Letting Agent not returning Tenants' Deposit

AskAsk

E201 said:

saajan_12 said:

E201 said:

Dear Forum,

I hope you can assist me with this issue. I have tried to provide as much relevant information as I can to give the fullest context possible:

- I have 2 tenants who have been living in my flat since 2017 with their child. From 2017 to 2020 the 3 -year assured short hold tenancy was administered by a local estate agent X. Local agent X found the tenants and they oversaw the protection of their deposit from 2017 to 2020 -  it was held in the Deposit Protection Scheme.

- In April 2020, when the tenants fulfilled their 3-year AST with agent X, I moved the tenants onto a 3-year tenancy agreement between ourselves.  Covid was raging at this time and the tenants wanted to have an AST with me as I could offer a slightly lower rent than the market. In April 2020 (2 weeks after the AST finished with local agent X) I requested by email that the tenants deposit be returned. I received a response from agent X saying they would oblige. 

- The tenants and I have since signed a further agreement (in 2023) for another 36 months until 2026. For the duration of their time in the flat I have not received any deposit monies from the  tenants.

- I have now discovered, almost 5 years later, that the deposit was not returned to the tenants in April 2020 by agent X as I had assumed. I have been emailing agent X over the last month, but they have not been responding. 

Please could you provide an indication of what my legal position is and what can I do to resolve this situation.

When you say 'administered by local agent X' do you mean with you as the LL and them as the agent? Or was it some rent guarantee scheme or direct rental by the agents? 

Assuming you were the LL, then as between you and the tenants, you did receive the deposit, just held by your agent. If it hasn't been protected all this time, then you would need to return that amount of money to the tenant before issuing a S21. The tenant could also sue you for non protection. The 

You may separately have a claim against the agent for the deposit amount at least. 

FlorayG said:

E201 said:

Hi FloreyG, thanks for the reply. I have checked with the DPS and the deposit is no longer protected (not since April 10 2020). I didn't provide all the context in my original message but I am about to start a section 21 and in case it does go to court I wanted to ensure the deposit is with the tenants. 

Well that is just weird. The deposit belongs to the tenant and would not have been refunded to anyone else. Are you able to check with the DPA and find out to whom they refunded the money?
Agent X does not refund the money. Agent X agrees with the DPA that the money can be refunded and the DPA refunds it directly to the tenant. Agent X should never see the money that is being refunded

Incorrect. Agent X could well have used an insured scheme, or even with a custodial, if the tenant never requested it  thinking the tenancy wasn't over and agent did, it may not have gone back to the tenant. 

Yes the agent did use the insured scheme. Does this change the situation? I really am getting confused with this.

there are two types of deposit protection scheme, one is custodial, where the scheme keeps the money and administer its return, the other one is an insurance backed scheme, where the landlord or EA, keeps the money but register that he has the money with the scheme and when he unprotects the deposit, the tenants will be notified that it has been unprotected and they will then have 3 months from the date it was unprotected (or earlier exit of the property) to raise a dispute.

FlorayG

AskAsk said:

E201 said:

AskAsk said:

if the deposit had been returned in 2020 as you state from the information you got from the DPS, then the responsibility lies with the EA.  i assume your new contract states zero for deposit held?

it is very unusual for a landlord not to take a deposit.  if you asked the EA to return the tenants' deposit in 2020, then why didn't you ask the tenants for a new deposit?

have you called them as they are not responding to emails?  and have you visited their office?

Hi AskAsk, thanks for the reply and the questions you've asked. I couldn't put all the details in my original post as it would be too long. Here are my answers below:

- The DPS haven't said that it was returned. They simply told me that it stopped being protected on 10 April 2020 which is when the AST contract concluded with agency X.

- I assumed that the deposit had been returned to the tenants when we drew up our new contract. I did put the same amount of deposit on the contract as I intended to ask for it but I didn't because of Covid. I ended up putting their rent down as they were in economic hardship at the time.

