Agents Gone Bust

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  • Agents Gone Bust

    Sorry if this repeats a previous thread but I could really do with some advice. The letting agency I am with has disappeared (shut down) and currently has my deposit of £590.

    I moved out of the property last week and am currently in contact with my landlord and would like to know where I stand. The deposit should have been held in a stakeholder account. She has agreed that I left the property in a satisfactory conditon.

    However, she is suggesting that the deposit money is mine and as such was held on my behalf so I have lost the money. I however believe that the landlord has a responsibility to pay me back my deposit even though the agency has gone bust.

    The query gets more complicated as I signed for a new property with the agents before they went bust and gave a further £110 deposit for it. However I didn't take the property as I couldn't contact the agency or landlord. Is there any way I can get this money back?

    Regards

    Boris

  • #2
    No end of hassle

    Sorry to learn about your situation.

    The previous landlord is responsible for returning your £590 deposit. Take them to court if they fail to pay.

    Depends what exactly the £110 covered. What did you sign on handing over this money? Was it a new AST or some kind of holding deposit?

    Comment


    • #3
      I agree with Poppy. Deposit is tenant's money and should be held by Agent in a client account.
      Agent is an arm of the L, so his actions are imputed to L. It follows that L has deposit, because his agent does, so L is contractually bound to return it.
      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


      • #4
        The £110 was given to the agent when signing the new AST, this was for our new property. However as we had problems contacting the Landlord we decided not to take it as we couldn't contact him and were moving in a week.

        We therefore had to sign for a new place. We have since made contact with the original landlord (£110 place) and he agreed to terminate the tenancy. The Landlord has however not received any money from the agents. Where do I stand in getting my £110 back.

        Regards
        Boris

        Comment


        • #5
          Let's just explain the legal principle here (sublect to Jeffrey's vastly superior knowledge): The agency had a contract with the landlord to represent him, so everything you did with the agent was on the landlord's behalf. Your contract was with the landlord, not the agent, even if you never saw the landlord or he did not sign your AST agreement as the agent signed it on behalf of the landlord and in accordance with his instructions. Now, all monies you handed over were accepted by the agent on behalf of the landlord, thus as you only have a contract with the landlord, you look to him, via court action if necessary for a refund of any deposits paid. The landlord in turn then takes the appropriate action against his agent to recover this money. Any legal action you tke against the agent will therefore fail as you did not have a contract with him.

          BUT

          You state that the first deposit you paid should have been held by the agent in a stakeholder's account. If this means that the money was held by the agent as a stakeholder, it means that he sits on the money and only releases it to either party when authorised by the other. It is therefore possible that you did have a form of contract with the agent and you may be able to take action against him.
          Perhaps one of our experts would care to comment further.

          P.P.
          Any information given in this post is based on my personal experience as a landlord, what I have learned from this and other boards and elsewhere. It is not to be relied on. Definitive advice is only available from a Solicitor or other appropriately qualified person.

          Comment


          • #6
            Originally posted by P.Pilcher View Post
            Let's just explain the legal principle here (sublect to Jeffrey's vastly superior knowledge): The agency had a contract with the landlord to represent him, so everything you did with the agent was on the landlord's behalf. Not necessarily - their administration charges are nothing to do with the landlord which I would suggest is the £110. Your contract was with the landlord, not the agent, even if you never saw the landlord or he did not sign your AST agreement as the agent signed it on behalf of the landlord and in accordance with his instructions. Now, all monies you handed over were accepted by the agent on behalf of the landlord, thus as you only have a contract with the landlord, you look to him, via court action if necessary for a refund of any deposits paid. The landlord in turn then takes the appropriate action against his agent to recover this money. Any legal action you tke against the agent will therefore fail as you did not have a contract with him. Only the dilapoidations deposit is the responsibility of the landlord. You're making complicated issues that don't exist

            BUT

            You state that the first deposit you paid should have been held by the agent in a stakeholder's account. If this means that the money was held by the agent as a stakeholder, it means that he sits on the money and only releases it to either party when authorised by the other. Absolutely nothing to do with the agent having gone bust, and as they were holding the deposit it must be returned to the tenant by the landlord, less dilapidations It is therefore possible that you did have a form of contract with the agent and you may be able to take action against him. Most unlikely to extract any money as such.
            Perhaps one of our experts would care to comment further.

            P.P.
            You haven't really thought this through
            The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

            Comment


            • #7
              I contend that if the contract actually states that the agent is acting as a stakeholder, then he is acting independently of the landlord and would therefore be liable for the deposit. The landlord has no access to this deposit without the express approval of the tenant.

              It looks like I disagree with the majority on this one.
              ASSUME NOTHING - QUESTION EVERYTHING!

              Comment


              • #8
                Further to my previous post, I now contend that if the agent is acting as a stakeholder, he is then holding the deposit for the benefit of both the tenant and the landlord, and would be unable to release any funds without an agreement between the two. Should there be a dispute, then the agent's obligations are to turn the funds over to the court until final settlement.

