14 days beginning with the date of the making of the order.
    it's arguable that the person holding the deposit isn't the LPA-R.

    But then there is s.214(4)
    (4)The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order.
    and here the word 'landlord' includes the agent under s.212(9)(a), but arguably is referring back to "the person who appears to...be holding the deposit".

    So, if LPA-R was the defendant, one can imagine a scenario in which they argue they are not "the person who..." so the court cannot "also" order them to pay 3x the deposit. You see the difficulty.

    I would say the risk of claiming against the LPA-R is quite significant, given that you would be exposed to their legal costs (non-compliance claims are dealt with in the multi-track) and there is a chance you'd lose. And if you claim against the LL it may be impossible to enforce a judgment, so you'd end up out of pocket for the court fees (which are high for the multi-track; the hearing fee alone is £1,000). See
    http://blog.painsmith.co.uk/2009/05/...or-tds-claims/
    http://www.hmcourts-service.gov.uk/c...0_web_1009.pdf

    This is not the first time this situation has arisen, with mydeposits un-protecting a deposit because of the LL going into receivership (which, to my mind, defeats the whole purpose of the so-called protection they offer). Tenants should insist (as part of negotiation for the tenancy) that LLs use either the custodial scheme (DPS) or the TDS, the latter having much stricter criteria for membership than mydeposits.

    An alternative solution to the problem might be simply not to pay the last month's rent. I wouldn't usually suggest this, but in your case it could be the only way you'll get your deposit back, given that the scheme, the agent and the landlord have all effectively washed their hands of it.

    Comment


      #3
      Originally posted by westminster View Post

      The LPA-R is acting as the LL's agent so is theoretically liable (see s.212(9)(a) HA 2004), however, if you read the wording of s.214(3)

      it's arguable that the person holding the deposit isn't the LPA-R.

      But then there is s.214(4)

      and here the word 'landlord' includes the agent under s.212(9)(a), but arguably is referring back to "the person who appears to...be holding the deposit".

      So, if LPA-R was the defendant, one can imagine a scenario in which they argue they are not "the person who..." so the court cannot "also" order them to pay 3x the deposit. You see the difficulty.
      Many thanks for your thorough response!

      It squarely comes down to, I guess, who "appears to be holding the deposit". And as you say, the defense is that the LPA-R isn't.

      However, could it be argued that "they (LPA-R) should"? Given that they had more than a year to salvage/transfer it from the LL but have failed to? Mostly due to their own inaction. I have chased both LPA-R and LL frequently and put a lot of effort into this and LPA-R has repeatedly assured me many times that they will do it and are pursuing it. Initially the LL told me they had no issue with it but were just waiting for instructions from LPA-R, that never materialised. So, to my mind the fact that LPA-R isn't "holding", or "appear to hold" perhaps, the deposit is down to their own failure/mismanagement.

      Can the LPA-R "appear to be holding the deposit" on the merit that they ought to?

      I as a tenant have done all that I can, and nothing wrong, while the LL is being liquidated and LPA-R has failed to salvage my deposit over a long period of time, and accepted the tenancy agreement, which the deposit is documented it. Someone must be liable for it?

      Or is really withholding the last month's rent my best/safest option?

      Comment


        #4
        Originally posted by London Bridge View Post
        So, to my mind the fact that LPA-R isn't "holding", or "appear to hold" perhaps, the deposit is down to their own failure/mismanagement.

        Can the LPA-R "appear to be holding the deposit" on the merit that they ought to?
        There is no obligation for the agent to get the deposit from the landlord, and no law which would oblige the landlord to give it to the agent.

        Someone must be liable for it?
        The landlord is inescapably liable, the LPA-R possibly liable. But as I said above, it would be a high risk strategy to pursue a non-compliance claim against either of them. Certainly not something to be undertaken without first obtaining professional legal advice from a lawyer specialist in this field.

        Or is really withholding the last month's rent my best/safest option?
        That's for you to decide, but it's definitely low risk compared to legal action. I might have one last stab at it and call the bluff of the LPA-R; send them a copy of the statute with the relevant passages highlighted (inc. s.212(9)(a)), pointing out that they are legally liable for deposit protection (even though we know it's not quite as black and white as this).

        Here's the statute: s.212 - s.215 Housing Act 2004
        http://www.opsi.gov.uk/ACTS/acts2004..._en_19#pt6-ch4

        Comment


          #5
          Originally posted by westminster View Post
          There is no obligation for the agent to get the deposit from the landlord, and no law which would oblige the landlord to give it to the agent.
          So the argument that the LPA-R has accepted the tenancy agreement, in which the deposit is clearly defined, incl amount, doesn't strenghten the case/argument against them being liable for it? The "appear to be holding" passage in the law is superceding the obligations as set out in the tenancy agreement?

          Would you be able to reccomend a solicitor specialising in a case like this?

          Again, many thanks for your thorough responses!

          Comment


            #6
            I do not see how the LPA receiver could have done anything to get the deposit transferred to him. Nor can I see how in any sense the receiver can be deemed to be holding the deposit or ever to have held it.

            As a lawyer I could not possibly recommend that you withhold the last month's rent...

