Deposit lost or stolen by previous liquidated agent – am I liable?

by Readers Question

10:01 AM, 16th May 2016
About 2 years ago

Deposit lost or stolen by previous liquidated agent – am I liable?

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Deposit lost or stolen by previous liquidated agent – am I liable?

I purchased an HMO in 2011 with about 12 current tenancies, from a variety of agents. These agents held on to the deposits until last year when I decided to self manage and they have thus unprotected all the deposits, paid them over to me, and I have now paid to protect them with My-Deposits.liquidated

All well and good. The only problem is one tenant, who got his tenancy through a particular agent. I believe he paid a deposit to this agent when he started the tenancy before I owned the property. The agent has now gone into liquidation, in around 2012 or 2013, and I was not informed and only found out in a roundabout way (through a neighbouring estate agency). There is now no way of contacting anyone to do with this now ex-agency.

I thus believe the tenant’s deposit has been swallowed up by this agent.

Question: When the tenant decides to give notice, will I be liable for his deposit even though I have never received it?

Many thanks

Ian



Comments

Neil Patterson

10:07 AM, 16th May 2016
About 2 years ago

Hi Ian,
Have you checked with all the other deposit protection schemes on the off chance it is still protected?

Mark Alexander

10:39 AM, 16th May 2016
About 2 years ago

Hi Ian

As much as it grieves me to say this, yes YOU are personally liable if your agent failed to protect your tenants deposit.

HOWEVER, you do have available to you recourse to the Directors of the agency personally, regardless of whether they were a limited company and regardless of whether it has been liquidated - please see http://www.property118.com/private-prosecutions/

Also see >>> http://www.property118.com/property118-landlords-association/86633/
.

Ian Simpson

8:12 AM, 26th May 2016
About 2 years ago

Reply to the comment left by "Neil Patterson" at "16/05/2016 - 10:07":

Hi Neil

That might be worth a go .... I know about TDS and My-Deposits, who are the other ones...? MAybe I will get my friendly agents to check for me...

And by the way, the said director is now I believe residing at Her Majesty's pleasure, so doubt any recourse to that one!!

Thanks

IAn

H B

21:53 PM, 28th May 2016
About 2 years ago

You are ultimately responsible for the deposit but you should have a good claim against the estate of the company and its liquidators.

Deposits should be held in trust in a segregated client money account and not be used as spelling capital for the business. Records would have shown who the deposits belonged to, so the fact that they were not returned to you suggests that the company was not properly wound up and may be evidence of theft.

Greg Smith

15:08 PM, 2nd June 2016
About 2 years ago

Hi Ian, do avoid this sort of problem in the future I would advise using an online letting agency such as LetMe. There are no deposits involved with their process, so this sort or problem doesn't occur when using them as your letting agency,


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