Ownership vs landlordship - and myDeposits approach

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    Ownership vs landlordship - and myDeposits approach

    I am getting a variety of inconsistent views on a deposit protection issue. My understanding is that ownership of a property and being a landlord are dissociated concepts:

    i.e. that :

    - a part-owner who is not a named landlord does not carry the obligations of a landlord simply by virtue of ownership.

    - a named L does not need to be named owner,
    and ONE landlord (not all landlords or all owners) has to protect the deposit on behalf of all landlords (not on behalf of all owners).

    - a T who sublets with his own sub-AST might collect a separate deposit, and have to protect that separately - but is not an owner.

    - I might have 100% beneficial interest in a property, and yet not be named at all on HMLR records. The 0% owner (and non L) who has 100% of the title is not the person obligated to protect deposit (and should not do so).

    I would have thought that this should be bread and butter material (unless I am severely misled), but myDeposits call handlers do not seem to have a clear grasp of the position and are suggesting that I am doing something wrong.

    In my case, one of my properties is owned only by myself, but my wife and I are named as joint landlords. Another property is owned by me, and my wife is named as the sole landlord (I pay all of the tax in both instances). My understanding is that this is a perfectly legitimate management approach and does not require any justification. One of the landlords (my wife) protects the deposit. I regard that as all fine.

    I cannot find any reference on their website to the effect that a protecting landlord is synonymous with an owner (and has to be the HMLR title holder). I'm a little concerned that in the case of any deposit dispute I might encounter difficulty.

    To reword all of the above as a simple question - why on earth is it not right for my wife, a clear landlord (but not owner), to protect a deposit.

    Any clear views from anyone out there?

    #2
    No answers for you but I had a call from My Deposits this week asking why the deposit was in my name only when my other half and I are both the landlords. They must be tidying up their paperwork!

    Comment


      #3
      If you or your wife do not own any part of a property by what legal mechanism (eg a tenancy permitting subletting) do you have the right to be landlord?
      I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

      Comment


        #4
        Then how do letting agents, who are not the owners of the property,
        get the deposit protected ? Nor are they the Landlord, and on
        "Find tenant only" services, the agent is not acting on behalf the
        landlord to administer the property, as "Find only" writes out the
        A.S.T. with the landlords name and address on as bing the landlord.

        Something wrong somewhere if an owner or landlord cannot
        protect the deposit, giving all details.

        Comment


          #5
          A lot of issues in one post! I'll try and untangle it.

          IN England what we think of as 'ownership' is actually a tenancy from the crown. We don't own the land we merely own an interest in it, known as an estate. Each estate has a legal owner and the form of ownership is limited by the LPA 1925. So the only form of legal ownership is a Joint Tenancy, limited to 4 people. All other types of interests are equitable interests. So to have a tenancy in common, you might have two legal owners who hold the legal joint tenancy (they both 'own' title at the same time), but they hold the equitable title of trust for themselves (!) in unequal shares.

          If you carry this on you can get to the situation where the legal owner has no equitable interest in the title. As you might have guessed it is the equitable interest that is important here and will determine the true state of 'ownership'. While it is possible to hold equitable interests which are not registered, this is very uncommon since compulsory land registration and the cases were this can happen are very rare now. Hence if you have a 100% beneficial interest that is not on the Land Registry, you either hold unregistered land or you are running the risk of losing your interest.

          So, for our purposes here the 'owner' should be on the land register. Each 'owner' who has a right to possession can enter into a tenancy and hence act as the landlord and protect deposits etc.

          Hence to be a 'landlord' you must hold an interest in the land. Someone who does not hold an interest has no rights to lease to the tenant, and so no tenancy exists (although the 'tenant' may still be protected). Someone on an AST holds an interest in the land and they can 'sell' (assign) this interest to a subtenant and be a LL too.

          However you can also 'act' as the landlord if you are appointed as the landlords agent. This is how letting agents act and how your wife acts, i.e. in your name. But the agent is not the LL and must identify the LL by law (s48 LLATA 1987).

          How you receive rents and account for the income is a different issue, look in the tax forum here to find a wealth of material on how HMRC view this. But basically they expect those with an equitable interest in the land to be sharing the profits.

          Originally posted by AndrewDod View Post
          To reword all of the above as a simple question - why on earth is it not right for my wife, a clear landlord (but not owner), to protect a deposit.
          Simple answer, your wife is not the landlord, she is your agent. She can protect the deposit as a letting agent can if she has clear authority from you to do so. Although, probably the deposit schemes have different requirements for agents.

          Clear? Probably not!
          caveat emptor
          If it sounds like I know what I am talking about........I don't.

          Comment


            #6
            Many thanks to all, especially Wight Knight for very useful information and thoughts.

            The summary I take from the above is that a landlord has to be an owner on the title, but surely a beneficial owner with formal status (some sort of restriction registered with HMRC for example) can also be L. For anyone else, the tenancy agreement should specifically state that the person acts as agent for L.

