Estate Agent not handing over deposit

kazza10_2

We have just had started renting our flat to tenants - the estate agents who found the tenants said they would give us the deposit (£2,800) to hold on to and this was written into the contract - the tenants duly moved in but the money wasn't transferred ...after making numerous phone calls I've now been told that they are shutting shop and going into receivership - and it looks like we will be responsible for giving the tenants back their deposit - even though we have never received it in the first place

(the tenants were honourable and handed over a months rent and deposit in advance - & of course the estate agent take their 10% fee up front so it seems like no-one will be out of pocket except us).

Unfortunately we choose an estate agent who isn't a member of the estates agents reg. board so i don't think we'll ever see the money back - so i think a lesson for any people new to buy to let like me - go with an estate agent who is an ombudsman member - i did my homework too late - I thought I might have trouble with tenants not paying - not the estate agent who only needed to pass on the deposit.

Now I have tenants living in my flat and no deposit for any damage they may do & I can hardly ask for another deposit from them

Any advice from people who have been in a similar position would be useful.

silvercar

try a forum like landlordzone to find out if the tenants have lost their money or you. as you haven't received the money yet, it may not be considered yours. On the other hand it was past to the EA as agents for you.

you ahould now put in a claim with the insolvency practitioner that is winding up the EA company as you are a creditor. the amount of your loss is the deposit less the 10% commission. At least if the tenant renews there won't be anyone to claim renewal commission.

kazza10_2

Sorry for the lateness of this reply - work has been a bit manic.

Thank you for the landlordzone site - its a real find and very useful.

On the plus side - after many emails to the estate agent - and thinking that I had definitely lost the money & that it was an expensive lesson learnt early in our lifes as landlords we received the money back - I think this was due to the fact that I kept emailing the guy and just wouldn't go away.and like you say if the tenants sign off for another year I won't have to pay agents fees.

Thanks again.

Debt_Free_Chick

Has the cheque cleared?

If the EA is in receivership, then the Receiver has control over the EA's assets so the (original) EA wouldn't be able to return any money from the business assets.

Of course, he might have returned the money from his own funds, but I would have thought this unlikely.

I hope the cheque has cleared, as you ought to be in a line of creditors all waiting for the Receiver to sort out the finances. Often, there isn't any money to return to the creditors (of which you were, officially, one as you were someone to whom the business owed money).

Perhaps the deposits were "bonded" and protected from the main assets of the business

Anyway, if you are "sorted" that's a good result

tara747

Just checking. Are your tenants going to get their deposit back?

dnwilliams

People complain about estate agents but very rarely do they make a point of making sure that they are a member of either ARLA or the NAEA, both of whom insist their members clients funds are insured against this.

Never use an agent that isn't a member, your asking for trouble!!