Further Warnings to Landlords about Tenants Deposit Protection

by Mary Latham

17:21 PM, 9th December 2011
About 9 years ago

Further Warnings to Landlords about Tenants Deposit Protection

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Further Warnings to Landlords about Tenants Deposit Protection

Following my blog The Devil is in the Detail, I want to pass on some information that will help landlords avoid being caught out.

  1. “When you protect a deposit you are asked if there is a third party who has provided the deposit.  Most of us assume that the tenant has provided their own deposit and click the NO box. But did we actually asks the tenant?”


In a recent case, the Mother of a tenant had provided the deposit and, because the landlord was unaware of this, he did not send her a copy of the Protection Certificate and prescribed information about using the scheme. As a result, the mother was awarded 3 times the deposit by the courts.

Good practice- and I shall certainly be doing this myself in future- is to tick the YES box and cut and paste the form onto a word document. When a tenancy is agreed, I am going to ask the tenant to complete the application form and sign it. I will the use the information that they have provided when I protect the deposit on the online form. This has three purposes:-

  1. They will have signed to say that they have given me the information and cannot then claim that I have excluded a third party (if there is one) or not included a valid contact address for after the tenancy has ended;
  2. The tenant will know from the outset that I am a professional landlord and will have more confidence handing over the deposit to me;
  3. It will save me time when I complete the online form.

I only use MyDeposits, other schemes may have different paperwork so you should check this out.

  1. “Many landlords do give the tenant a copy of the Protection Certificate within the legal deadline (currently 14 days but about to rise to 30 days as I said in my first blog) time but we must also give the prescribed information about the scheme. If you do not give this information to tenants you will not have met your legal obligations.”

These documents must be sent to everyone who is involved, all those who contributed to the deposit (if it is a joint tenancy) and anyone who gave them the funds as described above.

The information is on the MyDeposits website and I am sure that the other two schemes will also provide the information on their website.

Many landlords believe that, because there is a “Lead Tenant” who will be the main point of contact for the deposit scheme, they do not need to give copies to anyone else but this simply is not the case. You must give copies to everyone involved.

As an aside,  I heard a case of a mother who tried three times to pay her sons rent to the landlord but the landlord told her that she only accepted rent from “the lead tenant”. This was a joint tenancy for a group for a group of students.  Could you imagine what the courts would make of a landlord would refused the rent three times and then took legal action when the tenant did not pay?! The “lead tenant “is for the purpose of tenancy deposit protection and in all other circumstance all tenants are equal “jointly and severally responsible”

I am sure that I don’t really need to say this, but for clarity, if you refuse rent that is offered in legal tender do not expect to win if the tenant refuses to pay and you take legal action. This also applies to those landlords who “insist” on a direct debit.  This might be your preferred method of payment but if a tenant offers you cash or a cheque (with time to clear by the due date) just say “thank you” and if it is cash issue a receipt or, better still, a rent book.



Comments

Tessa Shepperson

18:24 PM, 9th December 2011
About 9 years ago

I have heard it suggested that if the tenant pays the deposit by credit card, the credit card company is a 'third party' who ought to be provided with the relevant notice etc.

I am not sure how the courts woud treat this if it ever came to it. What do you think?

Mary Latham

19:07 PM, 9th December 2011
About 9 years ago

What an intersting question Tessa. Personally I would not take a deposit by credit card and I don't know a landlord who would. Maybe Agents do this I am not sure.

For me the whole point of taking a deposit is to hold something that the tenant wants back to ensure that they are respectful of the property that I want back.

I honestly cannot remember when I last withheld monies from a deposit unless the tenant asked me to use it to cover an agreed cost ie rent or serious damage and that has only happend twice in recent years. I am very realistic about what is fair wear and tear and I have an ambition to give back 100% of tenants deposits everytime.

If a landlord r agent intends to withhold monies from deposits he needs to be certain that he has covered himself at the beginning.

Mark Reynolds

20:54 PM, 9th December 2011
About 9 years ago

Hi Tessa & Mary

As you know we are a letting agent in leighton buzzard area. Our first priority is to our landlord to make sure we get the right tenant. Once the tenant is in the property our responsibility is to both. We would never take a deposit on a credit card for the following reasons:

1. We can never be sure it is their card

2. If it is cloned, the cardholder may never know until their statement comes in

3. Once they see the charge the cardholder will dispute it and we are highly likely to be told to pay the money back

4. When we tell the tenant about this "error", they are likely to do one before we can sort it out

I think you get the picture. In conclusion, we do everything we can to ensure the tenant is who they say they are and to take a credit card may be the chink in our armour, so this scenario will never come up for us 🙂

Mark Reynolds

21:01 PM, 9th December 2011
About 9 years ago

Sorry I meant to also say, Mary your experience and female intuition wins the day - probably for different reasons but wins never the less hahaha 🙂 !!!!

Mark Alexander

21:11 PM, 9th December 2011
About 9 years ago

I doubt very much that many landlords have the ability to take credit card payments. I do as I have another business but I have never had such a request from a tenant. If I did I think this would ring alarm bells with me, if for no other reason that it's not what I'm used to.

Mary Latham

21:20 PM, 9th December 2011
About 9 years ago

Point well made Mark R

Mark Reynolds

21:23 PM, 9th December 2011
About 9 years ago

Thanks Mary L

22:54 PM, 9th December 2011
About 9 years ago

Not sure about this situation relating to mother of tenant providing deposit.
Surely if a tenant hands over the deposit monies then where those monies have come from is irrelevant as far as the Landlord is concerned.
Your contract is between you and the tenant.
You don't need to ask where they obtained the resources from.
They could have come from a loan shark.
Are you supposed to provide a copy of the DPC to the loan shark!!!
No how the tenant comes up with the resources to obtain the tenancy is nothing to do with the landlord if the tenant hands over the monies to the landlord direct.
The tenant essentially has a private treaty agreement with the mother to pay back potentially the resources facilitated for the tenant.
A different situation if the mother hands over the deposit monies directly to landlord then I can see that provision of a DPC to the mother would be valid.
Extrapolating your contention EVERY tenant could say it wasn't their money they gave the landlord for the deposit it was their Dad, Mum, loan shark, cash advance on credit card, friend, local church, work colleagues etc, etc, Then they make a claim namin g anybody to claim 3 times the depoist.
Again a possible flaw in depoist regulations which may require a test case if tenants get wise to this possible loophole to rip landlords off.
I think I will be adopting your measure.
It seems you can't be too paranoid as a landlord of tenants exploiting loopholes to rip landlords off!!?
Therefore taking it to the enth degree I can see why you are to now get tenants to sign for the fact that it is their resources that are funding the deposit.

Mary Latham

23:23 PM, 9th December 2011
About 9 years ago

I think the clue is in the fact that MyDeposits actually ask the question on the online form when a deposit is protected. I admit that I did not realise the importance of the question but I do now.

A good message Paul
".... you can’t be too paranoid as a landlord of tenants exploiting loopholes to rip landlords off!!?"

23:32 PM, 9th December 2011
About 9 years ago

I agree with you Mary if somebody of your experience could have been potentilally tripped up by this circumstance what hope is there for us considerably less experienced landlords than you.
I think continual monitoring of your posts is esseential as far as I can see

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