Beware of what constitutes a deposit – Is there a definition?

by Readers Question

10:48 AM, 25th November 2014
About 5 years ago

Beware of what constitutes a deposit – Is there a definition?

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Beware of what constitutes a deposit – Is there a definition?

My tenant could not afford a months rent and deposit in advance to secure my property. She really wanted the property and offered to pay four weeks rental in advance.

She was honest enough to say that she would not be able to pay future rent in four weekly payments so offered to pay one week at a time from day one of her contract. Ie she would always be four weeks in advance as long as she paid her weekly rent.

Due to her losing her job, rent arrears accrued and I had no alternative than to issue a Section 21 Notice via the local County Court.

The judge yesterday threw out of court my re possession order request stating that I had tried to manipulate the Tenancy Deposit Scheme and ruled that the four weeks rent was indeed a deposit.

I argued that had the tenant saved each weeks rent and had paid me four weekly as per the contract there would have been no difference. The judge was adamant that the four weeks rent was indeed a deposit and after this ruling I am awaiting a solicitors letter demanding the penalty of three times the so called deposit figure for failing to deposit in a Deposit Scheme.

Is there any clear definition as to what constitutes a deposit.

Many thanks

Garrydeposit



Comments

Romain Garcin

19:11 PM, 25th November 2014
About 5 years ago

Reply to the comment left by "garry scothorn" at "25/11/2014 - 18:32":

That the rent was specified as 4-weekly in advance while the tenant pays weekly in advance is a red herring.
What is causing trouble is that you are always holding the equivalent of 4-week rent, which do not correspond to any rent payment.

Steve Masters

8:42 AM, 26th November 2014
About 5 years ago

Consider this: AST states 4 weekly in advance, and Tenant pays first 4 weeks advance to Landlord. No problem. She gets paid weekly so puts NEXT period rent into a jar in the kitchen 1 week at a time as she gets paid. At the end of the first 4 weeks she takes the 4 weeks rent from the jar and pays the landlord for the 2nd 4 weeks rent. No problem.

It's Christmas and she spends all the money in the jar on presents, Oops! But not to worry, she gets her Christmas bonus early so she has the money for January's rent after all, a little bit early in fact. To avoid temptation again she pays the landlord early. Does the very first 4 weeks rent in advance as per AST miraculously become a deposit?

This works well for her, so she decides to skip putting weekly rent it into the jar and give it to the Landlord straight away instead. Is she paying the NEXT period rent in advance installments still? Or does the very first 4 weeks rent in advance as per AST miraculously become a deposit?

What happens if any tenant pays extra or early for any reason does this put in question rent paid becoming a deposit. Mine field!!!

Garry Scothorn

9:57 AM, 26th November 2014
About 5 years ago

Reply to the comment left by "Steve Masters" at "26/11/2014 - 08:42":

Hi Steve, many thanks for your comments as they are exactly my thoughts.
You couldnt have put it better and this was my explanation to the judge.
I just feel I have again been trapped legally for something done with good intentions to help out a tenant.
As I informed the judge, her decision has cost any future tenants the possibility of a roof over their head with me at zero level unless they now have the full bond and rent.
I now await a claim from the tenant for three times the so called deposit fine
Regards Garry

Shakeel Ahmad

10:08 AM, 26th November 2014
About 5 years ago

Most judges are arrogant, self centered show little sense of the realty of the commercial and need I say not in the real world. The legal system including the LVT/ first tear needs to be looked at by non legal bodies.

Steve Masters

10:36 AM, 26th November 2014
About 5 years ago

So what where you supposed to have done Gary? After week 1 and your tenant paid the first weekly installment of next months rent, you realized a judge would class the original 4 weeks rent paid at the outset not as Rent but as a Deposit. So you protected the "Deposit" and issued your tenant with both the Deposit Protection Prescribed Information and a rent demand for being in arrears because she started paying in advance. Nonsense!

Do you think if Gary now issued a Section 8 notice siting ground 11 for persistent arrears and it went to court whats the betting the judge this time would class the original 4 weeks rent not as a Deposit but as Rent and and throw the Section 8 claim out.

Which way should Gary turn?

Steve Masters

10:50 AM, 26th November 2014
About 5 years ago

What if Gary's AST asked for 4 weeks Rent in advance and an equal sum as a Deposit and at the start the tenant only paid a sum equal to 4 weeks rent.

Has Gary received the Rent or the Deposit?

Either way he is 4 weeks short! How can this be Gary's fault?

Robert Rivers

12:32 PM, 29th November 2014
About 5 years ago

The various explanations are interesting, however, what does Garry do, now that the S21 has been rejected by the judge, what are his next steps to proceed forward and how does he bring the matter to a close???

Jerry Jones

15:00 PM, 29th November 2014
About 5 years ago

This is a case where one hopes that one of the landlord bodies would take it to appeal on Gary's behalf and get the position clarified.

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