Letting Agent being sued

[Bowlane]

Hi

Can someone help me, I started a small letting agency 9 months ago, i took instructions to act on a let only basis for a landlord. The tenant was found, upon recieving the deposit and first months rent I deducted fees and sent the deposit to the landlord, all of which is confirmed in writing and documented, also confirming in writing that he had to register the deposit with 14 days. At that point my dealings with him ceased.

The landlord did not register the deposit, now the property has been repossessed and the the ex tenant is suing both him and me for return of three times the deposit.

I no longer operate the agency. I have searched the net and there appears to a number of conflicting views.

Should i fight this in court?

[jta]

Hi
Should i fight this in court?

Yes you should, if for no other reason than, if you didn't, there is nothing to stop the LL saying you did not pass the deposit to him.
People have been known to lie in court you know, (shock/horror)
I reckon if you turn up, armed with all the paperwork, the case against you will be dismissed but go ahead against the LL. Serve him right too.

[Poppy35]

i too think that as long you have everything clearly documented that the landlord was responsible for protecting the deposit then you shoud not be worried.

[MrAgent]

Hi

Can someone help me, I started a small letting agency 9 months ago, i took instructions to act on a let only basis for a landlord. The tenant was found, upon recieving the deposit and first months rent I deducted fees and sent the deposit to the landlord, all of which is confirmed in writing and documented, also confirming in writing that he had to register the deposit with 14 days. At that point my dealings with him ceased.

The landlord did not register the deposit, now the property has been repossessed and the the ex tenant is suing both him and me for return of three times the deposit.

I no longer operate the agency. I have searched the net and there appears to a number of conflicting views.

Should i fight this in court?

Do you have Professional Indemnity cover (legal cover would be a bonus)?

You really should have protected the deposit yourself (ideally with the DPS) and done a landlord transfer once you hand over. That is how I do it.

I would still fight it though - a lot to lose by doing nothing. Depending on how long you have been going and how much cash is in your company, it may be worth settling the DPS issue by protecting the deposit out of your own funds and then making payment to the tenant.

This will cancel out your find-only fee (and then some) but will prevent you being sued for 3x the deposit + the deposit return and may be cheaper for you than going to court and losing what could be a lot of money, plus any legal fees (which could be expensive). My personal view is you screwed up by not protecting the deposit however there may be some mitigation in you telling the landlord to protect the deposit, but probably not much.

I would still recommend getting some decent legal advice (do not be afraid to pay for it - you will hopefully learn from this experience!) before doing anything.

[Snorkerz]

I am in a similar situation - but from the Landlords point of view. Everyone tells me that I am responsible for the tenants deposit even though it was the agent who took the deposit.

IANAL, but I'm pretty sure that the tenants case is against the landlord and that you have no responsibility.

I am sure Jeffery will be on later with a clearer answer, but to clarify...

There are 2 contracts -
1) Tenant / Landlord
2) Landlord / Agent

There is no contract between tenant & agent. You act for the landlord, so if the tenant is unhappy with something the landlords agent has done, tenant sues the landlord and then, if he can, tenant sues the agent. In his instance, you notified landlord of his responsibilities so he wouldn't be able to sue you.

[MrAgent]

I am in a similar situation - but from the Landlords point of view. Everyone tells me that I am responsible for the tenants deposit even though it was the agent who took the deposit.

IANAL, but I'm pretty sure that the tenants case is against the landlord and that you have no responsibility.

I am sure Jeffery will be on later with a clearer answer, but to clarify...

There are 2 contracts -
1) Tenant / Landlord
2) Landlord / Agent

There is no contract between tenant & agent. You act for the landlord, so if the tenant is unhappy with something the landlords agent has done, tenant sues the landlord and then, if he can, tenant sues the agent. In his instance, you notified landlord of his responsibilities so he wouldn't be able to sue you.

Yebbut (I love that phrase) the general opinion is the HA 2004 legislation was particularly vague with regard to responsibilities of the landlord and the landlords agents - while ultimately the landlord has to cough up the cash there is nothing stopping the tenant naming the agent as co-defendant.

