Landlord seeking to retain my deposit for new tenants

Chucklesmango

Hi all, I'll try to keep this brief and factual. Very grateful for your assistance. This is in England.

Myself and tenant A were on a joint tenancy from March 2019 for 13 months. It lapsed to a monthly periodic tenancy for the final month.

I served notice to end the tenancy altogether, as a backstop in case all else failed. I left the property just over a month ago (a week before end of period, just before lockdown). Tenant B wanted to move in. Tenant A, B, myself & landlord signed a deed of assignment to transfer all benefits and liabilities to tenant B from me, on the same terms as the original contract. The landlord and new tenants didn't want to sign a new AST. It isn't clear to me what's been created here (a new periodic joint tenancy between A&B + landlord?).

I cleaned my room and common areas as well as I could, but obviously couldn't do a full clean/inventory as the other tenant remained with all of their stuff. I have pictures of my empty, clean room.

Given COVID, neither myself nor landlord have an inventory, full inspection etc from the date of my departure.

I agreed, by email, a provisional charge for leaving the property in respect of deep cleaning (this was in the contract anyway, and broadly speaking the price seems fair). By email, landlord also indicated a provisional view not to charge for any damage in respect of my tenancy.

Tenant B doesn't have the money for a full deposit. Tenant B moved in in the final week of my lease, as otherwise it wouldn't have been possible to move.

As I know tenants A & B, landlord is asking us to informally come together to resolve deposit. In the interim, they will retain most of the deposit from myself & A's tenancy (within a scheme) and deposit it in a protected scheme.

A&B have been living there for about 4 weeks now, as I understand it without a deposit in place.

I am obviously not keen on this, as it leaves me shortchanged by hundreds of pounds, with no guarantee of repayment in the future. I would be affected by tenants A & B moving out as well, as if they have deductions taken from the balance they will probably say they can't afford to pay me back.

Landlord has now sent over a deposit return request with the protection scheme to retain most of it to put towards A&B's deposit.

Tenants A&B may well leave the property at the end of the month.

I, obviously, want my full deposit back. Landlord has indicated that the amount of deposit they would return normally return to me is almost a grand. At the moment the offer is less than half of that.

Key concerns:
*If A&B leave at the end of the month, without having put a deposit in place, but mine still active, would there be any way for landlord to get the money (given that A has remained a tenant this entire time)?
*In the above case, if the landlord has to make deductions, will they be able to take some from my deposit (as it's shared with A)?
*Am I still somehow on the hook, because the deed of assignment isn't a complete new tenancy?
*If I dispute the current return, what can I expect from arbitration? Will they take a dim view of me moving out early and B moving in, technically without a tenancy?

All help very much appreciated. Many thanks.

anselld

It depends on the assignment agreement (you still have a copy?), but usually with assignment the incoming tenant pays the deposit to the outgoing tenant and from then on the deposit and any deductions for damages are the responsibility of the incoming tenant.

In this case it is most likely that the agent will consider the deposit as belonging to the current tenants and deductions may be made as appropriate for any agreed damages.  Any remaining deposit would be returned to the current tenants.

The fact that the incoming tenant still owes you the deposit is between you and them.  You should not have signed the assignment without receiving the deposit.  You may need to sue the incoming tenant via small claims if they do not pay up.

greatcrested

Chucklesmango said:

Myself and tenant A were on a joint tenancy

Tenant B wanted to move in. Tenant A, B, myself & landlord signed a deed of assignment to transfer all benefits and liabilities to tenant B from me, on the same terms as the original contract.

It isn't clear to me what's been created here (a new periodic joint tenancy between A&B + landlord?).

No.

Assignment means the original tenancy continues unchanged other than the assigning of a new name in place of an old name.

Normally it would include a clause agreeing that the outgoing tenant pays the incomeing tenant their shareof the deposit. The deposit taken and protected by the landlord remains unchanged,and will be returned to the tenants named on the updated contract at the time the tenancy eventually ends.

But I can't read the Deed you signed! What does it say? Here is an example:

https://www.landlordzone.co.uk/pdf/Licence-Deed-of-Assignment.pdf

See clause 10.

Chucklesmango

Thanks both for your replies.

There are only two clauses I see that have any effect, which are:

"The Remaining Tenant and the Outgoing Tenant hereby assign and transfer to the Remaining Tenant and the Incoming Tenant all rights, obligations and interests in or relating to the Property which are created by the Tenancy Agreement for the remaining term of the said Tenancy Agreement. Such assignment shall be effective from the date this deed is executed."

