Unprotected deposit counter claim

Unprotected deposit counter claim

10:17 AM, 20th August 2014, About 10 years ago 4

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Unprotected deposit counter claim

A previous tenant left three months into the fixed term six month AST. No notice was given other than a cursory phone call and some texts asking what would happen with their deposit. In good faith I refunded half of the deposit. It seemed pointless to pursue them for outstanding rent and I actually felt sorry for them.

However, we had not protected the deposit.

We have other properties and have used the custodial and insured schemes so there was no excuse, just bad paperwork and admin. No defence on that one. One of the tenants has now come back to me – 5 months later – telling me to send him a cheque for 3 x compensation or he will sue me. We have since recorded the deposit (on advise from the scheme) into the insured scheme.

I hold my hand up to the mistake and realise I have left myself open on this one. But surely, there must be some element of fairness if it were to proceed to court. I have been fair, courteous and honest throughout my written discussions with these individuals. They have been antagonistic, threatening and no acknowledgement that they had a legally binding contract in the first place.

They have a case as the deposit wasn’t protected, I fully accept that but do I have a counter-claim for the broken contract and loss of rent?

I can’t be the only person in the country who’s faced this form of blackmail.



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Mark Alexander - Founder of Property118

10:33 AM, 20th August 2014, About 10 years ago

Hi Kathy

You may well have a basis for a counter-claim based on your costs of re-letting and any rental income lost due to a void period. This will very much depend on the arrangement and what was put in writing when the tenants vacated though.

Also, it is far from a given that compensation will be awarded to a tenant by a judge. This is discretionary and you appear to have a good story.

I think you ought to issue a strong response advising the tenant that if they take action you will counter claim for breach of contract and associated losses, also pointing out that compensation awards for failing to protect a deposit are discretionary. That may well make them think twice.

Good luck.

Ian Narbeth

14:01 PM, 20th August 2014, About 10 years ago

Keep copies of all the correspondence. Judges take a dim view of blackmail attempts.

You say "one of the tenants" but referred to "a previous tenant". Can you clarify? Is it the tenant who left or another who is claiming the 3x? If they were joint tenants are all of them claiming? Did you re-let the property within 3 months? If you did the tenant may argue there was an implied surrender and that he is not liable for the remaining 3 months' rent.

Also if the tenancy ended, on what basis did you record the deposit into the insured scheme and did you serve Prescribed Information on the tenant(s)? If not then you still have not complied with the rules. In Gardner v McCusker the court awarded 2x the rent against a landlord who had failed to re-serve the Prescribed Information when the tenancy became periodic. This was extremely harsh as the deposit was protected and the tenant had received the PI 6 months previously. Some judges seem to like kicking landlords.

Philip Savva

20:59 PM, 20th August 2014, About 10 years ago

Hi Kathy, in re; the deposit was anything put down in writing stating they paid a deposit or not?

Neil Robb

17:12 PM, 24th August 2014, About 10 years ago

Hi Kathy

I very recently had a similar problem in which the tenant tried to say I kept his 1/2 of his deposit for work to be done etc. He was quite demanding and I tried to explain to him what had happened and they in fact lied to me about the reason for leaving my property early. 18 months later he threatened to sue me and take legal action. I told him to do what he felt he had to. After all his ranting I have not heard a thing.

Be careful what you put in writing as it can be later used against you. As you say you have been fair and reasonable. I believe only the lead tenant can pursue the breach of the deposit scheme. He could be just chancing his arm.

I now find I don't take deposit most of the time as it rarely covers unpaid rent or damage done. The time it takes to fill out an inventory the will be accepted by the deposit scheme and checks through out the agreement take up a huge amount of time. Downside some tenants think they can do what the like as there is no deposit at risk. So for this has worked to my favour.


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