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London Bridge
12-04-2010, 10:15 AM
My basic question is, who should/can I file a claim against to 1) get my deposit protected/repaid and 2) the 3 x compensation?

1) The Landlord ("LL") - in the process of being liquidated (no assets)
2) LPA-Receiver ("LPA-R")
3) Either LL or LPA-R
4) Both LL and LPA-R

And, subsequently, is the LPA-R's defense that they have never received/claimed/transfered the deposit from LL relevant/valid?

Background:

1) Assured short hold tennancy signed September 2007, now periodical and I am still renting it

2) LPA-R appointed in August 2008

3) Despite numerous attempts from me, the tenant ("T"), to urge LPA-R to ensure deposit is salvaged/transfered from original landlord ("LL"), LPA-R made little effort to make this happen

4) LL has now is in the proceess of being liquidated, thus little chances that they could either pay me the deposit back, or transfer it to LPA-R

5) I have received a notice from mydeposit 6 months back that my deposit is "unprotected"

6) LPA-R refuses to protect deposit as "it was never paid to them"


My understanding is:

1) LPA-R is acting as an agent to LL

2) LPA-R has accepted the tenancy agreement as it was originally worded by effect having accepted my rent payment, which started in Septebmer 2008 and has been fully and timely paid ever since. As such, they are liable my deposit, as it is, incl amount, stated in the tenancy agreement.

As such, I should be able to file a claim against LPA-R.As there is no point filing against LL, as being liquidated and there are no assets to distribute. Or should I still claim against LL? Or both?

Is the LPA-R's argument that they have never received the deposit a relevant/valid defense? My thinking is that it isn't for two reasons:

1) The LPA-R act as an agent of LL

2) LPA-R had more than a year to affect a transfer of the deposit from LL to themselves. But did no/very little attempt to make it happen. And does it even matter given their "agency status"?

Any court ruling in this area yet, or will this be a first?

westminster
12-04-2010, 11:23 AM
My basic question is, who should/can I file a claim against to 1) get my deposit protected/repaid and 2) the 3 x compensation?

And, subsequently, is the LPA-R's defense that they have never received/claimed/transfered the deposit from LL relevant/valid?....

Any court ruling in this area yet, or will this be a first?

Yes, there has been a high court ruling. http://blog.painsmith.co.uk/2010/02/12/high-court-decision-on-tdp/ Though the facts are different to your case (in the high court case, the agent had received the deposit), it does mean that whoever you claim against, the defendant can avoid the 3x sanction if he protects the deposit with the DPS before the hearing.

The LPA-R is acting as the LL's agent so is theoretically liable (see s.212(9)(a) HA 2004), however, if you read the wording of s.214(3)


(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.

it's arguable that the person holding the deposit isn't the LPA-R.

But then there is s.214(4)

(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.
and here the word 'landlord' includes the agent under s.212(9)(a), but arguably is referring back to "the person who appears to...be holding the deposit".

So, if LPA-R was the defendant, one can imagine a scenario in which they argue they are not "the person who..." so the court cannot "also" order them to pay 3x the deposit. You see the difficulty.

I would say the risk of claiming against the LPA-R is quite significant, given that you would be exposed to their legal costs (non-compliance claims are dealt with in the multi-track) and there is a chance you'd lose. And if you claim against the LL it may be impossible to enforce a judgment, so you'd end up out of pocket for the court fees (which are high for the multi-track; the hearing fee alone is £1,000). See
http://blog.painsmith.co.uk/2009/05/21/proper-place-for-tds-claims/
http://www.hmcourts-service.gov.uk/courtfinder/forms/ex50_web_1009.pdf

This is not the first time this situation has arisen, with mydeposits un-protecting a deposit because of the LL going into receivership (which, to my mind, defeats the whole purpose of the so-called protection they offer). Tenants should insist (as part of negotiation for the tenancy) that LLs use either the custodial scheme (DPS) or the TDS, the latter having much stricter criteria for membership than mydeposits.

An alternative solution to the problem might be simply not to pay the last month's rent. I wouldn't usually suggest this, but in your case it could be the only way you'll get your deposit back, given that the scheme, the agent and the landlord have all effectively washed their hands of it.

London Bridge
12-04-2010, 11:40 AM
The LPA-R is acting as the LL's agent so is theoretically liable (see s.212(9)(a) HA 2004), however, if you read the wording of s.214(3)

it's arguable that the person holding the deposit isn't the LPA-R.

