Letting Agent claiming back 8 months rent already paid to landlord

dln

I have looked at the contract and found the following:

"Indemnity under this policy shall cease immediately the insured obtains vacant possession of The Premises. . . "

I took possession about two months ago.

Baileycat

I too suspect a Direct Debit indemnity claim has been made by the tenants. Like others have said, the bank immediately refund the money to the customer, who would then chase the other party (in this case the agent). They would be out of pocket and it doesn't seem surprising that they're now clutching at straws trying to get the money back from anyone they can. I can't help you with whether they can legally or not, I'm sorry, but it doesn't surprise me that they'd try this.

I work in insurance and had a list of people with outstanding debts to call back one evening. I came across one woman who owed around £900 in total. When I looked at the account, she had paid her Direct Debit on time, every month for almost 3 years - then, when the policy was cancelled, she'd done an indemnity claim at the bank for every single payment she'd made to us. Because the bank gave her it back, we owed them, and therefore the balance was outstanding with us again. Naturally it wasn't a convenient time when I called and we probably haven't been able to contact her since. Essentially she'd had almost 3 years worth of free insurance, and there was nothing we could do about it - I doubt our debt collection agency would've been too bothersome for this woman, who was clearly a pro at these scams.

dln

Thank you for contributing.

Yes, a DD indemnity claim has been made. The reason is: "No advance notice received by payer." He claimed back 8 months payments - £3,800.

There is a clause in my contract with the agent which states:

"In such circumstances when a tenant's cheque or direct debit is not honoured by the tenant's bank, the landlord must refund the agent the amount paid to him and seek compensation direct from the tenant."

I have been informed, however, that the OFT has disallowed such estate agent's clauses.

Your case of that nice lady claiming 3 years back payments is amazing. Why does the system so readily allow such claims. It seems to leave the DD system totally open to abuse.

My agent has counterclaimed with the bank. I have advised him them to take it to the banking ombudsman should the counterclaim fail. The tenant has also, now, been reported to the police. Hopefully this will go all the way (unless he repays - Ha Ha) to court for fraud.

dln

For those of you still interested in my predicament, it is also been discussed here:

http://www.landlordzone.co.uk/forums/showthread.php?69728-Can-a-letting-agent-claim-back-8-months-rent-from-me-%28and-you!%29/page6

Here is my latest reply there:

Many thanks jjlandlord and jpkeates for your continued interest in my 'problem.'

Although you are not writing what I want to read jjlandlord I do fear that you are correct. In saying that, I have no legal knowledge in this (or any!) field.

In both this forum and on:

https://forums.moneysavingexpert.com/discussion/comment/69007321#Comment_69007321

it does seem that rent collection by DD is unusual although I have been told that 'Countrywide' do it also.

I have two properties let by this particular agent. Both collected by DD. I put it to them that one of my properties has had the same tenant paying by DD for nine years. Suppose that tenant pulled the same scam and claimed 'no advance notice received by payer?' Would I then be liable for the nine years back payment - £27,000 plus?!

I told them I wanted future payments by Standing Order or I would move the properties to an agent that would provide me with that facility. I received a reply within 30 minutes saying the lets would be changed to SO.

They also said: 'By using the DD system we ensure that rents are paid on time. They are under our control.'

With my experience here I am am not sure how much they are under the 'control' of the agent. . .

The agent has counterclaimed with the bank (this can take 28 days) and also reported the incident to the police - I have a police log number.

At this stage my thoughts are that, if the counterclaim fails i.e. the bank agrees that the tenant did not receive advance notice then the agent did not fulfill the terms of my contract with them by correctly serving the notice i.e. the DD and I should not, therefore, be liable to repay.

Does this sound reasonable?

DandelionPatrol

dln wrote: »

I have two properties let by this particular agent. Both collected by DD. I put it to them that one of my properties has had the same tenant paying by DD for nine years. Suppose that tenant pulled the same scam and claimed 'no advance notice received by payer?' Would I then be liable for the nine years back payment - £27,000 plus?!

The maximum the bank should reclaim is 6 years [Statute of Limitations]. If they claim more from the agent, then there would be an interesting argument, because if the agent pay back more than 6 years, they would be paying back more than a court could enforce, so you could argue that they should stand that loss themselves

dln wrote: »

They also said: 'By using the DD system we ensure that rents are paid on time. They are under our control.'

With my experience here I am am not sure how much they are under the 'control' of the agent. . .

The agent has counterclaimed with the bank (this can take 28 days) and also reported the incident to the police - I have a police log number.

At this stage my thoughts are that, if the counterclaim fails i.e. the bank agrees that the tenant did not receive advance notice then the agent did not fulfill the terms of my contract with them by correctly serving the notice i.e. the DD and I should not, therefore, be liable to repay.

Does this sound reasonable?

I think you are right here. Certainly the agent could claim under the contract. But if it turns out that they failed to execute the DD correctly, then IMO they are liable for a loss to you. So you could counterclaim. If you have anything from them extolling the virtue of DD from before you took on the tenant in question, this would be evidence even more in your favour.

I suggest a visit to a solicitor, to look at likely claims and counterclaims. In your position, I would float the idea of not paying back and telling the agent that if they sue, you will counterclaim. I think both sides would win their respective claims, which would be a bit zero sum.

Beware if you go down this road, that the agent may try to set off their claim using the rent from your long standing tenant. I think I would be moving that tenancy to another agent.

Thrugelmir

dln wrote: »

At this stage my thoughts are that, if the counterclaim fails i.e. the bank agrees that the tenant did not receive advance notice then the agent did not fulfill the terms of my contract with them by correctly serving the notice i.e. the DD and I should not, therefore, be liable to repay.

If it was that easy to dispute direct debits no commercial organisation would use them.

Marktheshark

I advised you to make a fraud report, as the one suffering the loss you are the victim.
You can then use the crime number to halt the banks DD guarantee claim as they can not act complicity in a reported crime.

Head it off by getting in front and putting a roadblock down.

It sounds as if they are attempting to defraud you to me and if the police agree its game over for their little scam.

They might even get what they think they will be getting, some free accommodation, the next lot comes with 3 square meals and 24/7 warden patrolled security.

dln

Many thanks for your thoughts DandelionPatrol.

I don't have anything extolling the virtues of DD.

I have wondered if they may try to siphon off income from my long standing tenant. Should that happen with one month's rent I would immediately move it to another agent.

dln

This is the strange thing isn't it?

Why has the tenant been able to claim back 8 payments with such apparent ease? Can't we all claim back our previous DD's with the gas/electricity/council tax/ mobiles, etc etc. I think the financial system would then collapse!

dln

The agent has made a fraud report. Can I make one also for the same incident?