As agent the OP should have protected the deposit.

Also: While the tenant "wouldn't be able to sue you", they can and will - even if not justified, you will incur expenses fighting it even. The OP should take proper and qualified legal advice.

I suspect Snorkerz is not a lawyer (just judging from the name - I am certainly sure that Jeffrey would never go by the moniker "Mr Jeffrez", for example), and I know for sure I am not. Therefore any advice that is free is worthless - if the OP takes my (or Snorkerz) advice, then he has no-one to sue when it goes tits-up.

[dg2009]

so if you were a LL whose LA never passed on the deposit would you be happy to have the T take you to court and STILL rent the property to them?

[Mars Mug]

so if you were a LL whose LA never passed on the deposit would you be happy to have the T take you to court and STILL rent the property to them?

Couldn't that situation be monitored and rectified in the first few days of the tenancy before the 14 days protection notification time is up?

[Bel]

The OP should tell the LL to protect the deposit immediately for the sake of the LL and himself.

The OP would be wise to take legal advice from experienced solicitors, but from the facts, I think a court would not find the OP responsible as long as the OP is able to communicate them to the court.

See this thread for a few insights regarding court process: http://www.landlordzone.co.uk/forums/showthread.php?t=18854 see agnt46 near bottom of first page

[Bowlane]

Thanks for the advice, I will speak to a solicitor.

With regards to the deposit, can it still be registered even though the tenancy has now finished and should I do this personally?

Do the the tenants have the right to refuse the payment.

I'm worried by doing this am I accepting liability

[westminster]

You must defend this claim; if you don't it greatly increases the risk of incurring the penalty. I also second the suggestion to tell the LL it's in his interests to protect the deposit now and provide prescribed info to the tenant. Late protection is better than no protection.

Two questions: Is the claimant using a solicitor or are they a litigant in person? What form was the claim served on?

Was it form N208? If not, it has not been correctly commenced. See
http://painsmith.wordpress.com/2009/05/21/proper-place-for-tds-claims/

This will not invalidate the claim but it may well be in your interest to get the claim allocated to the correct track, the multi-track, where parties' legal costs are awardable.

It is essential that the solicitor you consult is familiar with the deposit scheme statute and its ambiguities. If not, they'll be of little use in constructing a defence.
(see S.212-215 HA 2004 (http://www.opsi.gov.uk/ACTS/acts2004/ukpga_20040034_en_19#pt6-ch4)).

Personally, I think it's arguable - if your contract with the LL restricted your services to a find-only arrangement - that you were not "acting on behalf" of the LL in respect of the deposit. Is the deposit mentioned at all in your contract with the LL?

[awt19]

Personally, I think it's arguable - if your contract with the LL restricted your services to a find-only arrangement - that you were not "acting on behalf" of the LL in respect of the deposit. Is the deposit mentioned at all in your contract with the LL?

Westminster, is this relevant from the HA?:
S212(9)a: References to a landlord or landlords in relation to any shorthold tenancy or tenancies include references to a person or persons acting on his or their behalf in relation to the tenancy or tenancies.

So this would include the LA? so is it not irrelvant that the LA were not 'acting on behalf' of the LL in respect of the deposit?

I suspect this is where the tenant is coming from.

Also 213(a) Any tenancy deposit paid to a person in connection with a shorthold tenancy must, as from the time when it is received, be dealt with in accordance with an authorised scheme.
and 213(c)Where a landlord receives a tenancy deposit in connection with a shorthold tenancy, the initial requirements of an authorised scheme must be complied with by the landlord in relation to the deposit within the period of 14 days beginning with the date on which it is received.

So the way I read it, the LA is liable for the penalty......

This case is relevant:
http://www.landlordzone.co.uk/forums/showthread.php?t=16679

Seems quite common now that LL's are simply protecting the deposit prior to going to court and avoiding the fine, with the 14 day requirement not relating to the penalty... thats (I think) what happened in this case..