But then there is s.214(4)

and here the word 'landlord' includes the agent under s.212(9)(a), but arguably is referring back to "the person who appears to...be holding the deposit".

So, if LPA-R was the defendant, one can imagine a scenario in which they argue they are not "the person who..." so the court cannot "also" order them to pay 3x the deposit. You see the difficulty.


Many thanks for your thorough response!

It squarely comes down to, I guess, who "appears to be holding the deposit". And as you say, the defense is that the LPA-R isn't.

However, could it be argued that "they (LPA-R) should"? Given that they had more than a year to salvage/transfer it from the LL but have failed to? Mostly due to their own inaction. I have chased both LPA-R and LL frequently and put a lot of effort into this and LPA-R has repeatedly assured me many times that they will do it and are pursuing it. Initially the LL told me they had no issue with it but were just waiting for instructions from LPA-R, that never materialised. So, to my mind the fact that LPA-R isn't "holding", or "appear to hold" perhaps, the deposit is down to their own failure/mismanagement.

Can the LPA-R "appear to be holding the deposit" on the merit that they ought to?

I as a tenant have done all that I can, and nothing wrong, while the LL is being liquidated and LPA-R has failed to salvage my deposit over a long period of time, and accepted the tenancy agreement, which the deposit is documented it. Someone must be liable for it?

Or is really withholding the last month's rent my best/safest option?

westminster
12-04-2010, 12:37 PM
So, to my mind the fact that LPA-R isn't "holding", or "appear to hold" perhaps, the deposit is down to their own failure/mismanagement.

Can the LPA-R "appear to be holding the deposit" on the merit that they ought to?
There is no obligation for the agent to get the deposit from the landlord, and no law which would oblige the landlord to give it to the agent.


Someone must be liable for it?
The landlord is inescapably liable, the LPA-R possibly liable. But as I said above, it would be a high risk strategy to pursue a non-compliance claim against either of them. Certainly not something to be undertaken without first obtaining professional legal advice from a lawyer specialist in this field.


Or is really withholding the last month's rent my best/safest option?
That's for you to decide, but it's definitely low risk compared to legal action. I might have one last stab at it and call the bluff of the LPA-R; send them a copy of the statute with the relevant passages highlighted (inc. s.212(9)(a)), pointing out that they are legally liable for deposit protection (even though we know it's not quite as black and white as this).

Here's the statute: s.212 - s.215 Housing Act 2004
http://www.opsi.gov.uk/ACTS/acts2004/ukpga_20040034_en_19#pt6-ch4

London Bridge
12-04-2010, 13:01 PM
There is no obligation for the agent to get the deposit from the landlord, and no law which would oblige the landlord to give it to the agent.

So the argument that the LPA-R has accepted the tenancy agreement, in which the deposit is clearly defined, incl amount, doesn't strenghten the case/argument against them being liable for it? The "appear to be holding" passage in the law is superceding the obligations as set out in the tenancy agreement?

Would you be able to reccomend a solicitor specialising in a case like this?

Again, many thanks for your thorough responses!

Lawcruncher
12-04-2010, 13:13 PM
I do not see how the LPA receiver could have done anything to get the deposit transferred to him. Nor can I see how in any sense the receiver can be deemed to be holding the deposit or ever to have held it.

As a lawyer I could not possibly recommend that you withhold the last month's rent...

jeffrey
12-04-2010, 13:18 PM
Any Receiver is merely the representative of a creditor, not of L.

London Bridge
12-04-2010, 13:21 PM
My understanding is that an LPA Receiver is indeed acting as an agent of the LL, albeit appointed by the mortgate bank. It is the power that enable LPA-R to redirect rentpayment to him/her and also step into the other rights/obligation of the LL.

And most certianly the LPA-R has the power to get the deposit transfered to him/her. That is at least what these LPA-R assured me they would do, but never did.

Lawcruncher
12-04-2010, 13:36 PM
My understanding is that an LPA Receiver is indeed acting as an agent of the LL

I agree. Section 109 (2) LPA 1925 says:

A receiver appointed under the powers conferred by this Act, or any enactment replaced by this Act, shall be deemed to be the agent of the mortgagor


And most certianly the LPA-R has the power to get the deposit transfered to him/her. That is at least what these LPA-R assured me they would do, but never did.

