Tenant Refused Deposit Back!

by Readers Question

15:37 PM, 29th July 2013
About 8 years ago

Tenant Refused Deposit Back!

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Tenant Refused Deposit Back!

Being a first time landlord I was very naive in the rules around securing the deposit (yes, I am another one of those!). Tenant Refused Deposit Back!

I realised this after I tried to issue a s.21 notice seeking possession, being advised that I had to return the deposit in full.

I realised this very late on and have tried to return the deposit to the tenant, I tried getting their bank details, asking to hand over a cheque, even getting a cheque witnessed and put in their post box. The last option happened and the day after I issued a s.21 notice.

A couple of days later I received a letter to be signed for with the deposit cheque inside from my tenant. I knew the letter was from them but I am not a bad landlord to refuse a letter from my tenant so I took it. Now that I have the cheque, am I back to square one on this. It was issued and received by the tenant before I hand delivered the s.21 so surely the possession order is valid.

I can’t guarantee the tenant will cash the cheque, now I can’t even guarantee they keep it.

Does this means the s.21 is invalid?

Can someone guide me, is there any case thats gone in front of a judge like this and what was the result.

This has been a huge learning curve for me and I’m just looking to see whether I now need to put it in a scheme, which is not a problem at all, happy to do it.

Can you help guide me on this?

Giuliana Quadernucci

Comments

Giuliana Quadernucci

21:14 PM, 5th August 2013
About 8 years ago

I'd like to thank everyone for their advice on this matter, a lot of it has been very helpful, others not so much and a bit scare mongering....

Just to advise that I have protected the deposit now and within a few hours of getting confirmation from the scheme I selected, my tenant asked me to put it towards the overdue rent - which clearly I can no longer do.

The tenant has also indicated that they will not pay the late payment fee which the statutory periodic tenancy allows (as I am using the last contract as the basis for the periodic). Clearly she's in the wrong.

She also wants it to move to a single tenancy, not a joint one with her husband, I'm also not going to do this either.

May well be back in future to keep you updated as perhaps my issue and how I am resolving it will help other 'dopey' landlords!

Mark Alexander

21:25 PM, 5th August 2013
About 8 years ago

Reply to the comment left by "Giuliana Quadernucci" at "05/08/2013 - 21:14":

Which smeme did you protect the deposit with and why don't you think you can use the money in the way the tenant has requested, ie to offset arrears?

Protecting late does not get you off the potential fine. However, the tenants request to use the deposit to reduce rent arrears does give you an opportunity to do a full and final settlement against all claims relating to the deposit.

The request from your tenant is a golden window of opportunity for you, I suggest you grasp it with both hands. I also suggest you consult with a solicitor to help you draft the full and final settlement agreement.

21:34 PM, 5th August 2013
About 8 years ago

Nothing stops you terminating the tenancy and then issuing a new one to this one tenant the day after.
You technically return deposit and then take it out again and issue a new DPC in her sole name.
Means a new AST but I can't see your tenant objecting.
She signs a surrender letter and then you offer a new AST to her the following day.
You could meet her at just before midnight and do it all then and after midnight.
If you don't want her to have a single AST then she and he have to leave.
As I've stated it sounds to me like she is working the benefit system.
She will qualify for a 1 bed place but she can stay in yours providing she can afford it which she will with the husband paying.additionally
Be very careful of 'clawback'; avoid direct payment of any LHA and you mustn't know anything about any deception arrangement otherwise if the council find out they will come to you for 'clawback' even if you didn't accept direct payments
That is NOT scaremongering that is what could happen...................................................be very; very careful of this tenant who will have you over.
Staying one night a week is the husband's PPR.
They MUST be both on the AST if he resides there
It is so obvious they are trying to work the system.

Mark Alexander

21:47 PM, 5th August 2013
About 8 years ago

Reply to the comment left by "Paul Barrett" at "05/08/2013 - 21:34":

The only way this tenancy can be terminated is by mutuL consent based on everything that's been said on this thread. Section 21 can't be served as the deposit can't be returned. Section 8 can only be served if/when the tenant defaults and it appears that's not happened. I may, of course not be privy to the full facts of this case.

