One Tenant, Two Deposits

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    One Tenant, Two Deposits

    Our tenant moved into a property in Jan 2013 on a 6 month AST. £595 was taken as a damage deposit and was protected with DPS within 1 week. The Prescribed Info was provided as per the DPS template. In July 2013 the tenancy agreement lapsed to a statutory periodic. The original deposit was left with DPS and was not re-protected.

    In July 2013, as the tenant could not provide a guarantor, a charity provided the equivalent of 3 months rent up front (£1,485). They stipulated that it was to be held by the letting agent for the purposes of covering non-payment of rent only. Any money unclaimed at the end of the tenancy needs to be repaid direct to the charity, not to the tenant. The tenant's rent is paid by the local authority in the form of housing benefits every 4 weeks. The £1,485 was transferred to us by BACS in Sept 2014 when the agent stopped managing the property.

    We want to sell the property so issued a S.21 Notice in August 2015. The tenant did not leave on expiry so we applied to the court for a possession order. The tenant qualified for legal aid via Shelter and has issued a defence and counter claim as follows:

    - Landlord should have re-protected the original £595 deposit in July 2013 when the AST lapsed to a statutory periodic.
    - Landlord failed to provide a tenancy deposit reference number from DPS for original £595 deposit.
    - Landlord failed to protect the additional money provided (£1,485) by the charity.
    - The Tenant has asked for the £1,485 to be returned to her.
    - The Tenant has asked the court to award damages to her up to a maximum of £8,910 (six times the deposit of £1,485!)
    - The Tenant has asked that we pay her/Shelter's costs (currently in excess of £3,000!)
    - The Tenant has asked the court to invalidate our S.21 Notice.

    Our solicitor has recommended we appoint a barrister to review the case but we can't afford to take the tenant on in court. We don't have any insurance and need to sell the house ASAP.

    Can anyone provide some input on where we stand? We're of the opinion that the additional £1,485 is a deposit and should have been protected so our S.21 is invalidated. However, can the tenant bring a claim for damages on an additional deposit that was provided by a third party and was paid directly to the agent? Whose legal rights have been breached by us not protecting the charity's money?

    #2
    On the basis of what you have told us it seems Shelter's advice to the tenant is correct.

    In your shoes I would try & negotiate a deal with tenant for somewhat less than you are currently exposed to (£12k-ish) and return both deposits to where they came from TODAY! Then serve a new s21.

    And find a new solicitor. Did he advise you not to protect the £1,485??

    You won't be selling that place any time soon, unless the tenant wants to be (is "encouraged" to be - ££££) helpful and move out:

    Sorry: I've made mistakes too.
    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


      #3
      - Landlord should have re-protected the original £595 deposit in July 2013 when the AST lapsed to a statutory periodic - I believe that this has been resolved by the 2015 Deregulation Act. This claim is no longer correct. Deregulation Act Section 32 applies.
      - Landlord failed to provide a tenancy deposit reference number from DPS for original £595 deposit. - If you supplied the Prescribed Information, the tenancy deposit reference should have been included, what does your copy show?
      - Landlord failed to protect the additional money provided (£1,485) by the charity. - This is a problem, if it was a tenancy deposit (which it sounds like) it should be returned to the charity and a new s21 notice issued. However, I would wait until the judge tells you what to do with it, it seems unreasonable that the tenant should receive it (as an applicant under the law) even though it is owed to the charity. You shouldn't stand to lose the same money twice.
      - The Tenant has asked for the £1,485 to be returned to her. - It can't be returned to her, it is not her money, it belongs to the charity (which is why you should return it to them). However, the tenant can ask the court to award the amount to her, as part of the penalty discussed below.
      - The Tenant has asked the court to award damages to her up to a maximum of £8,910 (six times the deposit of £1,485!) - She might be entitled to three times, not six times. It's up to the court to decide what is appropriate. If you return the money to the charity, the court may make a lower award.
      - The Tenant has asked that we pay her/Shelter's costs (currently in excess of £3,000!) - This is up to the court, make a counter claim for your costs. However, I think you are likely to lose the s21 hearing because of the charity's deposit.
      - The Tenant has asked the court to invalidate our S.21 Notice. - I suspect it's invalid.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        Welcome to Shelter -- who are giving mostly correct advice. But this sort of money grubbing has not much to do with their remit as a charity.

