Previous landlord failed to register deposit?

by Readers Question

14:45 PM, 5th January 2016
About 3 years ago

Previous landlord failed to register deposit?

Make Text Bigger
Previous landlord failed to register deposit?

I bought a property at auction in August 2015 which included 6 existing tenants.failed

Some of the tenants have remained in the property on their existing tenancy agreements and as these expire, I will offer them new tenancies or continue on their existing agreement as a periodic tenancy.

The tenancy agreement (AST) is very short and implies that the landlord took a deposit. However, I can find no trace of any deposits and the tenants have no paperwork to support the deposits being registered anywhere although they did pay a deposit.

I have not been “given” the deposits as part of the sale or otherwise.

I have tried contacting the previous owner/landlord but he is not responding at all.

I have one of the tenants given notice to leave the property and I want to know what to do about “returning” his deposit.

Do I just give him the deposit back (and the same with the other tenants in due course)?
Can I do an MCOL (money claim online) against the previous landlord?
If I do a claim, can I claim for 3 x deposit amounts?

There are lots of other discrepancies with the set up including weekly payments received and no rent books but I am getting things sorted.

Any new tenants who come in will have their deposits lodged with the DPS and receive a proper AST.

Thanks for any help you can give me.

Bernadette



Comments

Neil Patterson

14:47 PM, 5th January 2016
About 3 years ago

Sorry Bernadette, but obvious question - have you checked with your solicitor for any paper work?

Bernadette Lloyd

14:50 PM, 5th January 2016
About 3 years ago

Reply to the comment left by "Neil Patterson" at "05/01/2016 - 14:47":

Hi Neil,

I have everything from the solicitor and have sent a request via my solicitor and his solicitor for this information. His solicitor says he has sent it on to him and asked him to be in touch directly - either via my solicitor or to me ... heard nothing (just over 2 months now).

Thanks
Bernadette

Chris Byways

15:08 PM, 5th January 2016
About 3 years ago

With hindsight if the auction stated subject to existing ASTs I guess it should have been asked then. The tenants should have a claim against the original deposit taker for not registering, and only the court can order the upto 3x penalty against them - I hope.

So what proof do tenants have and do they have any contact details of whether it was allegedly lodged or insured? If the later, you are more likely to be liable, if the former the company taking the deposit should advise.

What is the correct procedure when taking over a TA, re updating the TA with the current details?

Annie Landlord

21:41 PM, 5th January 2016
About 3 years ago

In the circumstances, would the deposit schemes not respond to a solicitor's letter asking if any deposit was registered at the address? Indeed, you can just do an address search on the my deposits website to check whether a deposit is registered. Given the lack of communication from the previous owner it does look as though they've done a runner, doesn't it? Maybe you have some claim against your solicitor for not picking up on the issue?

Ian Narbeth

11:47 AM, 6th January 2016
About 3 years ago

Key question Bernadette, did your solicitor review and report on the auction pack before or after you bid at auction? If after, then it is unlikely you could have refused to complete even if key information was not provided.

Auctions are well-known as a place for off-loading problem properties and for fly-by-night sellers to make a quick buck. It is also not unknown for key documents to be omitted from the auction pack available for download until the day of the auction when they suddenly appear. If a seller has failed to protect the deposits then you have a problem. Best course is probably to repay the tenant out of your funds and try to trace if a deposit was lodged with the DPS or has been kept by the seller.

A word of advice. If you buy a tenanted property at auction you need to do a lot more due diligence beforehand than if you buy with vacant possession. If you want a solicitor to check everything out, expect to pay a decent fee which of course is lost if you don't win the bidding.

Bernadette Lloyd

18:32 PM, 7th January 2016
About 3 years ago

Hi Ian, Annie and Chris - thank you for your comments.

We (me and the tenants) only have copies of the one-page AST which was in the auction pack and does say that the deposit will be lodged. No one has any proof that it actually was. It does not even say which scheme would be used.

I issued section 48s to each tenant when I had completed on the property. I don't think there is anything else that I needed to do.

I have checked all the deposit schemes and none of them have anything lodged against that address for anyone. My assumption is that it was not registered.

Unfortunately I did not get our solicitor to review the pack before the auction. I do have some other issues that might have been picked up if the solicitor had reviewed and if I had a survey done ... hindsight is a wonderful thing. The property cash flows really well, even after paying for some of the "mistakes", including these lost deposits so it is a lesson learnt.

Thanks for your responses. I will probably pay the tenants back or lodge the money myself.


Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Millennials stumble on the Property Ladder

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More