Deposit Protection Boo Boo – Landlord SOS – HELP!

Thank you Robert, and Mark (again!), I think I have covered everything in these threads, obviously from my side, the tenant may see it differently of course.I know it's really flaky to say this, but I just can't be bothered with it all! I have made my dicision based on the advice you have given me and have written a letter saying that it's too stressful and here's the money back, basically! I know I have given the green light for them to take me to court for the re protecting business, but my Dad says thats what the "slush" fund is for!! He is reaping the benefits as well Mark, which is why I think he is keen for me to learn.. and move on. Being sued will be another experience I could do without, I must admit, but I need to deal with this situation promptly in order to find out what comes next and start dealing with that. In fact if I do go to court I feel quite confident that the original protection was just rolling on and that I didn't need to re protect.

Thank you Mary.

OK I have not read all the responses Josie in detail, but have skim read them and the advice to you seems to be pretty good, especially from Mark and Mary. I would also agree with the advice to take expert L&T Law solicitor advice especially if ther tenant does proceed - don't try and do this on your own. To the recommended solicitors named so far I would add Philippa Graham at Anthony Gold they run a no win no fee service on deposit claims for both Landlords and Tenants.

Back to the plot I would just comment as follows:-

Forget the new lease ignore it totally, red herring, as you say it doesn't exist. WORD OF WARNING if not executing renewal etc documents face to face, but posting them, NEVER sign first and then post as it can lead to all sorts of issues such as the reverse of this one where you think you have a periodic tenancy as their copy never came back, then they turn up in Court with it signed!!

The issue I will focus on is the status of the deposit in the periodic state, and there are two angles here. One is what the Scheme it is protected by may or may not want you to do. From memory I think TDS and Mydeposits want you to press a few keys and put a new date in, or the date it went periodic.

You can't now enter a new end date of course though originally I think at least one scheme asked for a date 6 or 12 months in advance, but have since dropped that requirement? But all this is just admin and to comply with Scheme Rules and what they want, and frankly is secondary to the second point, what the Law wants and the Housing Act 2004. Here with periodics we enter an interesting world and Mary has raised the key issue, the one I call the nano second of non protection!!

If as is clearly the case (no matter what anyone counter argues with me!!) that as set out in section 5 of The Housing Act 1988 at the end of the fixed term tenancy a new one arises (the periodic one) then there has to be a split second in time, the nano second(!!) when the deposit must be unprotected and needs to be re-protected. I agree with Mary here (she doesn't agree with all my views on this issue) that it is largely academic unless there is a serious gap between end of fixed term and protecting in the periodic state.

You said you new late protection was back dated anyway, so I am a bit confused as to how or why the tenant thinks the deposit was not protected anyway.

Can you explain that?

Anyway back to the plot again and if I was the tenant I would be arguing (so you know how to brief your Brief!) that even if you had acted perfectly in terms of doing whatever was needed by your Scheme to re-protect the deposit, you still had not discharged all obligations because the Prescribed Information needs to be re-issued.

My opinion, and that of some better legal brains than mine, is that because it is a new tenancy and I agree is a daft requirement, because protection is two pronged the money and the PI, to be 100% safe you need to re-issue the PI. Put it this way take ny advice and do so if it turns out you didn't need to you are covered anyway. If you don't and it turns out you should have done, then you are exposed.

Mary and probably Mark and maybe Tess may disagree with me here, there are others I could name on my side of the fence who do agree with me on this one and we await the inevitable Court case to decide.

But Josie I don't think it will be you. I agree with Mark and don't think you have a case to answer at all, or even if you do it will be a minor one and will not cost you x3 the deposit as the penalty at worst it will only be x1.

The problem post Localism Act is there is now no escape if an offence has been committed. If Mydeposits who I think may yet have to post confirm to you the deposit was never unnprotected in itself then there is only the PI argument and that as I have said is far from clear as to whether it needs to be re-issued anyway. I have seen an argument recently that having issued it once you have complied with the "initial requirements of the Scheme" as requitred under the Statute, but I am not convinced by that argument.

