Deposits in shared tenancies

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  • Deposits in shared tenancies

    Hello

    I just have a quick question about how deposits work in relation to flat shares. I know that the normal way this is done is when the new tenant moves in, they pass their deposit to the tenant who is moving out. I’m aware this is not the recommended way of doing things but I know that, in practice this is normally how it works.

    I’m a little concerned as say for example when I move out and the person who is replacing me passes me their deposit what if when they move out and they want to get their deposit back from the landlord (assuming they are the last tenant) the landlord doesn’t give them back the full amount and cites damages etc as a reason for not giving back the full amount. Would it be possible that the tenant could chase me as the person they replaced regardless of whether I caused the damages or not. Would they be able to do that? I assume not as it should have been something they checked before they moved in but I want to make sure as I wouldn’t want someone chasing me for deposit money long after I have moved out.

    Many Thanks

    Jarvis

  • #2
    This is a dodgy way of doing things: Basically you're giving money to a complete stranger... And that's it.
    It's a kind of ponzi scheme, and the last one in loses everything.

    If you do that, your best hope when you move out is to find another sucker who accepts to nicely give you money.

    Comment


    • #3
      Thanks

      But if for example the last one in has a problem in getting their share of the deposit back from the landlord when they move out could they chase me as the person who moved out before them and therefore the person they would have given their deposit money to? I just want to make sure I couldn't be chased up by someone for example years after I have moved out! At least not be legally responsible or anything like that.

      You say it is a dodgy way of doing it and I agree but what would you say is the best way? Should the landlord give back that person's share of the deposit before taking mine? Is this what would usually happen? It seems to me that the dodgy way as mentioned is the way this usually happens.

      Cheers, Jarv

      Comment


      • #4
        Originally posted by Jarv View Post
        I just have a quick question about how deposits work in relation to flat shares. I know that the normal way this is done is when the new tenant moves in, they pass their deposit to the tenant who is moving out. I’m aware this is not the recommended way of doing things but I know that, in practice this is normally how it works.
        No, it's not how things normally work. A security deposit is paid to a landlord, not to an outgoing tenant. Because it is LLs who hold security deposits, not former tenants of the property.

        You are rightly concerned about how things might pan out down the line. The possibilities for problems and disputes are endless.

        Originally posted by Jarv View Post
        But if for example the last one in has a problem in getting their share of the deposit back from the landlord when they move out could they chase me as the person who moved out before them (?) and therefore the person they would have given their deposit money to?
        Yup, it's perfectly possible that you could end up in dispute with the previous tenant and/or landlord.

        For future reference, a deposit is paid to a landlord, not to the outgoing tenant. If you pay a 'deposit' to an outgoing tenant, then don't expect to get it back anytime soon (if ever).

        Comment


        • #5
          Originally posted by westminster View Post
          Yup, it's perfectly possible that you could end up in dispute with the previous tenant
          There's nothing in writing, and no condition in such arrangement. And incoming tenant often does not really know who's the departing one (let's try to sue 'John' was lived there until 2 years ago...)
          As I said in effect incoming tenant just gives money to departing one. After that departing tenant is completely out of the loop without any liability for anything. It 'works' until the last one in the chain loses it all (if landlord decides that there's no deposit as far as he's concerned so nothing to refund).

          Comment


          • #6
            Thanks both for your replies. These are both useful but seem to contradict each other with one saying my deposit shouldn't be given to the departing tenant and the implying it is O.K to do this. Say for example the last one in the chain has a problem in getting their share of the deposit back from the landlord, if I was the person who moved out before them say for example 2 years ago could they in theory chase me? As soon as I move out of a property I would expect to be completely free of anything to with it so all liability I would have had etc would be gone once my name is off the contract and the new person's name on it. It seems however that this deposit situation could potentially lead to problems further down the line, which is not a situation I would want.

            I really want to flat share but it seems the terms and conditions around it are just crazy. Having to agree to be liable for people's rent you met 5 mins ago for a start is hard to accept. I think I might be better off signing a contract of my own on an individual room in a flat share as that way at least I am only responsible for my own affairs on the room. That would mean that I don't get a say in who moves in when the other rooms become free however so is bad in its own right! This is so hard!!!!

            Sorry for rant and thanks again.

            Jarv

            Comment


            • #7
              Originally posted by jjlandlord View Post
              There's nothing in writing, and no condition in such arrangement. And incoming tenant often does not really know who's the departing one (let's try to sue 'John' was lived there until 2 years ago...)
              As I said in effect incoming tenant just gives money to departing one. After that departing tenant is completely out of the loop without any liability for anything. It 'works' until the last one in the chain loses it all (if landlord decides that there's no deposit as far as he's concerned so nothing to refund).
              The outgoing/departing T might give a receipt for the money, who knows?