"The Incoming Tenant hereby agrees and covenants with the Outgoing Tenant that he will at all times keep the Outgoing Tenant fully indemnified against all payments, liabilities and obligations arising under the Tenancy Agreement from and including the date this deed is executed.

The Incoming Tenant hereby agrees and covenants with the Landlord and the Remaining Tenant that he will during the remaining term of the Tenancy perform and discharge all obligations and duties and make all payments which may be due under the terms of the Tenancy from and including the date this deed is executed."

I see the silence on the matter of the deposit opens up a lot of ambiguity.

There's a few issues, however:

• Both myself and tenant A served notices which were accepted before the assignment was effected. My understanding was this would extinguish the tenancy - hence the question of what the assignment actually does here.
• The deposit protection scheme this is lodged in have rejected the landlord's request to just resubmit the deposit in the new tenant's name. I can still be the nominated tenant.
• The deed was never witnessed due to COVID. I know the laws are fluid but wonder if this may anyway render it invalid (or at least not executed as a deed?).

Grateful for your thoughts on the matter, everyone. My thanks.

greatcrested

It sounds like the assignment took place after the notice was served but before the tenancy ended. My guess would be that that would over-rule/invalidate the notice. The alternative interpretation would be that the assignment took place but then the notice also kicked in - now ending the tenancy held by the remaining and incoming tenants.

In the latter case, you don't say what date your notice expired, or will expire? If the tenants don't leave on the date the notice expires, then they (whichever they are) become liable for double rent for failing to vacate following service of notice.

Clearly it is a nonsense for you to remain the deposit nominated tenant following assignment - but the lack of any legal agreement in the Deed makes the deposit question ... ambiguous as you say!

Strictly speaking it should be Executed as a Deed, witnessed etc. However courts do sometimes recognise deeds like this where the Execution has been les than perfect provided they (the judge) is satisfied that all parties understood and agreed with the purpose of the deed. You could certainly argue it is invalid. Would the LL or incoming tenant take the matter to court?

You would then presumaby fall back on the notice to end the tenancy. But has that date passed yet? If so......

Chucklesmango

Apologies: to be clear the notice was for the end of March (served end of Feb), so the notice period for my tenancy has expired. It was validly served and acknowledged by LL and done in good time.

I absolutely take your point that it's nonsense.

I've seen a lot of different takes on the interaction between the notice and the assignment. I had initially viewed it as you did - that the assignment coming after the notice effectively overruled it.

Others have suggested that, in fact, it doesn't really matter: my notice can't be revoked, and therefore served to bring the whole joint tenancy to an end. At that point, the assignment was essentially just a document referring back to my original tenancy agreement and operated to set up a new joint (where A&B are parties) tenancy on the same terms, which LL has accepted due to accepting their rent.

It's an odd situation. Thanks very much again for your help and any further views you have.

saajan_12

Chucklesmango said:

"The Remaining Tenant and the Outgoing Tenant hereby assign and transfer to the Remaining Tenant and the Incoming Tenant all rights, obligations and interests in or relating to the Property which are created by the Tenancy Agreement for the remaining term of the said Tenancy Agreement. Such assignment shall be effective from the date this deed is executed."

I see the silence on the matter of the deposit opens up a lot of ambiguity.

Its not silent on deposit. The prospect of your deposit being returned is one of your 'interests' relating to the property. You have assigned that to tenant B. So as far as the LL is concerned, they only need to return the full deposit to tenant A or B or both. You should only have signed this deed upon receiving reimbursement in the amount of your deposit from tenant B separately. 

Chucklesmango said:

There's a few issues, however:

• Both myself and tenant A served notices which were accepted before the assignment was effected. My understanding was this would extinguish the tenancy - hence the question of what the assignment actually does here. 

The assignment does nothing but replace your name with tenant B's. Everything else continues as normal. However it would be logical that all parties expected to continue the tenancy for longer than a month and the notice was verbally rescinded with LL's agreement. Since the papers are just records of what the parties actually agreed, I expect ultimately a court could reach this logical conclusion. In any case, if you insist the notice stands, the LL could charge double rent (and still not get your deposit back any faster).  

Chucklesmango said:

• The deposit protection scheme this is lodged in have rejected the landlord's request to just resubmit the deposit in the new tenant's name. I can still be the nominated tenant.

The scheme have rejected the request because they are likely seeing it as a new tenancy. As an assignment, the LL doesn't need to do anything with the scheme. Nominated tenant is legally meaningless, even if you wrongfully acquire the funds from teh LL from this point on, the current tenants can claim this from you.