- I've been emailing agency X for the past few weeks about this but have not got a reply. I have been advised to make a complaint through their internal complaints process. 

you can't unprotect a deposit without returning it as the form will ask you if you have returned the full deposit or have kept some and they will inform the tenants that their deposit has been unprotected.

sounds like the tenants had the money back but have lied about it as the deposit could not be unprotected without them being notified to give them a chance to raise a dispute.

does sound a bit of a mess but make a complaint with the EA as they had advised, but i do think your tenants know more than they are letting on.

This is the only logical answer I can come up with but I didn't want to jump in and be the first to suggest it...

E201

FlorayG said:

AskAsk said:

E201 said:

AskAsk said:

if the deposit had been returned in 2020 as you state from the information you got from the DPS, then the responsibility lies with the EA.  i assume your new contract states zero for deposit held?

it is very unusual for a landlord not to take a deposit.  if you asked the EA to return the tenants' deposit in 2020, then why didn't you ask the tenants for a new deposit?

have you called them as they are not responding to emails?  and have you visited their office?

Hi AskAsk, thanks for the reply and the questions you've asked. I couldn't put all the details in my original post as it would be too long. Here are my answers below:

- The DPS haven't said that it was returned. They simply told me that it stopped being protected on 10 April 2020 which is when the AST contract concluded with agency X.

- I assumed that the deposit had been returned to the tenants when we drew up our new contract. I did put the same amount of deposit on the contract as I intended to ask for it but I didn't because of Covid. I ended up putting their rent down as they were in economic hardship at the time.

- I've been emailing agency X for the past few weeks about this but have not got a reply. I have been advised to make a complaint through their internal complaints process. 

you can't unprotect a deposit without returning it as the form will ask you if you have returned the full deposit or have kept some and they will inform the tenants that their deposit has been unprotected.

sounds like the tenants had the money back but have lied about it as the deposit could not be unprotected without them being notified to give them a chance to raise a dispute.

does sound a bit of a mess but make a complaint with the EA as they had advised, but i do think your tenants know more than they are letting on.

This is the only logical answer I can come up with but I didn't want to jump in and be the first to suggest it...

The possibility of the tenants lying or not realising they received the deposit is very possible. What can I do in this situation? I need to prove that they did received the deposit and this relies on agent X cooperating with me. I just don't know what to do about this. 

E201

Sincerely appreciate all the comments and thoughts. I'm still a bit overwhelmed by the fact that I don't have all the answers to this scenario. Can anyone provide possible reason why the agent X is not being cooperative with me? All I asked them was when the tenant received the deposit.  Has too much time passed? Do I have the right to ask? I'm totally miffed by the situation. 

saajan_12

AskAsk said:

E201 said:

AskAsk said:

if the deposit had been returned in 2020 as you state from the information you got from the DPS, then the responsibility lies with the EA.  i assume your new contract states zero for deposit held?

it is very unusual for a landlord not to take a deposit.  if you asked the EA to return the tenants' deposit in 2020, then why didn't you ask the tenants for a new deposit?

have you called them as they are not responding to emails?  and have you visited their office?

Hi AskAsk, thanks for the reply and the questions you've asked. I couldn't put all the details in my original post as it would be too long. Here are my answers below:

- The DPS haven't said that it was returned. They simply told me that it stopped being protected on 10 April 2020 which is when the AST contract concluded with agency X.

- I assumed that the deposit had been returned to the tenants when we drew up our new contract. I did put the same amount of deposit on the contract as I intended to ask for it but I didn't because of Covid. I ended up putting their rent down as they were in economic hardship at the time.

- I've been emailing agency X for the past few weeks about this but have not got a reply. I have been advised to make a complaint through their internal complaints process. 

you can't unprotect a deposit without returning it as the form will ask you if you have returned the full deposit or have kept some and they will inform the tenants that their deposit has been unprotected.

sounds like the tenants had the money back but have lied about it as the deposit could not be unprotected without them being notified to give them a chance to raise a dispute.

does sound a bit of a mess but make a complaint with the EA as they had advised, but i do think your tenants know more than they are letting on.

Not true. 
Yes the deposit scheme will inform the contact details they have, and give tenants 3 months to dispute this. However you're dealing with humans not machines. They could just as easily have missed an email as they could have missed the deposit being sent to their bank account. The contact details could have been incorrect. They could have noticed but assumed the deposit money was being transferred to the LL. 

