Deposit problem after agent stopped trading?

by Readers Question

3 months ago

Deposit problem after agent stopped trading?

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Deposit problem after agent stopped trading?

A tenant has recently vacated my property which was rented through a letting agent. The letting agent stopped trading during the duration of the tenancy and its now come to light that they didn’t lodge the deposit with the DPS as was stated on the tenancy agreement.

Where do I stand as the landlord regarding the deposit as the tenant is now demanding I repay the deposit.

Many thanks

Dean



Comments

Neil Patterson

3 months ago

Hi Dean,

First port of call is to start with the redress scheme that the agent belonged to. They may have details of other landlords they have done this to. They may also hopefully have records of the agent's Client Money Protection insurance.

If not and there are enough landlords affected then you and they may be able/wish to consider a Private Prosecution.

Our team at Cotswold Barristers have been successful in the past for large groups, but they have all settled out of court and cannot be disclosed.

Please see >> https://www.property118.com/contact-legal-counsel/

Ian Simpson

3 months ago

I had this experience with one of mine ... the agent actually absconded with all the deposits , and was caught and jailed. (He didnt pay them back of course!) Luckily when the tenant moved out last year (Some ten years after giving in his deposit) I explained what had happened, and he didnt pursue it...
... As far as whether one should be liable to return something you never actually received in the first place, I am in the old school of saying that isn’t fair! However, that is using common sense, which of course, isn’t very common these days.

Graham Bowcock

3 months ago

Dear Dean

As the agent was representing you, then technically you did receive the money; it is obviously unfortunate that the agent was dodgy but this is not your tenant's fault (I appreciate that it was not your fault either, but he was your agent). If the tenant is entitled a refund of his deposit I would pay it and be glad he is not seeking any penalty for the failure to protect.

And, of course, pursue the dodgy agent until he is entirely aware of the grief he has caused, pays up whilst living in a tiny bedsit and is too embarrassed to walk down your local street. We must get rid of these people.

Graham

Annie Landlord

3 months ago

Unfortunately my understanding is that the deposit remains the responsibility of the landlord, so the landlord has to repay the tenant. I hope you can pursue the rogue agent and get your money back. Does the tenant have proof that they paid a deposit?

Cathie Hawkins

3 months ago

We had this problem. Had to pay the deposit and we also lost a number of months’ rent that the agent absconded with. Couldn’t trace him. ☹️

H B

3 months ago

Reply to the comment left by Ian Simpson at 30/05/2018 - 10:51
Not sure that you are using common sense, Ian. The deposit is the landlord's responsibility even if you have asked for it to be paid to someone else.

Ian Simpson

3 months ago

I think as I inherited this tenant with the property, and thus the crooked agent was nothing to do with me. he had been appointed by the previous landlord. Had I appointed him, signed an agreement with him etc etc, it may have been a different story, and may be construed that the deposit was repayable by me (even though I had never received it). I seem to remember the few times I have been to court, that judges do seem to be of the belief that in general, a redress of the balance should take place - e.g. A takes £5000 from B , thus B is owed £5000 by A. B is not owed £5000 by C ( or D for that matter!) so luckily all the judges I have ever met have had some common sense.

Graham Bowcock

3 months ago

Ian

Glad to hear that your problem got resolved, but I think the general principle is that when you acquire a property (purchase or inherit) you assume the position of the existing landlord, including all of their failings. If not then the system would be open to abuse (it wasn't me guv, it was my brother/cousin/uncle Dick, etc.).

They key for anyone buying a property with tenants is good due diligence and using a lawyer who knows their way around the lettings system. Any discrepancies need to be accounted for by indemnities or price reduction so that the subsequent landlord can always honour legal commitments).

Graham

Jonathan R

3 months ago

Not knowing all the details it is hard to say what I would do, however if this happened to me, with the tenants I have currently, I would pay them the deposit back myself.

They might need it to rent somewhere else and it isn't their fault.

Jonathan

Yvonne Francis

3 months ago

I believe the Landlord is legally required to return the deposit to their tenants if the agent fails to do so. If the deposit is not registered and the tenancy has ended then the tenant is entitled to claim three times the amount from the Landlord.

If it was me I would pay back without question and hope my tenants do not know their rights on this question and in future go to reputable long standing agents and keep checking them.

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