ex tenant's deposit missing- any advice please?

[Cathpot]

Just had upset phone call from our tenant who moved out about 6 weeks ago as we are selling the property. We checked the flat and instructed the estate agents who were holding her deposit to give it back in full. They said they would. After a couple of weeks when she had heard nothing and tried to contact them to no avail she rang me. I then tried and heard nothing back. It turns out the owner of the agency is filing for bancrupcy and is being investigated for fraud and theft. She got a letter in 2009 and saying that the deposit was being moved from the fund it was held in and either us or the estate agent would tell her where to. She didnt chase it up and we didnt know about it.

What is likely to happen now? Are we liable for her deposit? It would be hard to find at the moment as we are now covering the morgage while we wait to sell.

I feel really badly for her, worried about the money- any advice would be great

[Actors]

Tenancy Deposit Protection info

There some good information here. If the money was lodged under the tenancy deposit protection scheme, which it sound like it was, the tenant is protected by the government backed scheme and needs to make a claim under that.

[lalalonglegs]

It sounds as if the agent has spent it which is a criminal offence. Advise her to go to the police but don't get involved, it's not your fault.

[blackteaplease]

Actors that won't help if the agent has closed the account. They cannot do that nowadays but could previously.

Op the same thing happened to us. Our lovely ex landlord gave us the deposit back temporarily while we both threatened the letting agent with small claims court. He then paid us and we gave ll back his money. Ll wasn't obliged to do this. I would advise seeing legal advise and tenants to chase through small claims.

[Ogg]

Actually the LL is obliged to give the deposit back as the tenancy contract is with her, and the EA are purely the landlords agent and she should really (hindsight I know) have checked where the deposit was held. The Ll then needs to pursue the deposit from the EA.

[lalalonglegs]

The LL is not obliged to pay the tenancy out of her own pocket if the estate agent has fraudulently acquired it (by deregistering it from the deposit holding scheme and not moving it onto a new one as promised) and presumably spending it. The LL's obligations are to lodge the deposit with a suitable scheme or make sure that her agent has done so on her behalf - this was done and no one informed her that the deposit was subsequently moved. She cannot be held responsible for the agent's embezzlement.

[Ogg]

I'll think you'll find she is responsible - the tenant has no relationship with the agent at all only with the Landlord. The tenant can sue the landlord and could technically ask for 3x the deposit as well as it was not in a registered scheme though it is doubtful that the court would impose that. The estate agent may have committed embezzlement but she has embezzled from the Landlord not the tenant who had no choice of the agent and did not pay of sign a contract with the agent as the Landlord did. The Landlord cannot transfer her liabilities to the EA or pass her losses to the tenant.

[Cookie804]

The LL is not responible the agent was acting on her behalf and is meant to hold all deposits in a separate non interest account. Tenant will have to pursue the agent through the courts. All you need do is give a statement confirming he deposit was held by agent. That at the end of the tenancy there were no issues with the property and that the deposit should have been repaid in full.

Don't get too involved and certain don't pay them yourselves.

[Ogg]

'The agent was acting on her behalf' - exactly - the agent only acts on behalf of the landlord with whom the final responsibility lays.

[Ogg]

The tenant cannot sue the EA

[lalalonglegs]

As the LL wasn't holding the deposit, it was with the estate agent - known as the stakeholder within TDS - then the LL isn't responsible for its loss. The LL has paperwork (presumably) from the beginning of the contract showing that the deposit was registered with a scheme but it was then illegally moved without her knowledge. Look at it from the other side: if the tenant had been paying rent and the estate agent hadn't passed it on and had then filed for bankruptcy, would the LL demand that rent again or have to put it down to (very) bad luck?

The estate agent has behaved criminally, the matter should be handed over to the police.

[LynetteScavo]

This happened to people near where I live. The EA was sent to prison, but many people (tenants and landlords) were left out of pocket.

It's odd that she ever had a letter in 2009.

[LynetteScavo]

And yes, inform the police, in case they are not aware of the EA managing this house...which seems possible, considering the letter.

[lougle]

Sorry but it does seem that it would be you who loses out here.

