Withholding Deposit in lieu of fees?

bluebaron

Hi All,

Can anyone offer any advice here?

As a landlord I signed up with an agent for a tenant finding service 3 years ago and duly paid them a fee said thank-you very much and we went our separate ways. The only remaining contact was using the deposit holding scheme.

My tenant has just moved out and I went to them to get the deposit back. As this stage they said there were outstanding fees. I queried what these were and was told that I had agree to pay 10% of the annual rent every year and these had never been received.

I informed them that I never knew this and asked why I hadn't been billed and had no contact with them in the last 3 years etc and was told they thought the tenant had moved out years ago!!

Now they wont release the deposit back to me (which I have already repaid to the tenant as they needed it to get a new place!)

Can they legally hold back the deposit? Surly this is a separate issue? If they dispute fees they should sue me them if they think they have a case?

Werdnal

Any fees you owe the agent are a totally separate issue to the deposit. Deposit is the tenant's money, and the agent has no right to use it for anything other than authorised losses or costs against the property iteself (ie your loss or costs, not theirs).

However, you have somewhat complicated matters by returning the deposit to the tenant yourself and requesting the money back now from the agent. Legally, as above, the deposit is the tenant's money and the tenant needs to request it back from the scheme, not you.

Why have you paid the tenant first - whether they need the deposit for new place is not your concern or responsibility, and the agent is now using this to withhold the fees they feel you owe them. Had the tenant requested this money (their money) back via to proper route, this would not have happened as the agent cannot use tenant's money for your fees!

benjus

Why did you return the deposit to the tenant? If the agent was holding the deposit (presumably it was protected in an insurance-backed scheme - is this the case?) they should have returned it to the tenant directly.

Is it normal for agents supplying a tenant-find-only service to hold the deposit for the duration of the tenancy? Sounds a bit odd to me, but I don't know.

jamie11

I informed them that I never knew this and asked why I hadn't been billed and had no contact with them in the last 3 years etc and was told they thought the tenant had moved out years ago!!

That says a lot about their accounting methods.

I agree with Werdnal, it's not your money they're holding.

Can you contact your ex tenant and enlist his help?

bluebaron

Yes I was silly to pay the deposit directly but the house was in good order and the tenant needed the deposit the same day for his next house and signed it over to me.

Now of course the agent is saying the amount is no longer a deposit and has such has applied it to the account.

They now plan on billing me for the last 3 years at 10% of the rent for doing nothing!! I am completely livid about the whole thing.

Any ideas?

jamie11

Get in touch with the tenant, ask him to sign the deposit over to you then make a single claim on it. I think you should be sending the LA a letter before action.

If they thought the tenant had left years ago then they clearly were not doing their job, A judge would love this.

Mistral001

What is a "tenant finding service". Do they exist anywhere?

ValHaller

I think one of the obvious things to do is to dig out the contract with the Agent and see whether you did sign up for a 10% fee.

bluebaron

Looking at the agreement is it simply a one page document stating 10% of annual rent 6 monthLY fee.

I asked them why they have not billed me in 3 years and no real excuse other than thought tenant had moved out and I said why would they move out 6 months into a 12 month agreement and even if they had you hold the deposit so you would have known.

Just waiting for them to call back but looks like I may nee to go down legal route.

Classic case of mis-selling.

jamie11

Mistral001 wrote: »

What is a "tenant finding service". Do they exist anywhere?

https://www.findermonkey.co.uk

pivotalgubbins

bluebaron wrote: »

Looking at the agreement is it simply a one page document stating 10% of annual rent 6 monthLY fee.

I asked them why they have not billed me in 3 years and no real excuse other than thought tenant had moved out and I said why would they move out 6 months into a 12 month agreement and even if they had you hold the deposit so you would have known.

Just waiting for them to call back but looks like I may nee to go down legal route.

Classic case of mis-selling.

So, let me get this right, you signed up to an agreement which states that 10% of the annual fee is due?

There is no requirement for them to bill you every year, a debt can still be owing after six years of it being accrued. Terrible business practice of their part but I think you'd have trouble in going down the legal routes - a lot of grey areas.

Why you paid the tenant back is still beyond me (as the deposit for their new place is their problem)!

Classic case of not reading the small-print I'm afraid...