Unprotected deposit

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    Unprotected deposit

    Hi

    Got a small issue with a tenant. Spoken to a couple agents I know and they where a bit on unsure on a answer.

    I rented a flat to a couple 2 years and didn't protect there deposit (yes very stupid)

    They signed up for 6 months but wanted to end the tenancy a month early which I agreed to and we both agreed out of the £690 deposit I would deduct £180.

    Other then that no issues at all and when they moved out I got the keys and they got there money and everyone was happy.

    Now they have this 'no win no fee' lawyer demanding £4000 otherwise they are taking legal action because it was not protected. Spoke to the old tenant on the phone and he more or less said there only doing it to get money out of me and then laughed!!!

    I got a solicitor to write back and ask them to drop it otherwise we would take legal action against them.

    I know I made a silly mistake but can they really take me to court even tho they got there money back straight away and there was no on going issues? I have all the text messages and emails between us all and I can prove that I paid them back.

    #2
    Yes they absolutely can, and the penalty is between 1-3x the amount of deposit.

    So a £690 deposit = max. penalty of £2,070. However, as has been pointed out to me recently on these forums, there's an argument that if you also failed to protect it once the tenancy became a statutory period tenancy, it could double up the number of penalties. So you could be looking at between £1,380 and £4,140 worst case scenario.

    You WILL lose if this goes to court, the only consideration is the amount the judge will award. If you never protected the deposit, this will be seen as, potentially (and to be honest, probably), a flagrant disregard for your responsibilities by a judge (espec. if in a bad mood), so this penalty is likely to be high.

    I suggest you talk to your solicitor and discuss making an offer to settle out of court, or you could end up bearing their costs too. Sorry.

    Also, what 'legal action' did you threaten them with? If you already took an agreed sum from the deposit I'm not quite sure where you're thinking of going with that.

    Comment


      #3
      I see a 6 months fixed term that lasted 5 months, so I don't see where SPT comes into it. Please confirm if that reading is correct.

      If it is, then as stated, you're liable for between £690 and £2,070 if it goes to court for a decision, plus any legal cost incurred by the ex-T's lawyer, plus any court fees, plus any fees your own solicitor charges you, which may end up more than £4,000 total. You have no defence against a penalty being awarded, and you haven't mentioned any reasons where you may have for a counterclaim. Having said all that, most threats don't result in actual court actions, and most of the "no win no fee" types dealing with this area a) aren't actually lawyers but other legal types who do the works with maybe a lawyer at the top, and b) tends to drop any claims that isn't straight forward.

      I would say get your solicitor to make the other side a formal Part 36 offer of £690 (1x deposit) as settlement, possibly along with some legal argument why the T would only win 1x if it went to court. That may be enough to stop the other side from going forward with actual court action hoping to win more as refusing a Part 36 offer and then in failing to beat it in judgement carries cost consequence for the refusing side. No win, no fees types won't want to do all the work that will involve and risk ending up with nothing if final judge award only 1x.
      I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

      I do not answer questions through private messages which should be posted publicly on the forum.

      Comment


        #4
        Yes, they can sue and will be awarded 1-3x deposit.
        Their Solicitor is asking double the max of what could be awarded so 3x deposit Penalty.
        Instruct your Solicitor to offer £1k (ceiling £1500) in full final settlement. See what their response is.

        Comment


          #5
          I won today against my old LL who was a scumbag, I'd try and settle out of court as you will lose.

          Comment


            #6
            The mother in law did some mobile phone fraud when they where there and my solicitor said we maybe try and get back her costs from them. To be honest I just want them to go away. Just made me sick when they told me on the phone I was really nice to them and it was nothing personal but they think I have money to burn and that I won't miss it

            Comment


              #7
              Originally posted by KTC View Post
              I see a 6 months fixed term that lasted 5 months, so I don't see where SPT comes into it. Please confirm if that reading is correct.
              I understood as 6 month initial term with SPT that followed for the rest of the two year tenancy but you may be right. OP can you confirm, did you repeatedly issue new 6 month contracts at the end of each fixed term or...?

              As to the 'mobile phone fraud' above, if it was not your tenants involved but one of their mothers, I can hardly see how you could take action against them for that, and even if they were involved somehow I don't really see how you could take civil action either.

              I also don't see this as being relevant in any way, shape or form to the matter of non-protection...

              Get some proper legal advice and be prepared to offer a settlement to keep it out of court.

              Comment


                #8
                Do we actually have any evidence of what judges do in such circumstances? Do they actually always go for 1 month irrespective of the situation? And what evidence makes them decide that it is 1 month, 2 or 3 months?

