Can a theoretical deposit be relabelled rent?

Can a theoretical deposit be relabelled rent?

14:22 PM, 4th October 2016, About 5 years ago 36

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A fellow landlord found themselves in the unenviable position of landing a tenant whose history was hidden but rapidly caught up with them after only 6 weeks in the property.jif

The paperwork was fine and the prospective tenant had a backstory worthy of Harry Pearce himself. Now, with 8 weeks hindsight the clues are there; I doubt a bank would have spotted them.

The tenant moved in without funds for rent and deposit being cleared. After a short delay and many attempts (apparently it’s the banks fault), the tenant’s father managed to make a payment to the landlord and the tenant called it ‘the deposit’.

No rent though. Apparently the tenant has as many difficulties with incompetent banks as the father.

The landlord hung on to the deposit outside the deposit scheme they usually use whilst the tenant made and broke many promises to pay rent. The landlord has their own cash flow to mind and was forced (by the need for their own survival) to pay their mortgage with some of the deposit.

But on day 31 of ‘the deposit’ being handed over the landlord was (and this is rather a strong word, I can think of no other) blackmailed regarding penalties as it wasn’t deposited within 31 days.

Still no rent.

So, my question is simple and in two parts…

The tenant has failed to pay any rent and the tenant’s bank continues to be incompetent (Apparently). Rent, by agreement should have been monthly in advance. Can a landlord re-label the money previously handed over as ‘the deposit’ to cover unpaid rent?

The landlord (is not me by the way) is seeking an eviction Section 8 – non-payment of rent, fraudulent references and two other unpleasant clauses. It is clear to me that this will go to the bailiff stage. The landlord will refuse to release the deposit, but they are desperately worried that the Deposit Scheme rules will find against them. Does anyone know what their view might be?

Thanks

Hamish



Comments

by Romain Garcin

16:17 PM, 5th October 2016, About 5 years ago

Reply to the comment left by "Ian Narbeth" at "05/10/2016 - 12:33":

"You are probably aware of cases where a debtor pays a sum and it is open to the creditor to allocate it to a particular debt or debts unless the debtor says that it is to be applied to a particular account."

Yes. IMO, this fits the current scenario.

by Mandy Thomson

16:30 PM, 5th October 2016, About 5 years ago

Reply to the comment left by "Romain Garcin" at "05/10/2016 - 16:16":

Doesn't a creditor's right of set-off apply here?

by Gary Nock

17:23 PM, 5th October 2016, About 5 years ago

Not being as legally savvy as either Mandy or Romain in contract matters, I can't help thinking that if the tenant said it was a deposit, and then the landlord protects it as a deposit.....then a Judge will say it was a deposit.. If it walks like a duck...quacks like a duck.. then the probability is..its a duck!

by Mandy Thomson

17:49 PM, 5th October 2016, About 5 years ago

Reply to the comment left by "Gary Nock" at "05/10/2016 - 17:23":

Fair comment, Gary, but the OP states, "But on day 31 of ‘the deposit’ being handed over the landlord was (and this is rather a strong word, I can think of no other) blackmailed regarding penalties as it wasn’t deposited within 31 days." This strongly suggests the landlord could argue undue influence; see http://www.inbrief.co.uk/contract-law/undue-influence/

There is more going on here than is possible to detail on a thread such as this. If the landlord goes back over his communications he may well find some conversation (text, FB, Whatsapp etc) where the tenant is claiming he should put the money toward the rent, which is not what a deposit is for.

by Mandy Thomson

20:39 PM, 5th October 2016, About 5 years ago

Reply to the comment left by "Mandy Thomson" at "05/10/2016 - 16:30":

I've just double checked and set-off rights only apply automatically to banking and tax, unless a there's a clause in the contract which allows it.

by Hamish McBloggs

9:18 AM, 6th October 2016, About 5 years ago

Reply to the comment left by "Michael Barnes" at "05/10/2016 - 11:07":

Hi Michael,

I saw Romain's point re insured vs custodial.

1 months rent as deposit probably doesn't cover the time between the tenant's arrival and departure, plus costs and intangibles from any subsequent fall out.

More general landlord oriented insurance may cover some of this provided all conditions are fulfilled exactly which is why I ask the question about due dil.

I am also asking about latitude if it is clear one party is good and honest and the other for what ever reason is not.

I am good and honest (my opinion) but it didn't stop the vatman getting the right hump with me for making a trivial mistake. There is NO excuse. I should have known the law and if I wasn't sure I should have employed an accountant. It will always be cheaper to bin the receipt for the hot sausage roll or go on a diet.

How many (and be honest) landlords, accidental or otherwise, know all the rules when they start; particularly if new and faced with an alleged fraudster?

Perhaps there should be exams for want-to-be landlords.

Hamish

by Hamish McBloggs

9:42 AM, 6th October 2016, About 5 years ago

Reply to the comment left by "Ian Narbeth" at "05/10/2016 - 11:47":

Ian,

I suspected as much.

by Hamish McBloggs

9:46 AM, 6th October 2016, About 5 years ago

Reply to the comment left by "Mandy Thomson" at "05/10/2016 - 17:49":

Mandy,

I will look at the link later re undue influence. Perhaps they have an email somewhere which may help.

I told them to get legal advice but in the meantime gather their evidence.

Hamish

by Hamish McBloggs

9:47 AM, 6th October 2016, About 5 years ago

Reply to the comment left by "Romain Garcin" at "05/10/2016 - 16:17":

Romain,

I agree with you.

Hamish

by Hamish McBloggs

9:58 AM, 6th October 2016, About 5 years ago

Quality referencing is a key point.

Can a reputable referencing agency uncover false identities that are carrying around undesirable baggage?

Hamish


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