Many possibilities, but with an insured scheme you physically CAN unprotect a deposit without returning. Its simply not as certain as you suggest. 

E201 said:

Sincerely appreciate all the comments and thoughts. I'm still a bit overwhelmed by the fact that I don't have all the answers to this scenario. Can anyone provide possible reason why the agent X is not being cooperative with me? All I asked them was when the tenant received the deposit.  Has too much time passed? Do I have the right to ask? I'm totally miffed by the situation. 

Well you're getting close to the wire so you need to move quickly. Arguably if the agent was no longer managing the property then they should have returned the deposit to you in 2020 (as you're ultimately responsible to the tenant). If they don't play ball, then your recourse is via courts, which has a statue of limitations of anything in the last 6 years. Its already been 5 years, so you need to move quickly to demand it from them and if unsuccessful then issue court papers. They may well have a (valid) defense that they returned it to the tenant as part of their management of the property, but that's what would ultimately force them to prove it.  

AskAsk

saajan_12 said:

AskAsk said:

E201 said:

AskAsk said:

if the deposit had been returned in 2020 as you state from the information you got from the DPS, then the responsibility lies with the EA.  i assume your new contract states zero for deposit held?

it is very unusual for a landlord not to take a deposit.  if you asked the EA to return the tenants' deposit in 2020, then why didn't you ask the tenants for a new deposit?

have you called them as they are not responding to emails?  and have you visited their office?

Hi AskAsk, thanks for the reply and the questions you've asked. I couldn't put all the details in my original post as it would be too long. Here are my answers below:

- The DPS haven't said that it was returned. They simply told me that it stopped being protected on 10 April 2020 which is when the AST contract concluded with agency X.

- I assumed that the deposit had been returned to the tenants when we drew up our new contract. I did put the same amount of deposit on the contract as I intended to ask for it but I didn't because of Covid. I ended up putting their rent down as they were in economic hardship at the time.

- I've been emailing agency X for the past few weeks about this but have not got a reply. I have been advised to make a complaint through their internal complaints process. 

you can't unprotect a deposit without returning it as the form will ask you if you have returned the full deposit or have kept some and they will inform the tenants that their deposit has been unprotected.

sounds like the tenants had the money back but have lied about it as the deposit could not be unprotected without them being notified to give them a chance to raise a dispute.

does sound a bit of a mess but make a complaint with the EA as they had advised, but i do think your tenants know more than they are letting on.

Not true. 
Yes the deposit scheme will inform the contact details they have, and give tenants 3 months to dispute this. However you're dealing with humans not machines. They could just as easily have missed an email as they could have missed the deposit being sent to their bank account. The contact details could have been incorrect. They could have noticed but assumed the deposit money was being transferred to the LL. 

Many possibilities, but with an insured scheme you physically CAN unprotect a deposit without returning. Its simply not as certain as you suggest. 

E201 said:

Sincerely appreciate all the comments and thoughts. I'm still a bit overwhelmed by the fact that I don't have all the answers to this scenario. Can anyone provide possible reason why the agent X is not being cooperative with me? All I asked them was when the tenant received the deposit.  Has too much time passed? Do I have the right to ask? I'm totally miffed by the situation. 

Well you're getting close to the wire so you need to move quickly. Arguably if the agent was no longer managing the property then they should have returned the deposit to you in 2020 (as you're ultimately responsible to the tenant). If they don't play ball, then your recourse is via courts, which has a statue of limitations of anything in the last 6 years. Its already been 5 years, so you need to move quickly to demand it from them and if unsuccessful then issue court papers. They may well have a (valid) defense that they returned it to the tenant as part of their management of the property, but that's what would ultimately force them to prove it.  

the EA can't unprotect the deposit without returning it as the tenants would have raised a dispute when they are informed by the scheme that their deposit has been unprotected.

it is possible that they may have missed the email notification of the protection but they would not miss the money that had been sent to them as they were skint and when you are skint, you will notice a large deposit being paid into your account.