Anyway Josie you never mentioned Prescribed Information at all did you actually issue it when originally protecting as the Schemes do not do this for you even though they have a template of the PI form on their websites, which personally I think is very misleading and know many private Landlords who deal with the money but omit to issue the PI, or issue a form which is incomplete or incorrect, usually missing out the Relevant Person name if it applies (someone else providing part of the deposit) or post tenancy contact address details.

If you did not issue the PI then the offence is committed and the tenant has a clear claim against you. Howwever as a private Landlord although ignorance of the Law is no excuse you'd only be penalised deposit return and x1 as a penalty. I'd be astonished if it was more, x2 and x3 is usually reserved for bigger private Landlord running a business, or of course agents who should know better!!!

One other point - no way your claim could amount to x2 the deposit is there as that would help your case against the tenant.

Sorry me again just to deal with one other point.

I would not give the deposit back yet but if that is your decision fair enough. But someone else posted early on about trying to link the deposit return to full and final settlement etc, but i think then said you cannot do that.

This is correct and no matter what you concocted and whatever the tenant signed agreeing, they could change their mind and sue you for up to 6 years post the 'offence' date under Statute of Limitations.

This is why I would not give the deposit back, as the tenant will only be entitled to it if they go to Court (the claim has nothing to do with Schemes and is not handled by them, only dispute adjudication) so it is for the Court to decide if the deposit amount should be paid to the tenant. The Scheme simply decides if the tenant or you raise a dispute with them.

@Industry Observer - very interesting reading. Slightly off topic but you know I like to probe into these legal issues nearly as much as you do. My question is your thoughts on the nano-second argument in terms of when a person decides to switch deposit protection providers. By way of example, let's say that previously I had decided that I preferred to hold the deposits myself and chose to register them with an insured scheme such as MyDeposits or TDS. Then, due to bank charges I have a change of heart and decide to switch over to using the DPS Custodial scheme. Are you suggesting that I should transfer the money and protect with the custodial scheme, and serve the new certificate and PI before I unprotect deposits with the insured scheme provider?

Thank you guys, I appreciate the effort that has been put into these responses.
You have to remember that I am really not very good at this job and although I don't often make mistakes (thankfully), I must put my hands up & say I could easily have missed something. I'm not confident at all in this situation and am at the moment trying to get hold of the tenant to go and have a chat with them. (no response yet).

@Josie

I ask again please did you serve Prescribed Information with original protection?

@Mark

I think that is a very different situation Mark in the sense that the money is never unprotected because you do it all on the same day. But yes if holding the money yourself as opposed to DPS being involved in current protection, I'd suggest completing the new protection first would be a very wise best practice.

Nothing at Law says you can't protect the same deposit twice!!!

The issue doesn't arise because on any change of scheme, or even change of Landlord or agent and money staying in same scheme, you simply MUST serve PI again.

Where the nano second really comes into play is that because the two tenancies cannot be running at the same time, there has to be a moment in time when the deposit is unprotected, but that's all it is and the Court isn't going to crucify anyone if that's all it is and everything else is done corectly.

The real issue of course is whether the PI needs re-serving because the tenancy has gone periodic and those arguments have been well aired here and elsewhere!!

Hi Josie,

It seems like this hinges on whether or not a new tenancy agreement was formed. Our advice would be to seek legal advice on the issue of whether a new tenancy agreement has been formed or not. This may depend on whether you changed any terms of the tenancy agreement (such as rent) and whether your tenant is able to prove this.

In the eyes of the law the deposit was properly protected first time round as long you did indeed serve the tenant with the prescribed information within the 30 day period.

Re-protecting the deposit bears no significance unless it turns out that a new tenancy agreement was formed. If that is the case then, by your own admission, the deposit was protected out of time and therefore you would be in breach of TDP legislation.

Hope that helps.

O.I.
These comments are getting far too in depth for me! If I fill out a form, then I just give it all the info that it asks for! I'm not a legal beagle I'm afraid! I am a LandLord that is just learning as I go along.....Legal things from the internet and landlord magazines and now this thread...... and day to day running of the general business & how to keep the tenants happy from my very experienced father.
This has been a VERY enlightening thread, thank you all.
Right, I'm off again now.....school run, dinner,karate and pony riding! (no, not me, the kids!).

Not 100% on this, but is it not case law that as long as the tenants deposit is placed in a scheme that the Courts will not take action?