Can I use deposit against arrears court fees and costs?

by Readers Question

13:40 PM, 11th May 2016
About 2 years ago

Can I use deposit against arrears court fees and costs?

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Can I use deposit against arrears court fees and costs?

By way of a Court judgement for possession only I am informed by my letting agent that the tenant’s deposit cannot be used against the £4,000 rent arrears plus Court fees, solicitor’s and bailiff’s costs. costs

Is this right ?

The tenant willfully stayed on after legal notices were served in order to cause me financial damage. To return his deposit while he owes me money cannot be right.

Many thanks

David



Comments

Neil Patterson

13:42 PM, 11th May 2016
About 2 years ago

Hi David,

I thought you could take the arrears, but we are going to need someone better informed than myself on this subject to help please.

Gary Dully

15:19 PM, 11th May 2016
About 2 years ago

When completing and lodging a deposit with the DPS, they ask you to copy and paste from your tenancy agreement the circumstances under which the deposit can be withheld.

Those clauses should state what constitutes a charge against the deposit and you then apply for the money to the DPS.

If they agree you should get it back.
Your letting agent should be aware of this process.

Steve From Leicester

10:00 AM, 12th May 2016
About 2 years ago

You will need to apply to the DPS (or whichever scheme the deposit is registered with) and make a claim against the deposit for your losses. Arrears should just be a formality, but you do need to go through the due process. The court costs etc might be a bit more tricky, they might argue that these costs are beyond the scope of the deposit.

I'm a little bit surprised that whoever represented you in court didn't ask the judge to order that the deposit should be paid over to you as part payment towards arrears and fees. You'd still have to claim it via the appropriate scheme but there would be no arguments because they'll abide by the judge's ruling. Worth remembering in the hopefully unlikely event that you find yourself in a similar situation in future.

Mark Lynham

10:07 AM, 12th May 2016
About 2 years ago

It should be in the tenancy that the deposit can be used for any default in the tenancy terms and one of those will of course be rent arrears.... sounds crazy....
The agent just makes a claim against the deposit for arrears..

Clint

10:31 AM, 12th May 2016
About 2 years ago

I was once owed rent which was well over the deposit so I did not return the deposit. There was a court hearing for the other monies owed. The tenant did not turn up so I won the case by default. The judge mentioned that I was lucky that the defendant did not turn up as I could not just deduct the deposit from the rent arrears even if the rent was owed and although, the tenancy agreement stated this in one of the clauses that the deposit could be used for rent arrears. By the way, this claim was a money claim where the tenancy had already ended and I was claiming for the balance after deducting the deposit. I left believing that the judge did not know what she was talking about as it all seemed quite ridiculous.

On another occasion, I applied for possession using a section 8 notice where the tenant was more than two months in arrears so obviously I assumed, that I could deduct the month's deposit from the rent arrears. The judge who was a different judge from the judge in the other case, asked me if I wanted an order to deduct the deposit from the rent arrears which seemed once again to be an odd question as I was going to do that anyway but obviously replied "yes".

I do recall a time just after the deposit protection scheme started where, I spoke to someone in "mydeposits" where the person told me the deposit could not be used for rent arrears. I then spoke to the National Landlords Association where the adviser told me that many of the officials were new and did not know what they were talking about.

So from the above, it would seem that a separate order has to be given by the judge or if you go through the dispute resolution, they would have to decide.

I would leave it to the agent to raise a dispute resolution if this is possible at this stage or let the agent take it to court and you make a counter claim stating that you already have a judgment for £4000. I am not qualified in this area to give advice but this is what I would do.

All such a waste of time for all parties including the court.

Ian Narbeth

16:20 PM, 12th May 2016
About 2 years ago

Your letting agent sounds like an idiot. What does he think the deposit is for? To provide an interest free loan to his business if he is holding the cash?

If the deposit held in an insured scheme you should take the money and notify the defaulting tenant, If in a Custodial scheme contact the DPS or whoever and claim all of it. If the tenant objects you can show the DPS the court judgment which proves the arrears.

I would then sack the letting agent forthwith.

Nick Pope

13:21 PM, 14th May 2016
About 2 years ago

I think perhaps that everyone there is confusing as to the tenants position - at the end of a tenancy he/she cannot refuse to pay the rent and say "take it out of the deposit" as this is not what the deposit is intended for. Rent is payable regardless of what a landlord holds as a deposit.

I have recently had a similar situation and the DPS (I can't speak for other schemes) very clearly states that the rent arrears are deductible from the deposit.

Michael Barnes

21:41 PM, 14th May 2016
About 2 years ago

Reply to the comment left by "Clint " at "12/05/2016 - 10:31":

The deposit belongs to the tenant until one of the following happens:

1. The tenant agrees with you, in writing (and probably to the Deposit Protection scheme) that you can have some of the money to pay his debt to you.

2. A Court orders the deposit (or part of the deposit) to be paid to you.

3. The Deposit Scheme's arbitration process determines that part or all of the deposit is to be paid to you.

You cannot just 'take' the money.

This has the following consequences:
A. Always claim for all monies owed; do not deduct the deposit in the belief that it will come to you automatically.

B. Always ask the judge to include an order in his judgement that the deposit is to be paid to the landlord. I know from experience that the DPS custodial scheme requires this to release any money to the landlord.


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