        You are basically stuffed.

        Next time do the logical thing and boot the tenants out at the point you accepted the charity. You cannot afford to be a decent person under most circumstances as a landlord -- precisely because of this sort of attitude and system promoted by Shelter -- although I usually try to be. You need to learn to be an absolute cruel and heartless bastard, however hard that seems -- because that is what the spirit of the law demands. You also need to learn to obey the law so as to be an effective bastard.

        Comment


          #5
          Sadly I have to agree with Andrew: As a landlord you have to be prepared to be a b*st*rd: If you aren't prepared to be one, don't be a landl*rd.. (my example was when my tenant left, but allowed a young couple to live in the place with a 2-yr old child: I went round, told the couple they must leave, gave them an hour & left them to it, Mrs & child screaming & crying: Much to my surprise & relief they had gone when I returned )

          I'd forewarned local council housing dept. (& Police) who were very unsympathetic of the couple: Dunno what became of them.

          Artful (B*st*rd).
          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


            #6
            I didn't realise Shelter got involved with actually legally defending S21's. I'm so glad I stopped sending them cash, thinking they did a good job.

            Comment


              #7
              It could be 6 x deposit as a penalty if a new fixed term was agreed which subsequently went periodic.

              Comment


                #8
                Depending on the details of the charitable donation, it is possible that the charity in question provided the money to the tenant as a gift or a loan, who in turn paid it as deposit. In that case it is the tenants money as far as the landlord is concerned.

                Comment


                  #9
                  Section 214 is not clear about who can make an application. It says it can be made by the tenant or the person who paid the deposit. Since the section requires any repayment and "compensation" to be made to the applicant it would seem to follow that where the deposit was paid by someone other than the tenant that the applicant should be that person. It is not though certain and accordingly repaying the deposit to the charity has to be a risk because of the possibility of the court ordering it to be repayed to the tenant. The OP has to argue that the tenant has no standing to make a claim under section 214.

                  However, the fact remains that the £1,485 has to be a deposit as it was paid "for the purposes of covering non-payment of rent". The court can still order repayment and "compensation" payable to someone and there is no doubt that the section 21 notice is invalid.

                  Any suggestion that the OP should change solicitor is a bit quick as we do not know precisely what advice has been given. On the one hand any firm holding itself out to be a specialist in residential landlord and tenant matters ought not to have to run to counsel every time a non-routine problem arises, but on the other cannot be expected to know absolutely everything or guess what decision a court will make when a statute is unclear.

                  It should be noted here that the additional deposit was paid after the tenant had been in occupation for 6 months and (presumably) the rent had always been paid on time. Taking a further deposit when (at least in retrospect) it has proved to be an unncessary precaution is a classic case of coming a cropper by over-egging the pudding and failing to keep things simple.

                  Comment


                    #10
                    Originally posted by elniinio View Post
                    Depending on the details of the charitable donation, it is possible that the charity in question provided the money to the tenant as a gift or a loan, who in turn paid it as deposit. In that case it is the tenants money as far as the landlord is concerned.
                    It would seem not: The OP said: "Any money unclaimed at the end of the tenancy needs to be repaid direct to the charity".

                    Comment


                      #11
                      Originally posted by elniinio View Post
                      It could be 6 x deposit as a penalty if a new fixed term was agreed which subsequently went periodic.
                      My reading (which may be flawed) is that the deregulation act fixes that problem.

                      How it can do this without being "retrospective" legislation I will leave someone else to worry about.
                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                      Comment

                      Latest Activity

                      Collapse

                      Working...
                      X