                I know there is a lot of talk about what the law says can happen, but I've never heard any LL being penalised unless they were further failures on the LL's part or they kept all the deposit.

                I'm just curious, not affecting me at all, deposit has always been protected on time with required documents shared on time, but I do find this legal penalty absurd when the tenant has actually suffered no loss. It is nothing more than an easy way to make money for such tenant.

                Comment


                  #9
                  Originally posted by Notyetagain View Post
                  I'm just curious, not affecting me at all, deposit has always been protected on time with required documents shared on time, but I do find this legal penalty absurd when the tenant has actually suffered no loss. It is nothing more than an easy way to make money for such tenant.
                  It's not for that, it's to make the legislation self policing.

                  This used to be a routine issue and the idea is to make it appealing to a tenant to bring the landlord to court as that was intended to reduce the problem of deposits not being returned.
                  If there was no penalty, the number of tenants who would bother suing their landlord would be much smaller (and the court time to resolve routine deposit disputes would be huge)

                  Given that 12 years or so after the legislation was introduced it's still fairly common to see posts from landlords who didn't protect a tenant's deposit or from a tenant with an unprotected deposit, it's interesting to see what could be done to ensure greater compliance.
                  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


                    #10
                    Well Ill just have to see what happens next then won't I.

                    OK I broke the law. Didn't mean to and its not like I went out of my way to rip someone off. From day one I was fair to them and they know this. They broke the contract and I still gave them most of there money back with no issue. Not like I killed someone or stole money like Phillip Green!!!!

                    Morally I did nothing wrong as far as I am concerned. It was a simple business transaction and I kept my end of the bargain.

                    I just think its unfair to go after me for money they go back straight away. If push comes to shove ill offer them the £180 back but in my opinion I feel I shouldn't. They even have on youtube a video of them both going round the flat saying how perfect it is for them apart from it being to small to have a child in it.

                    I pay tax of those earnings and go to work everyday to pay for my life. But these people think they can sit at home and claim benefits and then try to extort me because they don't want to work. Its not fair? Seems to me the law is there to rip off landlords

                    Comment


                      #11
                      I fear you are confusing "fair" with "the law". Different things.

                      You broke the law: You are liable to the penalty. That's how things work here...
                      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


                        #12
                        See this is where I am confused and no one seems to really know or even have a real answer.

                        Yes I broke the law. But I never kept the money.

                        But there was not 1 single dispute about it being a issue in the 2 and bit years since they left. They basically see a loop hole and are trying to get money.

                        3 x of £0 = 0

                        Ok if you want to get technical 3 x £182 is £546

                        If every single tenant did this to a landlord then why would anyone want to rent out property?

                        So has anyone on here been taken to court over anything similar? My solicitor thinks there is no case because they had there money back and I have proof they where more then happy with me keeping £182 for ending the contract early.

                        The must be plenty of rogue landlords out there out to rip people but I am not one of them.

                        Comment


                          #13
                          Originally posted by Raiden328i View Post
                          must be plenty of rogue landlords out there out to rip people but I am not one of them.
                          Unfortunately, the tenants are in the right and entitled to do what they're doing.
                          The law is designed to encourage them to do it.

                          Being negligent may not be as bad as doing something deliberately, but you are not in the right.

                          Your solicitor is wrong in her advice and, if the tenant goes to court they will win and the legal fees can be much more than any penalty.
                          The judge can't award any less than one times the deposit value even if they think you're a wonderful landlord.

                          What you need to do here is negotiate.
                          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


                            #14
                            Let'e be honest, the law is still very badly drafted and the penalty disproportionate even with the changes from the Localism Act.

                            Currently courts have no choice but to award a penalty higher than the fine for many criminal offences for something that may not even have cause the tenant any problem.

                            Comment


                              #15
                              It is a statutory penalty, not compensation for loss sustained by the tenant. It is also not a loophole. Parliament made the law so with the specific intention of encouraging compliance / penalising non compliance. They didn't just do that once, but twice first with the initial passing of the Housing Act 2004, then with the Localism Act 2011 after the Courts effectively gutted the point the legislation due to Parliament's bad drafting. You talk of the letting being a business transaction, and you're right but as with any business there's rules you have to follow and penalties if you don't.

                              If your current lawyer really advised you that the T have no case because you agreed on the deposit deductions when they left then you need to get yourself a new lawyer that specialise in Landlord & Tenant matters.
                              I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

                              I do not answer questions through private messages which should be posted publicly on the forum.

                              Comment

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