[Bowlane]

it appears that the claimant is acting on a personal basis

there is no mention of me acting on the landlords behalf with regards to the deposit in the terms of business

[awt19]

it appears that the claimant is acting on a personal basis

there is no mention of me acting on the landlords behalf with regards to the deposit in the terms of business

I think its irrelevant as stated above as you were acting on behalf of the LL in regards to the tenancy agreement.

[Bel]

With regards to the deposit, can it still be registered even though the tenancy has now finished and should I do this personally?



I'm worried by doing this am I accepting liability

I think it is more in the LL's interest to do this.

You risk not getting your money returned if you do. Get legal advice from experienced help for your most prudent course of action

Please post feedback once you have taken action for the benefit of humanity.

All the best

[westminster]

I think its irrelevant as stated above as you were acting on behalf of the LL in regards to the tenancy agreement.

I disagree. It is perfectly reasonable for OP to argue that he cannot be held liable for failing to carry out a service he was neither paid nor contracted to perform on behalf of the landlord. While the court may or may not agree, this doesn't make the argument "irrelevant".

[Bel]

http://www.landlordzone.co.uk/forums/showthread.php?t=13201

Another thread on suing agent regarding deposit

also:
Read ; "Letting agents hit by TDS?" http://nearlylegal.co.uk/blog/2009/03/letting-agents-hit-by-tds/#comments

and http://painsmith.wordpress.com/2009/03/17/more-tdp-problems/ to which it refers

[westminster]

it appears that the claimant is acting on a personal basis

there is no mention of me acting on the landlords behalf with regards to the deposit in the terms of business

Good. What about the form the claim was issued on - was it an N208?

Another thought: S.214 Proceedings relating to tenancy deposits says this about applying the penalty...


(3)The court must, as it thinks fit, either—
(a)order the person who appears to the court to be holding the deposit to repay it to the applicant, or
(b)order that person to pay the deposit into the designated account held by the scheme administrator under an authorised custodial scheme,within the period of 14 days beginning with the date of the making of the order.
(4)The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order.

The LL is the person "holding the deposit", so he is the only one who can be ordered to do (3)(a) or (3)(b). As such, it would make no sense for the court to then go on to apply (4) to you, and not the LL.

[awt19]

I disagree. It is perfectly reasonable for OP to argue that he cannot be held liable for failing to carry out a service he was neither paid nor contracted to perform on behalf of the landlord. While the court may or may not agree, this doesn't make the argument "irrelevant".

True... I guess you could argue this point. But to me the strict wording of the Act says the person who receives the deposit must protect it within 14 days. And that person is the LA, who meets the criteria of 'landlord' by acting in regards to the tenancy agreement.

[Paul Gibbs]

LL and/or LA could be liable for the deposit sums.

LA needs to defend the claim, but to also counterclaim against LL for such sum as LA may be found liable for.

[Bowlane]

paul

would i conterclaim after the court decision?

thanks for everybodys assistance it is greatly appreciated

[Bowlane]

westminster

the claim was made on a form N1, i have 14 days to provide a defence

thanks

[westminster]

westminster

the claim was made on a form N1, i have 14 days to provide a defence

thanks

This is the wrong form. The courts changed the rules fairly recently and now, according to CPR (Civil Procedure Rules) Part 56, Section 214 claims must be started under Part 8 procedure and issued on Form N208. You should say so as part of your defence. Assuming you get a solicitor who is familiar with such claims, he/she will know this anyway (if they don't, it should lead you to question their experience in this area).

This doesn't get you off the hook but it is relevant because it means the claim will automatically be allocated to the multi-track, and in the multi-track, the winning party can recover their legal costs. (If the sum claimed is below £5,000 it would normally be allocated to the small claims track, where legal costs are not recoverable).

I'm adding the link Bel gave again, as it's very similar to your situation (let-only agent & LL failing to protect) - personally, I'd give these solicitors a ring and see what they advise as they are clearly experienced in such claims.
http://painsmith.wordpress.com/2009/03/17/more-tdp-problems/