            What of the converse? If someone is a part-owner and named on title, but is NOT a named landlord, does that person carry any of the obligations and liabilities of L (apart from payment of tax) simply by virtue of ownership. So, I take it that a majority-share tenant in common can be named as sole L (if there is a dispute between co-owners that is immaterial to the contract between T and L, I imagine). If named L were to then fail to carry out safety obligations, kills T, or illegally evicts T, could they come after co-owners who are not landlords or party to the agreement?

            Comment


              #7
              Quoting Lawcruncher commenting in a similar thread:

              Originally posted by Lawcruncher View Post
              What we have is a case of "undisclosed agency".

              First, the agent is clearly acting as agent because he was instructed to act as an agent. The situation is therefore quite different from the one where property belongs to A and B, without A's knowledge, grants a tenancy to C. Accordingly the client is the landlord.

              If an agent enters into a contract without disclosing he is an agent then he is personally liable to the other party to perform the contract. It may come down to what is in the contract. If words such as "on behalf of the owner" "acting for the landlord" appear (even without naming the landlord) the the agent is probably in the clear. On the other hand if the agreement describes the agent as "the landlord" and there is otherwise no indication that the agent is acting as agent, then the agent will be liable. The fact that the agent is liable does not affect the landlord's liability or his ability to enforce the contract.

              (1) An undisclosed principal may sue and be sued on a contract made by an agent on his behalf, acting within the scope of his actual authority.
              (2) In entering into the contract, the agent must intend to act on the principal’s behalf.
              (3) The agent of an undisclosed principal may also sue and be sued on the contract.
              (4) Any defence which the third party may have against the agent is available against his principal.
              (5) The terms of the contract may, expressly or by implication, exclude the principal’s right to sue, and his liability to be sued. The contract itself, or the circumstances surrounding the contract, may show that the agent is the true and only principal.


              Siu Yin Kwan v Eastern Insurance Co Ltd

              Comment


                #8
                Originally posted by AndrewDod View Post
                Many thanks to all, especially Wight Knight for very useful information and thoughts.

                The summary I take from the above is that a landlord has to be an owner on the title, but surely a beneficial owner with formal status (some sort of restriction registered with HMRC for example) can also be L. For anyone else, the tenancy agreement should specifically state that the person acts as agent for L.
                So, going back to my earlier post, 'title' effectively has two levels of ownership. The first level is legal title, these are the trustee(s) of the title. Legal owners do not have rights of occupancy. The second level is the equitable title - the beneficiaries, these have rights of occupancy and are the people that actually own the title, either as Joint Tenants or Tenants in Common. Only an equitable owner can deal with the property (ie lease, sell etc). In most cases the trustees and beneficiaries will be the same.

                So, a 'beneficial owner' is an equitable joint tenant or tenant in common. The only formal way they can be on the registry is listed as someone with an equitable interest. It is possible that someone could hold an unregistered equitable interest, but you run the risk of your interest being extinguished on sale or transfer (or death of co-owner), in addition you won't be able to act on your share. Effectively, until you register your interest you cannot benefit from it

                There are many other types of people who hold interests via restrictions and charges etc. But these do not hold the right to create or dispose of the property, with the exception of a mortgage charge, but even here it is actually the court which effectively forces the owner to sell.

                All registering the income with HMRC should be doing is telling them the division of the equitable title. You cannot just declare one owner to be receiving all the income afaik.

                Originally posted by AndrewDod View Post
                What of the converse? If someone is a part-owner and named on title, but is NOT a named landlord, does that person carry any of the obligations and liabilities of L (apart from payment of tax) simply by virtue of ownership. So, I take it that a majority-share tenant in common can be named as sole L (if there is a dispute between co-owners that is immaterial to the contract between T and L, I imagine). If named L were to then fail to carry out safety obligations, kills T, or illegally evicts T, could they come after co-owners who are not landlords or party to the agreement?
                This hinges on the issue of consent. http://www.landlordzone.co.uk/forums...r-alone-let-it

                Basically if a joint owner consents to the let, then they will be party to the contract and bound by all the usual obligations jointly and severally. So the tenant can choose which landlord he is going to sue, they are both 100% responsible.

                If a joint owner does not consent, then they are not party to the contract. Under the doctrine of privity of contract they cannot be liable.

                Bear in mind you can have express and implied consent. Implied consent can also be by conduct, so if I know you are letting our jointly owned house and take no action, the court can read this as my implied consent.

                As you can see, there are issues here to do with tax fraud and money laundering - this might be why the deposit and letting agencies have a duty to ensure that the 'landlord' really is someone who has the correct legal standing and consent. I read somewhere that HMRC are now systematically checking tax records against the land registry and so forth to try and spot this kind of evasion.

                Great re-post from lawcruncher via westminster there.
                caveat emptor
                If it sounds like I know what I am talking about........I don't.

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