AskAsk

E201 said:

Sincerely appreciate all the comments and thoughts. I'm still a bit overwhelmed by the fact that I don't have all the answers to this scenario. Can anyone provide possible reason why the agent X is not being cooperative with me? All I asked them was when the tenant received the deposit.  Has too much time passed? Do I have the right to ask? I'm totally miffed by the situation. 

as it has been 5 years since they had returned the deposit, it is likely that they don't keep files for that long and especially for ex-business.  so it may be difficult for them to go back that far.  the agent managing the property at the time may no longer work there and so records of his expired transactions may no longer be accessible.

they would have to look through their business accounts to check for the refund.  so the complaints procedure may be a good start as that will force head office to look into it.

it is a shame that you did not ask for the deposit as stated on the new contract as all of this would have come out at the time when it was still being dealt with.

you do have the right to ask the EA to look into it and to take them to court if they can't prove that the deposit had been returned.

saajan_12

AskAsk said:

saajan_12 said:

AskAsk said:

E201 said:

AskAsk said:

if the deposit had been returned in 2020 as you state from the information you got from the DPS, then the responsibility lies with the EA.  i assume your new contract states zero for deposit held?

it is very unusual for a landlord not to take a deposit.  if you asked the EA to return the tenants' deposit in 2020, then why didn't you ask the tenants for a new deposit?

have you called them as they are not responding to emails?  and have you visited their office?

Hi AskAsk, thanks for the reply and the questions you've asked. I couldn't put all the details in my original post as it would be too long. Here are my answers below:

- The DPS haven't said that it was returned. They simply told me that it stopped being protected on 10 April 2020 which is when the AST contract concluded with agency X.

- I assumed that the deposit had been returned to the tenants when we drew up our new contract. I did put the same amount of deposit on the contract as I intended to ask for it but I didn't because of Covid. I ended up putting their rent down as they were in economic hardship at the time.

- I've been emailing agency X for the past few weeks about this but have not got a reply. I have been advised to make a complaint through their internal complaints process. 

you can't unprotect a deposit without returning it as the form will ask you if you have returned the full deposit or have kept some and they will inform the tenants that their deposit has been unprotected.

sounds like the tenants had the money back but have lied about it as the deposit could not be unprotected without them being notified to give them a chance to raise a dispute.

does sound a bit of a mess but make a complaint with the EA as they had advised, but i do think your tenants know more than they are letting on.

Not true. 
Yes the deposit scheme will inform the contact details they have, and give tenants 3 months to dispute this. However you're dealing with humans not machines. They could just as easily have missed an email as they could have missed the deposit being sent to their bank account. The contact details could have been incorrect. They could have noticed but assumed the deposit money was being transferred to the LL. 

Many possibilities, but with an insured scheme you physically CAN unprotect a deposit without returning. Its simply not as certain as you suggest. 

E201 said:

Sincerely appreciate all the comments and thoughts. I'm still a bit overwhelmed by the fact that I don't have all the answers to this scenario. Can anyone provide possible reason why the agent X is not being cooperative with me? All I asked them was when the tenant received the deposit.  Has too much time passed? Do I have the right to ask? I'm totally miffed by the situation. 

Well you're getting close to the wire so you need to move quickly. Arguably if the agent was no longer managing the property then they should have returned the deposit to you in 2020 (as you're ultimately responsible to the tenant). If they don't play ball, then your recourse is via courts, which has a statue of limitations of anything in the last 6 years. Its already been 5 years, so you need to move quickly to demand it from them and if unsuccessful then issue court papers. They may well have a (valid) defense that they returned it to the tenant as part of their management of the property, but that's what would ultimately force them to prove it.  

the EA can't unprotect the deposit without returning it as the tenants would have raised a dispute when they are informed by the scheme that their deposit has been unprotected.

it is possible that they may have missed the email notification of the protection but they would not miss the money that had been sent to them as they were skint and when you are skint, you will notice a large deposit being paid into your account.

I won't repeat myself but you it is certainly possible - please reread the scenarios I mentioned if you don't understand. OP needs to check at both the agent and tenants sides.