If the deposit had been paid to a third party then you and the receiver acting together could have required the third party to pay it to the receiver. However in this case the deposit was paid to the landlord. An LPA receiver has no power to extract money from the mortgagor.

westminster
12-04-2010, 13:48 PM
So the argument that the LPA-R has accepted the tenancy agreement, in which the deposit is clearly defined, incl amount, doesn't strenghten the case/argument against them being liable for it? The "appear to be holding" passage in the law is superceding the obligations as set out in the tenancy agreement?
I'm not sure whether the LPA-R can be said to have "accepted" the full responsibilities of the landlord (for example, s.11 repairing obligations) if they are merely his agent? But I have zero knowledge of the legal status of LPA-Rs, I'm just going by what would be the case if this were a standard situation involving a landlord and an agent he'd instructed to act on his behalf.



Would you be able to reccomend a solicitor specialising in a case like this?
Try PainSmith, the firm whose blog I linked to above. They acted on behalf of the appellant in the High Court deposit case.

jeffrey
12-04-2010, 13:51 PM
My understanding is that an LPA Receiver is indeed acting as an agent of the LL, albeit appointed by the mortgate bank. It is the power that enable LPA-R to redirect rentpayment to him/her and also step into the other rights/obligation of the LL.

And most certianly the LPA-R has the power to get the deposit transfered to him/her. That is at least what these LPA-R assured me they would do, but never did.
I agree. The LPA-R is the agent of the creditor (C), appointed by C but statutorily deemed to represent the debtor/mortgagor, L in this case.

London Bridge
12-04-2010, 14:04 PM
I agree. The LPA-R is the agent of the creditor (C), appointed by C but statutorily deemed to represent the debtor/mortgagor, L in this case.

Ok. So what do you think about the potential/risk to file a claim for the deposit + compensation against the LPA-R given the circumstances as explained? Could it be sucessful on the basis that LPA-R is acting as an agent to LL despite not "appearing to hold the deposit"?

Lawcruncher
12-04-2010, 14:42 PM
Ok. So what do you think about the potential/risk to file a claim for the deposit + compensation against the LPA-R given the circumstances as explained? Could it be sucessful on the basis that LPA-R is acting as an agent to LL despite not "appearing to hold the deposit"?

The best answer I can come up with without thinking the matter through is that the receiver could not be under any obligation to pay the deposit or any compensation unless he had surplus moneys in hand. Bearing in mind section 109 (8) LPA 1925 the chances of there being a surplus before any sale have to be remote. The sub-section says:

Subject to the provisions of this Act as to the application of insurance money, the receiver shall apply all money received by him as follows, namely:
(i) In discharge of all rents, taxes, rates, and outgoings whatever affecting the mortgaged property; and
(ii) In keeping down all annual sums or other payments, and the interest on all principal sums, having priority to the mortgage in right whereof he is receiver; and
(iii) In payment of his commission, and of the premiums on fire, life, or other insurances, if any, properly payable under the mortgage deed or under this Act, and the cost of executing necessary or proper repairs directed in writing by the mortgagee; and
(iv) In payment of the interest accruing due in respect of any principal money due under the mortgage; and
(v) In or towards discharge of the principal money if so directed in writing by the mortgagee;
and shall pay the residue, if any, of the money received by him to the person who, but for the possession of the receiver, would have been entitled to receive the income of which he is appointed receiver, or who is otherwise entitled to the mortgaged property.

I think we also need to bear in mind that the compensation does not arise under the tenancy. The obligation to pay is a personal one which arises from a failure to protect the deposit.

jeffrey
12-04-2010, 14:44 PM
Note that '...apply all money received by him...' reference in line 1. The deposit was not.

London Bridge
14-04-2010, 10:49 AM
Ok. Is there a way to get the deposit back from the ultimate owner of the liquidated company (which was the LL)?

I just can't belive that I as a tenant have no protection at all from the law in regards to my deposit in a situation like this.

Paul Gibbs
14-04-2010, 15:28 PM
If by ultimate owner you mean an individual who was a shareholder or director of the company then no. The company is considered to be a seperate legal entity from its members.

London Bridge
15-04-2010, 14:07 PM
Given that my depsosit is not protected now LPA-R can not end the tenancy with a Section 21 notice, right? As I understand one of the santions for failing to protect the deposit is that Section 21 notice cannot be used, and that must surely apply in this case, right?

This put the LPA-R in an akward situation as they would need end the tenancy to sell the flat, which they as LPA-R is ultimately mandated by the mortgage bank to do.

