Protecting the deposit before it's actually received

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  • Protecting the deposit before it's actually received

    I have a new tenant who is moving in on Saturday. Initially the plan was to meet up before the move in date to sign the AST and tenant was going to do bank transfer then move in few days later once money had cleared. They now want to pay with bankers draft on Saturday. I like to have all the paperwork on move in day including the deposit details so that I can get them to sign to say it's all been received etc. I know I could send it with recorded postage or return a few days later but I want to get everything done on Saturday if possible.

    Are there any problems with protecting the deposit on the morning before its actually been received other than potentially losing my fee if for some reason the tenant doesn't actually move in.

    I don't see how it could happen but potentially could the tenant claim back the deposit from the deposit scheme if they found out it was protected and they didn't actually move in, even if they hadn't actually paid a deposit. They would have no evidence of the actually tenancy etc.

    Bit of a weird question I know but thanks in advance and I hope my question makes sense.

  • #2
    I can't really comment on the deposit question, but make sure those bank drafts are genuine, won't you.

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    • #3
      Just tell them that they can't move in until deposit is paid and cleared.

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      • #4
        Originally posted by jackboy View Post
        Are there any problems with protecting the deposit on the morning before its actually been received other than potentially losing my fee if for some reason the tenant doesn't actually move in.
        You can't physically protect the deposit if it hasn't actually been received; the only way you could do that is to put your own money up front and protect that; hopefully it's pretty obvious why that would be a Very Bad Idea. Given that you've got, what, 30 days? from receipt to protect the deposit there's really no point in worrying about this.

        What you can usefully do is provide the necessary Prescribed Information to the tenant, and get their signature on a copy to confirm that's been provided. I routinely do that myself and it's a useful timesaver; avoids posting stuff back and forth later and the inevitable chasing when they don't send it back.

        Oh, and if they want to pay on move-in day... do yourself a favour and just insist on cash! If they don't like that they must arrange a bank transfer in advance.

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        • #5
          Please do not even hand over the keys unless you have the money either physically in your hands or confirmed into your bank account. If tenants cannot do this, delay the move in until they can.

          Many is the tale here of LLs who have allowed tenants to take residence on the promise of money, only to find it never appears! What other business would hand over goods without guaranteed payment changing hands first?

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          • #6
            Thanks for the replies. I assumed Bankers draft would be ok as it is cleared funds and wont bounce, assuming its genuine. I gave them the choice of bank transfer or bankers draft as I assumed both these methods would be safe. If i meet the prospective tenants at the bank and pay the draft directly into my account would this be safe?

            I assume the bank would know the difference?

            I didn't think tenants would like to pay the money up front without getting the keys as what's to say i wont disappear with their money.

            Do most people think it ok to ask for the money to be transferred first and then once its cleared i would meet them at the property to sign the AST and go through the check-in. Or should the tenancy agreement be signed at the point of the money transfer but not release the keys until the funds arrive in my account?

            Thansk for the advice. I used to use a letting agent and i've only done 2 lets myself so i am still a novice at this. The first chap was happy to trasnfer over the money a few days before and i just met him at the property afterwards to sign the AST etc but i thought this was a little risky for him incase i was a dodgy landlord. I personally wouldn't want to transfer the money without getting the keys immediately so i guess a certain amount of trust has to exist in this transaction.

            Thanks

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            • #7
              Originally posted by jackboy View Post
              Thanks for the replies. I assumed Bankers draft would be ok as it is cleared funds and wont bounce, assuming its genuine. I gave them the choice of bank transfer or bankers draft as I assumed both these methods would be safe. If i meet the prospective tenants at the bank and pay the draft directly into my account would this be safe?

              I assume the bank would know the difference?

              I didn't think tenants would like to pay the money up front without getting the keys as what's to say i wont disappear with their money.
              Nothing at all, and this is how one of the "professional" scams works

              But short of LL registration (Oops) just how can a tenant trust a LL he has contacted directly? (except for handling over a bundle of cash)

              tim

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              • #8
                Originally posted by jackboy View Post
                I assumed Bankers draft would be ok as it is cleared funds and wont bounce, assuming its genuine. I gave them the choice of bank transfer or bankers draft as I assumed both these methods would be safe. If i meet the prospective tenants at the bank and pay the draft directly into my account would this be safe?
                I still wouldn't use this option. eg see http://www.pistonheads.co.uk/gassing...06426&f=23&h=0

                I didn't think tenants would like to pay the money up front without getting the keys as what's to say i wont disappear with their money.

                Do most people think it ok to ask for the money to be transferred first and then once its cleared i would meet them at the property to sign the AST and go through the check-in. Or should the tenancy agreement be signed at the point of the money transfer but not release the keys until the funds arrive in my account?
                Well personally if was a tenant I certainly wouldn't be happy transferring a large sum to the bank account of a private individual I'd only just met!

                I give my tenants the option of paying me by cheque or bank transfer providing they pay me in advance; or they bring cash on the day, which almost all of them choose. I send them the paperwork (tenancy agreement and the Prescribed Information) to read and sign in advance (ie, so I can't be accused of not letting them have enough time to study it, get advice etc), then they bring that along to the property on move-in day where I sign all my bits, hand it over along with the keys, and they give me their wodge of cash - 1 months' rent plus the damage deposit - (which I pointedly count there and then in front of them, to avoid any possible 'misunderstandings') and give them a receipt. End of.

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