Agents Went Bust (More Info)

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  • Agents Went Bust (More Info)

    Further to my agency going bust, I have withheld the last months rent. However I have received a letter from my landlord, shown below. As such she is demanding I pay the outstanding rent, but I intended to only pay if I receive my deposit back. The issue surrounds who is responsible for the deposit. I would appreciate it, if my situation is explained.

    What do you recommend?

    Extract from the landlords letter

    Liability to pay the deposit
    Because the letting agent holds the deposit as a stakeholder (and not as my agent), the money is held on trust for the benefit of the landlord and tenant. Neither party is entitled to the deposit at any stage before the end of the tenancy.

    Therefore, despite the fact that there is no contract between you and the letting agent, the trust under which the money is held creates a legal relationship. Should the letting agent not deal with the deposit as it should under the tenancy agreement, you would be entitled to claim it back from them because the letting agent would be in breach of trust.
    The deposit cannot be claimed from me because the money does not belong to me. I am not liable either to pay it to you or to claim it from the agent for you.
    You should be able to claim the deposit back from the agent as it should not form part of the agent's working capital. The deposit is not the agent's money. Therefore the agent should be holding the deposit on trust, and following the terms of the tenancy agreement it should be paid to you.

  • #2
    For members not familiar with the original thread:
    http://www.landlordzone.co.uk/forums...ead.php?t=5254

    From the previous thread there are 2 schools of thought. You would be wise then to get an expert opinion from a specialist solicitor. Perhaps you could ask the Shelter helpline first.

    If you have not already done so, I would write to her using info posted on the previous thread that would help your case; ie referring to the law of agency, and argue your case as best you can. Sound confident. The ball is in her court, so then do nothing.

    The next step for her is to threaten court action. You will definately need good legal advice by then

    Please post back on any professional advice you recieve.
    All posts in good faith, but do not rely on them

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    • #3
      Many of us are very interested in the legal opinion you receive. Follow Bel's advice and let's see what happens.
      ASSUME NOTHING - QUESTION EVERYTHING!

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      • #4
        The landlord's letter is rubbish.

        The landlord is liable for the return of your deposit. Don't pay the last month's rent. The landlord can then sue the agent for return of deposit to cover last month's rent.

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        • #5
          Originally posted by attilathelandlord View Post

          The landlord can then sue the agent for return of deposit to cover last month's rent.
          But the agent has gone bust, hence neither the tenant or the LL wants to be the loser in the end.
          All posts in good faith, but do not rely on them

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          • #6
            No I don't suppose they do but it doesn't change the fact that the LL must repay the deposit if the agent has disappeared/gone bust.

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            • #7
              Originally posted by attilathelandlord View Post
              No I don't suppose they do but it doesn't change the fact that the LL must repay the deposit if the agent has disappeared/gone bust.

              Maybe, but the tenant also has a duty to pay the rent, to the landlord if necessary, even if the agent has disappeared. Has he paid the final month's rent? Can't have it all ways, not paying the rent and asking for his deposit back too.

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              • #8
                STAKEHOLDER - A third person, chosen by two or more persons, to keep in deposit property, the right or possession of which is contested between them and to be delivered to the one who shall establish his right to it. Thus each of them is considered as depositing the whole thing. This distinguishes this contract from that which takes place when two or more tenants in common deposit a thing with a bailee.

                A person having in his hands money or other property claimed by several others, is considered in equity as a stakeholder.

                The duties of a stakeholder are to deliver the thing holden by him to the person entitled to it on demand. It is frequently questionable who is entitled to it. In case of an unlawful wager, although be may be justified for delivering the thing to the winner, by the express or implied consent of the loser yet if before the event has happened he has been required by either party to give up the thing deposited with him by such party, he is bound so to deliver it or if, after the event has happened, the losing party give notice to the stakeholder not to pay the winner, a payment made to him afterwards will be made in his own wrong, and the party who deposited the money or thing may recover it from the stakeholder.
                ASSUME NOTHING - QUESTION EVERYTHING!

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                • #9
                  Originally posted by paul_c View Post
                  Maybe, but the tenant also has a duty to pay the rent, to the landlord if necessary, even if the agent has disappeared. Has he paid the final month's rent? Can't have it all ways, not paying the rent and asking for his deposit back too.
                  You are right, he does have a duty to pay rent. But he is also bright enough to realise that if he pays the rent, she will not be giving his deposit back, as she has just said that she doesn't think she is liable because the agent is responsible in her eyes. From reading other threads, it seems that if you have good reason to expect the landlord to withold your deposit for no good reason (eg you know he has done it before), then witholding the rent can be legally (?) justified. He is saving himself the trouble and expense of taking her to the county court to get his deposit back.

                  The OP also says he will pay the rent when he gets the deposit back.
                  All posts in good faith, but do not rely on them

                  * * * * * ** * * * * * * * * * * * *

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                  • #10
                    Agree with you there Bel

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                    • #11
                      Originally posted by Paragon View Post
                      STAKEHOLDER - A third person, chosen by two or more persons, to keep in deposit property, the right or possession of which is contested between them
                      Presumably a general definition of stakeholder, but not one that applies in this case as the tenant doesn't have a say in choosing the agent or how the deposit is held. The choice is solely down to the landlord so if a dodgy agent has been chosen that's solely down to the landlord. Unless you realistically claim a tenant can get the agent to be changed? I don't think so. What if the landlord chooses his EA mate as a stakeholder? You need more equal parties which isn't the case for the landlord's choice of an agent.
                      ~~~~~

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                      • #12
                        You're all getting sidetracked about the "stakeholder" bit!

                        It's nothing to do with this situation, it's only to do with assessment of dilapidations in that the landlord and tenant jointly have to agree to its apportionment when this aspect has been resolved. The landlord still has the legal responsibility to account for it.

                        What you have here is that the agent who is the landlord's agent after all, is holding the deposit on behalf of the landlord (but crucially in trust for the tenant as well), and whose duty it is to return the balance of the deposit after assessment of dilapidations.

                        As the agent has presumably disappeared with the money, then the landlord has the responsibility to account to the tenant for his deposit.

                        Attilla is exactly right when he says the landlord's letter is bovine excrement.

                        I would be withholding the last month's rent if it is equivalent to the deposit too! Saves a lot of problems later, and you can bet it won't get to court if that's what the tenant decides to do.
                        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.

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                        • #13
                          Plan

                          Just to let people know I have been advised by a solicitor that as the money is held as a 'stakeholder' I can't claim it back from the landlord. If it was held as an agent I would have been able to reclaim the money. I now have to pay the landlord.

                          I do however intend to take the agents to small claims court. It turns out then are not bust they are just closing the company.

                          Do I sue the director as an individual or the company??

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                          • #14
                            Thank you for that borisb. I guess your solicitor didn't understand all the ramblings about Agency Law either.
                            ASSUME NOTHING - QUESTION EVERYTHING!

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                            • #15
                              Big Caveat - I know little about the closure of companies and I am still baffled why the agent is deemed to be responsible, plus doubly baffled by the admission that it is merely winding itself down for no discernible reason....

                              However, if the letting agency is a limited company (as opposed to a sole trader), information at Companies House indicates that creditors can prevent the company from dissolving itself

                              http://www.companies-house.gov.uk/ab...tml/gbw2.shtml

                              If it's a limited company, then I suggest you contact Companies House to see how you can object to its proposed dissolution or run this past your solicitor.

                              You could check records on the web check service that belongs to the Companies House website.
                              Last edited by Beeber; 16-03-2007, 14:41 PM. Reason: to clarify definition of a limited company and how to check it's status

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