Housing Act 2004
"214
Proceedings relating to tenancy deposits(1)Where a tenancy deposit has been paid in connection with a shorthold tenancy, the tenant or any relevant person (as defined by section 213(10)) may make an application to a county court on the grounds?
(a)that the initial requirements of an authorised scheme (see section 213(4)) have not, or section 213(6)(a) has not, been complied with in relation to the deposit; or
(b)that he has been notified by the landlord that a particular authorised scheme applies to the deposit but has been unable to obtain confirmation from the scheme administrator that the deposit is being held in accordance with the scheme.
(2)Subsections (3) and (4) apply if on such an application the court?
(a)is satisfied that those requirements have not, or section 213(6)(a) has not, been complied with in relation to the deposit, or
(b)is not satisfied that the deposit is being held in accordance with an authorised scheme, as the case may be.
(3)The court must, as it thinks fit, either?
(a)order the person who appears to the court to be holding the deposit to repay it to the applicant, or
(b)order that person to pay the deposit into the designated account held by the scheme administrator under an authorised custodial scheme,
within the period of 14 days beginning with the date of the making of the order.
(4)The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order.
(5)Where any deposit given in connection with a shorthold tenancy could not be lawfully required as a result of section 213(7), the property in question is recoverable from the person holding it by the person by whom it was given as a deposit."

[lalalonglegs]

My reading of those paragraphs is that the LL can be held responsible if s/he deliberately fails to pay the deposit into an authorised scheme etc or refuses to pay it back, not that the LL is liable if the stakeholder acts fraudulently/criminally. The most relevant part is:

)The court must, as it thinks fit, either?
(a)order the person who appears to the court to be holding the deposit to repay it to the applicant.

In this case, that would be the EA, not the LL.

lynette - the TDS could have informed the tenant that the deposit had been "unprotected" so the EA was covering his back by sending a letter explaining that it had been moved to stop them getting suspicious.

[Ogg]

If the tenant did not pay rent then it would still be the ll who loses out. The LL has a contract with the Agent the tenant does not.

[lougle]

Yes, Lalalonglegs, but then it says:

"The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order."

Which means that the OP would lose 3x the deposit.

[lalalonglegs]

The tenancy contract - if it is anything like a standard one - states that the estate agent will be the stakeholder, not the LL therefore the LL has not had any benefit or even any contact with the deposit. The tenant has presumably signed up for that and therefore cannot hold the LL responsible for the loss of the money.

If the rent was lost through EA fraud, then we agree that the LL would be the one to suffer the loss. If the deposit is lost because of EA fraud that the LL was completely unaware of, did not contribute to and did not benefit from, then it's really tough luck but the tenant is going to have to suck up the cost. Going to the police is his or her only recourse - and sadly will probably not help get the money back.

[AgentProvocateur]

Regardless of who's legally responsible, surely, as a landlord, you are morally responsible. The tenants have paid you promptly every month, and have left the property in a good enough state for you to give them their deposit back. A deposit that they may be relying on for their next flat.

The right thing to do would pay it (or at least half)

[Ogg]

As an Letting agent - I would be very surprised if the tenancy contract stated anything that holds the Agent responsible for anything unless they had an extremely crap layer draft something especially for them :)

[Ogg]

But hey could be why they have got have gone bust !

[Ogg]

www.landlordzone.co.uk/forums/showthread.php?11439-Letting-agent-falsely-told-tenant-that-deposit-protected

[LynetteScavo]

I was about to post exactly what lalalonglegs said.

[Queen0fFeckingEverything]

I self represented (and won) in a court case over 'missing' deposit money, where my LL and the agent tried to blame each other for the fact it hadn't been protected.

From memory (it was 5 years ago) the LL is ultimately responsible for returning the deposit no matter who was holding it or what they had done with it.

The agent is acting on behalf of the LL and the LL is still responsible for the deposit even if the agent has been instructed to deal with it.

[SuedeEffectPochette]

I think the landlord (former landlord) is liable. They might have a claim against the agent for negligence/fraud but that claim won't be any good to them if the agent is crooked/bust. If I was acting for this tenant I would be suing the landlord... not the agent.... and for 3 x the deposit....sorry OP.

[Cathpot]

Thank you for your replies. We did some poking about yesterday and it seems we are liable and we have paid her- because she had believed the agents were working on giving it back she had waited 5 weeks already. I have a very bad feeling about our chances of getting it back as the people we have spoken to in various offices are being very evasive. Who do we go after in small claims court? It is the owner of the company?