            Comment


              #7
              Any Receiver is merely the representative of a creditor, not of L.
              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).

              Comment


                #8
                My understanding is that an LPA Receiver is indeed acting as an agent of the LL, albeit appointed by the mortgate bank. It is the power that enable LPA-R to redirect rentpayment to him/her and also step into the other rights/obligation of the LL.

                And most certianly the LPA-R has the power to get the deposit transfered to him/her. That is at least what these LPA-R assured me they would do, but never did.

                Comment


                  #9
                  Originally posted by London Bridge View Post
                  My understanding is that an LPA Receiver is indeed acting as an agent of the LL
                  I agree. Section 109 (2) LPA 1925 says:

                  A receiver appointed under the powers conferred by this Act, or any enactment replaced by this Act, shall be deemed to be the agent of the mortgagor

                  Originally posted by London Bridge View Post
                  And most certianly the LPA-R has the power to get the deposit transfered to him/her. That is at least what these LPA-R assured me they would do, but never did.
                  If the deposit had been paid to a third party then you and the receiver acting together could have required the third party to pay it to the receiver. However in this case the deposit was paid to the landlord. An LPA receiver has no power to extract money from the mortgagor.

                  Comment


                    #10
                    Originally posted by London Bridge View Post
                    So the argument that the LPA-R has accepted the tenancy agreement, in which the deposit is clearly defined, incl amount, doesn't strenghten the case/argument against them being liable for it? The "appear to be holding" passage in the law is superceding the obligations as set out in the tenancy agreement?
                    I'm not sure whether the LPA-R can be said to have "accepted" the full responsibilities of the landlord (for example, s.11 repairing obligations) if they are merely his agent? But I have zero knowledge of the legal status of LPA-Rs, I'm just going by what would be the case if this were a standard situation involving a landlord and an agent he'd instructed to act on his behalf.

                    Originally posted by London Bridge View Post
                    Would you be able to reccomend a solicitor specialising in a case like this?
                    Try PainSmith, the firm whose blog I linked to above. They acted on behalf of the appellant in the High Court deposit case.

                    Comment


                      #11
                      Originally posted by London Bridge View Post
                      My understanding is that an LPA Receiver is indeed acting as an agent of the LL, albeit appointed by the mortgate bank. It is the power that enable LPA-R to redirect rentpayment to him/her and also step into the other rights/obligation of the LL.

                      And most certianly the LPA-R has the power to get the deposit transfered to him/her. That is at least what these LPA-R assured me they would do, but never did.
                      I agree. The LPA-R is the agent of the creditor (C), appointed by C but statutorily deemed to represent the debtor/mortgagor, L in this case.
                      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).

                      Comment


                        #12
                        Originally posted by jeffrey View Post
                        I agree. The LPA-R is the agent of the creditor (C), appointed by C but statutorily deemed to represent the debtor/mortgagor, L in this case.
                        Ok. So what do you think about the potential/risk to file a claim for the deposit + compensation against the LPA-R given the circumstances as explained? Could it be sucessful on the basis that LPA-R is acting as an agent to LL despite not "appearing to hold the deposit"?

                        Comment


                          #13
                          Originally posted by London Bridge View Post
                          Ok. So what do you think about the potential/risk to file a claim for the deposit + compensation against the LPA-R given the circumstances as explained? Could it be sucessful on the basis that LPA-R is acting as an agent to LL despite not "appearing to hold the deposit"?
                          The best answer I can come up with without thinking the matter through is that the receiver could not be under any obligation to pay the deposit or any compensation unless he had surplus moneys in hand. Bearing in mind section 109 (8) LPA 1925 the chances of there being a surplus before any sale have to be remote. The sub-section says:

                          Subject to the provisions of this Act as to the application of insurance money, the receiver shall apply all money received by him as follows, namely:
                          (i) In discharge of all rents, taxes, rates, and outgoings whatever affecting the mortgaged property; and
                          (ii) In keeping down all annual sums or other payments, and the interest on all principal sums, having priority to the mortgage in right whereof he is receiver; and
                          (iii) In payment of his commission, and of the premiums on fire, life, or other insurances, if any, properly payable under the mortgage deed or under this Act, and the cost of executing necessary or proper repairs directed in writing by the mortgagee; and
                          (iv) In payment of the interest accruing due in respect of any principal money due under the mortgage; and
                          (v) In or towards discharge of the principal money if so directed in writing by the mortgagee;
                          and shall pay the residue, if any, of the money received by him to the person who, but for the possession of the receiver, would have been entitled to receive the income of which he is appointed receiver, or who is otherwise entitled to the mortgaged property.


                          I think we also need to bear in mind that the compensation does not arise under the tenancy. The obligation to pay is a personal one which arises from a failure to protect the deposit.

                          Comment


                            #14
                            Note that '...apply all money received by him...' reference in line 1. The deposit was not.
                            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).

                            Comment


                              #15
                              Ok. Is there a way to get the deposit back from the ultimate owner of the liquidated company (which was the LL)?

                              I just can't belive that I as a tenant have no protection at all from the law in regards to my deposit in a situation like this.

                              Comment

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