Am I responsible for the deposit money paid to my brother?

by Readers Question

11:10 AM, 8th December 2015
About 3 years ago

Am I responsible for the deposit money paid to my brother?

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Am I responsible for the deposit money paid to my brother?

Hi all I hope someone can help on this peculiar situation.responsible

A tenant was signing up to a lease with my brother and duly paid him the deposit. The tenant then decided that they wanted to sign the lease agreements with me instead as I was the owner and subsequently did so.

Although my lease agreement stipulates a deposit I did not follow through as I had guarantees. Lease agreement is in my name and rent has been duly paid. I don’t hold a deposit.

A deposit was paid to a cancelled lease agreement. Am I responsible for the deposit money paid to my brother ?

Many thanks

Asif



Comments

Paul Franklin

14:12 PM, 8th December 2015
About 3 years ago

I assume your brother has given the deposit back to the tenant then?

AA

14:34 PM, 8th December 2015
About 3 years ago

No. I believe I try to be compliant in every part of legislation. My sibling has a different outlook .

Paul Franklin

14:47 PM, 8th December 2015
About 3 years ago

It all sounds a bit suspect to me. I suggest you speak with your brother to either hand the deposit to you for you to register it with an authorised deposit protection scheme, or return it to the tenant.

If one of those things are not done, the tenant certainly has a good case to apply to court to have the deposit returned with a penalty payment of between 1-3 times the amount of the deposit with your brother. In addition, as you have put in writing that you have also taken a deposit the tenant may also have a case against you for the same. The other penalty for non protection of the deposit is that you cannot serve a s.21 while an unprotected deposit is still being held. Again, especially as it is in writing, your tenant would have a case to defend a s.21 notice on that bases if you wanted to serve one.

AA

15:12 PM, 8th December 2015
About 3 years ago

Reply to the comment left by "Paul Franklin" at "08/12/2015 - 14:47":

Hi Paul - thanks for your input. My lease stipulated a deposit but as I had guarantees I did not request the deposit funds. So the tenant has never paid me any deposit. Quite happy for the tenant to take sibling to court - it's the only way he will learn. Second question if I could impose on your goodwill - in the event of a court judgement against a landlord does it affect credit rating ?

Paul Franklin

15:17 PM, 8th December 2015
About 3 years ago

Not to my knowledge no, but if the court orders you to pay the tenant a certain amount within a certain time and you do not, the tenant may then apply for a CCJ against you to seek to recover the money by way of bailiffs/attachment to earning etc - that will certainly effect your credit rating.

AA

15:19 PM, 8th December 2015
About 3 years ago

Is your advice that I can be held responsible ?

Paul Franklin

15:24 PM, 8th December 2015
About 3 years ago

I would say that there could be a case against you given that it was put in writing and also that the 'old' landlord was your brother. This could prompt the tenant to either advise the court that he/she paid a separate deposit to you, or alternatively apply to court because his/her legitimate expectation was that the deposit already paid to your brother would be passed to you but has not been either passed to you or protected.
It is arguable but I believe the argument may be there to be had. As I say I would encourage you to speak to your brother to do the right (and legal) thing.

Stephen Smith

15:27 PM, 8th December 2015
About 3 years ago

Any court would most likely see your brother as your agent under agency law, why else would they have paid a deposit to him?
Therefore the deposit has been paid, and as LL you need to protect etc.
Your grievance is with your brother since you allowed him to represent himself as your agent.

Jon Pipllman

15:42 PM, 8th December 2015
About 3 years ago

There is potential for you to get sucked into the mess (further than you already are).

The advice offered by Paul Franklin in his second post seems sound: "I suggest you speak with your brother to either hand the deposit to you for you to register it with an authorised deposit protection scheme, or return it to the tenant."

Don't let your brother's wrong doing risk affecting you.

AA

16:02 PM, 8th December 2015
About 3 years ago

Thanks to all for the advice. I will prep myself to pay out. Time limits have expired. Stephen articulated it succinctly " the grievance is with my brother" - sums up a lifetime relationship !

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