21:54 PM, 5th August 2013
About 8 years ago

Reply to the comment left by "Mark Alexander" at "05/08/2013 - 21:47":

Yep if there is no mutual consent then yes a whole hill of problems.
The deposit issue is a nasty little point; as you say, not sure what the whole story is!
I am presuming that they are prepared to work together and have a clean start.
But with so many unknowns; it is difficult to determine what is going on.

HB Welcome

0:12 AM, 6th August 2013
About 8 years ago

Reply to the comment left by "Chris Best" at "30/07/2013 - 16:07":

Chris, I see what you are saying but I think you are wrong, because of this case;

http://www.bailii.org/ew/cases/EWCA/Civ/2003/342.html

Mark Braithwait

14:44 PM, 8th August 2013
About 8 years ago

Reply to the comment left by "Chris Best" at "30/07/2013 - 16:07":

I agree that a cheque in not Legal Tender unlike coins & Bank Notes, however, they are a legal tender (i.e. a legal offer) and payment tendered (offered) is payment made. That is to say, by the actions of the tenant returning the cheque has refused the landlord’s good faith offer. The landlord has now legally paid the bond back and can therefore use “Section 21”.

Reasons for this are as follows; A cheque is a bill of exchange. Oxford Law Dictionary states “cheque n. A bill of exchange drawn on a banker payable on demand.”

HMRC web site states at http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm19120.htm: Where an IOU is involved, you should note the effect of the Bills of Exchange Act 1882/S62 and S89. If the holder [Your tenant] of a bill of exchange or of a promissory note either unconditionally renounces their rights in writing, or delivers the instrument to the person liable [Landlord], this discharges the obligations of the acceptor or promissor [Landlord], even though no consideration is received. So this is an exception to the rule that a unilateral discharge of a debt requires some form of consideration.
Bills of Exchange Act 1882 (S62.1): When the holder [tenant] of a bill at or after its maturity absolutely and unconditionally renounces his rights against the acceptor [Landlord accepting liability of the cheque] the bill is discharged..
The renunciation must be in writing, unless the bill is delivered up to the acceptor.

Note: Words in [ ] are added to highlight the landlord and tenant roles.

Derek Cornelius

17:22 PM, 30th August 2015
About 6 years ago

Can somebody please advise the outcome of this regarding cheque return etc. as it could be relevant to a situation I am currently in regarding a deposit and section 21 notice.

Thank you

Giuliana Quadernucci

17:49 PM, 30th August 2015
About 6 years ago

Reply to the comment left by "Derek Cornelius" at "30/08/2015 - 17:22":

Hi Derek

Thankfully this matter got resolved by the tenant abandoning the property owing me two months rent, I got off lightly if any of the other stories Ive heard are anything to go by. I did spend a lot of money on solicitors and it did revolve around getting the deposit back to the tenant. I wanted the tenant out as I wanted to sell which I did after she left and I had redecorated a second time, but it ended well for me, I'm not longer a landlord and if I become one again, I will be much more informed about taking on a tenant.

If you want some tips:

Thoroughly check references and include a reference from their previous landlord (I didn't in this case), seems my tenant moved on year on year probably because they caused trouble where they went!
Don't be friend with them as they take advantage. Keep it very professional.
Make sure you make regular visits, I didn't and I ended up being reported to the local authority as the place went mouldy!
Get bank account details from them when they sign up, I didn't and I had no way of getting the deposit back to them.
Make sure you protect the deposit, having it sitting in a bank account where the rent goes isn't sufficient.
If you are unsure of them, don't let them move in, its better to wait for the right tenant.

All I can add is good luck, this forum was helpful at the time, there is such a lot of ignorance in this area and it appears to me the tenant always holds the cards....but thats my experience, I'm sure others on here will feel different.

Ultimately if you get the unprotected deposit back to them then you can serve notice.

Derek Cornelius

19:48 PM, 30th August 2015
About 6 years ago

Reply to the comment left by "Giuliana Quadernucci" at "30/08/2015 - 17:49":

Thanks for the update Giuliana.
All the best

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