              (The outgoing T might then also claim his deposit back from the DPS, and win).

              I don't think you can argue there is no room for dispute, or that the outgoing T is 'out of the loop without any liability'.

              The money is not given to the outgoing T as payment for anything, so, strictly speaking, it's refundable to the person who paid it.

              Comment


              • #8
                Thanks again Westminster. This is what I thought but most flat shares just seem to require me to give the deposit to the outgoing tenant which I guess in theory means I could be chased if my replacement didn't get their deposit back from the landlord when they move out.

                On a different but related topic (as you have been so helpful) if a landlord operated using fixed contracts as opposed to periodical, would they require a new fixed contract to be signed each time? I guess this is the case otherwise the contract would become periodical?

                Just one other question as well please if I may. Would it be possible for a periodic contract to have terms in it to say for example that a replacement must be found before moving out? Or would this be illegal as periodic contracts can legally be ended by one joint tenant on their own assuming they serve a valid NTQ? I ask this as adverts for rooms on websites such as spareroom imply that replacements must be found before you can move out.

                Thanks again, your help is very much appreciated. You don't have any rooms available in London do you!!

                Jarvis

                Comment


                • #9
                  Originally posted by Jarv View Post
                  if a landlord operated using fixed contracts as opposed to periodical, would they require a new fixed contract to be signed each time?
                  AFAIK it is very rare for LLs to offer periodic contracts without an initial fixed term.

                  If an AST tenancy starts out as a fixed term, and the T is in occupation at fixed term expiry, and no renewal fixed term has been agreed, then a statutory periodic tenancy will automatically arise, replacing the expired fixed term tenancy. In other words, the tenancy effectively continues, but on a 'rolling contract' basis.

                  The LL cannot 'require' the T to agree to a new fixed term contract. It is up to the T whether to agree or not. If he doesn't, the tenancy will become periodic, but he will be more exposed to eviction. The LL cannot obtain a possession order to take effect during a fixed term tenancy, but he can when the tenancy is periodic.

                  Would it be possible for a periodic contract to have terms in it to say for example that a replacement must be found before moving out?
                  No. Such a term would not be enforceable.

                  You don't have any rooms available in London do you!!
                  Sorry, no...but have you looked into becoming a lodger in a flatshare? (i.e. with the tenant of the property as your landlord instead of the property owner?) Although you get almost no security of tenure at least you're not taking on joint liability for rent with a complete stranger. http://www.spareroom.co.uk/

                  Comment


                  • #10
                    Originally posted by westminster View Post
                    I don't think you can argue there is no room for dispute, or that the outgoing T is 'out of the loop without any liability'.
                    In practice that's exactly the case: Outgoing tenant gets someone to give him money and disappears, end of. Incoming tenant might know their full name, or might not, but usually certainly does not know any other details and thus cannot chase the outgoing one even if he wanted.
                    The fact the it is not a payment for anything does not mean the payment is refundable: If you give something to someone, you can't demand it back later.

                    Of course there should be room for actual dispute, but that would require that outgoing and incoming tenants draw a proper agreement stating what they are doing and what are the conditions attached.
                    But again, in practice this does not happen.

                    What I'm coming at is that when at incoming tenant "pays the deposit" to the outgoing one he basically makes a leap of faith that he will be able to do the same when leaving or that landlord will nicely give it back.

                    Comment


                    • #11
                      Thanks both again for your replies.

                      Westminster what you say about fixed contracts becoming periodical etc makes perfect sense to me. So im correct in saying that if a landlord wanted a new fixed term contract to be in place after the initial one had run out they would require it to actually physically be signed? Otherwise it would automaticaly become periodoc, is that correct?

                      That's what I thought also about periodic contracts although on spareroom.com it seems that some flat mates seem to think that a replacement must be found before I could move out event when the contract is in a periodic stage. I assume this is just a case of them not understanding how these things work then if it is not the case that a periodic contract could have a requirement to find a replacement before moving out as a clause in it?

                      Thanks also jjlandlord for your comments. Most welcome again.

                      Many Thanks, Jarvis

                      Comment


                      • #12
                        Originally posted by Jarv View Post
                        So im correct in saying that if a landlord wanted a new fixed term contract to be in place after the initial one had run out they would require it to actually physically be signed? Otherwise it would automaticaly become periodoc, is that correct?
                        Yes.

                        some flat mates seem to think that a replacement must be found before I could move out event when the contract is in a periodic stage. I assume this is just a case of them not understanding how these things work
                        Yes.

                        Comment

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