Deposit Protection Oversight – HELP!

by Readers Question

11:53 AM, 7th June 2014
About 5 years ago

Deposit Protection Oversight – HELP!

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Deposit Protection Oversight – HELP!

Had a tenant sign an AST in early 2013 and I didn’t register the deposit. Deposit Protection Oversight - HELP

How do I go about correcting this without being fined?

This was the only oversight as the other ASTs are registered.

Thanks

Sam



Comments

Mark Alexander

12:12 PM, 7th June 2014
About 5 years ago

Hi Sam

What’s done is done, your liability already exists, this liability is know is law as a “chose in action”. In other words, the right to sue. See >>> http://en.wikipedia.org/wiki/Chose

It is possible to assign a chose in action. In other words, the tenant could transfer his right to sue to another person. That other person could be you. Obviously you would never sue yourself!

The issue though is why would a tenant assign his right to sue you over to you?

Well maybe your tenant is just a really nice person and given that you are such a wonderful landlord who has made an honest mistake. On the other hand, at the first whiff of getting his deposit returned and compensation of three times that amount he may just choose not to be quite so nice.

Your potential liability will continue for 6 years if the property is England or Wales and there isn't anything you can do to change that.

Another option would be to write to him saying something along the lines of "as you have been such a good tenant I no longer feel it is necessary for me to hold onto your deposit, please find enclosed a cheque for £xxx". By doing this you will re-gain your right to serve a section 21 notice if/when the time comes but your liability to pay compensation will continue. Your tenant might not find out about his right to claim compensation for six years and after that time your liability will cease to exist. This is a strategy called "living in hope!"

If you decide to ask your tenant to assign his chose in action then it is recommended this is done by way of deed. To be completely bomb proof your tenant should be recommended to take professional advice. A good adviser will, of course, tell your tenant what his rights are. For this reason I'd suggest that you offer an incentive, i.e. if he agrees to assign his chose in action you will pay him some compensation now and you will also pay for the legal advice he takes.

Your third choice it to say and do nothing. Your position cannot worsen, unless you need to serve a section 21 notice. If you continue to look after this tenant well and give him a full refund of his deposit when he does eventually move out then you might just get lucky. He may never learn about his rights to sue you for compensation and even if he does he may choose not to exercise those rights on account of what a good landlord you have been to him.

I'm sorry that there's no 'get out of jail free' card for you play here but hopefully you will put this down down being a learning experience, regardless of what the outcome is.

Good luck!
.

Mark Leach

14:36 PM, 8th June 2014
About 5 years ago

Hi Mark,
A question for you. If you issue a termed tenancy or even a periodic one do you not have to re do the deposit each time. I think I have read somewhere that this is the case. If so either when the term expires or if periodic for some reason you could renew the tenancy with a new agreement and insure the deposit then !! Perhaps not entirely correct but would serve the purpose.
My company does not take any residential deposits mainly for this type of reason, it almost takes us back to the old section 20.

Best Mark Leach. John Leach Properties Ltd

Mark Alexander

21:24 PM, 8th June 2014
About 5 years ago

Reply to the comment left by " " at "08/06/2014 - 14:36":

Hi John

Starting a new tenancy and protecting the deposit does not wipe out ther previous "chose in action".
.

Dee Mc

21:42 PM, 8th June 2014
About 5 years ago

Reply to the comment left by "Mark Alexander" at "07/06/2014 - 12:12":

I think landlords should all consider attending a landlord accreditation course. Being a landlord is not a simply as people think and these course give you a wealth of information, eg registering your deposit (including time limits and consequences of not registering), how and when to serve notices, HMO advise and much more. You can also make savings, eg discount on HMO licensing and it looks good on your advert to say you are "an accredited landlord" although most tenants haven't got a clue what this means they think "I want one of those".. You also meet other landlords and hear their stories which can keep you from making the same mistake. As they say knowledge is power.

Mark Alexander

22:20 PM, 8th June 2014
About 5 years ago

Reply to the comment left by "Anonymous " at "08/06/2014 - 21:42":

I agree! 🙂
.

9:17 AM, 11th June 2014
About 5 years ago

just a bit of a curve ball question here.
If a LL protected the deposit as stakeholder, then LL unprotected deposit mid tenancy, but reprotected it a couple of years later and claims an oversight by staff member - can tnt claim 3 x deposit?

Mark Alexander

9:42 AM, 11th June 2014
About 5 years ago

Reply to the comment left by "Julie Ford" at "11/06/2014 - 09:17":

That's far too complicated for this time of the day Julie, in fact any time, any day.

My mind is now racing - THANKS!
.


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