                As the agent has disappeared with the funds, it is then the responsibility of both the tenant and the landlord to jointly pursue the agent as co-plantiffs againt the agent, the defendant.
                ASSUME NOTHING - QUESTION EVERYTHING!

                Comment


                • #9
                  Sorry if this link goes out of date:
                  http://www.residentiallandlord.co.uk/feature.htm

                  "Sometimes, where an agent is involved, the tenancy agreement will say that the agent is holding the deposit as ‘stakeholder’. This means that the agent holds the money in a separate trust account and is responsible for it. At the end of the tenancy, it is the agent that is responsible for deciding whether any deductions should be made, not the landlord. If the agent does not hold as stakeholder, then legally the firm is always acting for the landlord and it is the landlord who has ultimate responsibility (although in practice most landlords just leave it up to the agents)."

                  Seems to support Parragons view???
                  All posts in good faith, but do not rely on them

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                  • #10
                    No, being a stakeholder only states how the deposit is held. The ultimate responsibility is for the landlord to refund the deposit to the tenant, as the deposit belongs to the tenant and the agent works for the landlord. The landlord would then chase the agent for a refund.

                    Another reason why I never use agents and on the rare occasions that I have done, they never hold deposits for me.

                    Was the agent ARLA registered and therefore presumably bonded?

                    Comment


                    • #11
                      Very good article by Tessa Shepperson. Many thanks Bel. Good research. You picked up on my failings i.e. unsourced statement.
                      ASSUME NOTHING - QUESTION EVERYTHING!

                      Comment


                      • #12
                        Originally posted by attilathelandlord View Post
                        No, being a stakeholder only states how the deposit is held. The ultimate responsibility is for the landlord to refund the deposit to the tenant, as the deposit belongs to the tenant and the agent works for the landlord. The landlord would then chase the agent for a refund.

                        Another reason why I never use agents and on the rare occasions that I have done, they never hold deposits for me.

                        Was the agent ARLA registered and therefore presumably bonded?

                        It states a lot more than that. Please provide a counter source for your hypothesis. The agent works for the landlord, except in the case where the agent chooses to be a stakeholder, as opposed to just holding the deposit at the landlord's direction.
                        ASSUME NOTHING - QUESTION EVERYTHING!

                        Comment


                        • #13
                          "Sometimes, where an agent is involved, the tenancy agreement will say that the agent is holding the deposit as ‘stakeholder’. This means that the agent holds the money in a separate trust account and is responsible for it. At the end of the tenancy, it is the agent that is responsible for deciding whether any deductions should be made, not the landlord. If the agent does NOT hold as stakeholder, then legally the firm is always acting for the landlord and it is the landlord who has ultimate responsibility (although in practice most landlords just leave it up to the agents).

                          If the deposit is being held by an agent as stakeholder, the stakeholder keeps the interest as part of its fee. Otherwise, as the money strictly speaking belongs to the tenant, interest is payable, unless the tenancy agreement provides otherwise (which most do)."

                          Quote from Tessa Shepperson, Solicitor and contributor to Residential Landlord
                          ASSUME NOTHING - QUESTION EVERYTHING!

                          Comment


                          • #14
                            Study the law of agency.

                            The agent acting as a stakeholder regards deposit disputes, not the eventuality of the agent disappearing with the deposit.

                            The landlord is the principal, the agent is just that, the agent and the landlord will be responsible at all times for the deposit to the tenant, regardless of where and how it is held.

                            The landlord cannot hide behind the stakeholder issue in order to deny responsibility if the agent disappears with the monies.

                            The tenant in all cases will sue the landlord if monies not returned, not the agent.

                            The agent is to be regarded as " a glass window" through which the principal (landlord) may be viewed.

                            Comment


                            • #15
                              Originally posted by attilathelandlord View Post
                              Study the law of agency.

                              The agent acting as a stakeholder regards deposit disputes, not the eventuality of the agent disappearing with the deposit.

                              The landlord is the principal, the agent is just that, the agent and the landlord will be responsible at all times for the deposit to the tenant, regardless of where and how it is held.

                              The landlord cannot hide behind the stakeholder issue in order to deny responsibility if the agent disappears with the monies.

                              The tenant in all cases will sue the landlord if monies not returned, not the agent.

                              The agent is to be regarded as " a glass window" through which the principal (landlord) may be viewed.
                              Give us a link to your sources. Otherwise, your sweeping statements could be regarded as wishful thinking or even pure fabrication. Certainly, not saying that it is, but we do need some backup.

                              A tenant can sue anyone he likes, whether a judge would throw the claim out as being without merit is another question. We all know that, at the county court level, a judge has enormous powers of discretion. He can even override the letter of the law and support the spirit of the law. So, you never know until the day.
                              ASSUME NOTHING - QUESTION EVERYTHING!

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