How will LPA-R be able to end my tenancy now? Will they have to wait me out? And if so, why not agree to protect/pay back my deposit instead, despite it being lost by LL being liquidated and the mydeposit scheme has proven to be completely meaningless as a protection device in this instance.

westminster
15-04-2010, 15:24 PM
How will LPA-R be able to end my tenancy now?
They can serve notice under Ground 2 of Schedule 2 of the Housing Act 1988.

http://www.opsi.gov.uk/acts/acts1988/ukpga_19880050_en_14#sch2

London Bridge
15-04-2010, 15:28 PM
Ok. Thanks.

Does it need a court order? Or is it in effect "just another form"? For me as a tenant is there any practical difference relative to a Section 10 notice?

London Bridge
15-04-2010, 15:33 PM
"The Housing Act 1988 as amended by the Housing Act 1996 lays down certain circumstances (grounds) under which a landlord may successfully apply to court for possession.

Ground 2 - This ground is used by a mortgage wishing to gain vacant possession in order to exercise a power of sale. Notice will need to have been given to the tenant. The mortgage must have been taken out before the tenancy began and the the tenant warned about this contingency within the tenancy agreement."

I have note been warned within my tenancy agreement as far as I know.

So the LPA-R cannot use Ground 2 notice then? Does it meen LPA-R need to obtain a court order to gain possession/end the tenancy?

And, either way, a court order is required? Wouldn't that be more expensive to obtain (court fee, litigator/barrister fees) than just to agree to pay me back my deposit and have me agree to end the tenancy?

jeffrey
15-04-2010, 15:36 PM
"The Housing Act 1988 as amended by the Housing Act 1996 lays down certain circumstances (grounds) under which a landlord may successfully apply to court for possession.

Ground 2 - This ground is used by a mortgage wishing to gain vacant possession in order to exercise a power of sale. Notice will need to have been given to the tenant. The mortgage must have been taken out before the tenancy began and the the tenant warned about this contingency within the tenancy agreement."

I have note been warned within my tenancy agreement as far as I know.

So the LPA-R cannot use Ground 2 notice then? Does it meen LPA-R need to obtain a court order to gain possession/end the tenancy?

And, either way, a court order is required?
I do not know from where your quotation comes. A 'warning' might not be essential! Here's g2's actual text, with my added underlining for emphasis:

The dwelling-house is subject to a mortgage granted before the beginning of the tenancy and:
(a) the mortgagee is entitled to exercise a power of sale conferred on him by the mortgage or by section 101 of the Law of Property Act 1925; and
(b) the mortgagee requires possession of the dwelling-house for the purpose of disposing of it with vacant possession in exercise of that power; and
(c) either notice was given as mentioned in Ground 1 above or the court is satisfied that it is just and equitable to dispense with the requirement of notice;
and for the purposes of this ground “mortgage” includes a charge and “mortgagee” shall be construed accordingly.

London Bridge
15-04-2010, 15:40 PM
"County Court - Claims for Possession Procedures
To gain possession of the property the landlord will need to complete the Form for Possession of Property N5 Form and the Particulars of Claim N119. If you also want to claim rent arrears you can provide details on the particulars of claim form.

You should send or take your completed forms to the county court office in the district where the rental property is located. Once your completed forms are received at the court office, your case will be allocated a hearing date. For guidance, you should read the notes for claimant (rented residential premises) on the Court Service web site."

London Bridge
15-04-2010, 15:41 PM
Source:

www.landlordzone.co.uk/grounds_for_possession.htm

jeffrey
15-04-2010, 15:51 PM
Still, that advice does not tally with the wording underlined in post #21. So is Parliament wrong, then?

London Bridge
15-04-2010, 16:07 PM
But it does tally, doesn't it?

....if court is satisfied.....

Implies a court order, just as the link I provided states.

Perhaps I misunderstand you, but I don't spot the difference with the text you provided and what's written in that link.

jeffrey
15-04-2010, 16:20 PM
But it does tally, doesn't it?

....if court is satisfied.....

Implies a court order, just as the link I provided states.

Perhaps I misunderstand you, but I don't spot the difference with the text you provided and what's written in that link.
In post #20's second paragraph, the bold wording reads and the the tenant warned about this contingency within the tenancy agreement.
That's not what the Act says, is it, in paragraph (c) underlined in post #21? Even if T was not warned, the Court can decide to give L possession.

westminster
15-04-2010, 16:26 PM
I have note been warned within my tenancy agreement as far as I know.
The court can still order possession if it is "satisfied that it is just and equitable to dispense with the requirement of notice".


So the LPA-R cannot use Ground 2 notice then?
Incorrect. They can use Ground 2.


Does it meen LPA-R need to obtain a court order to gain possession/end the tenancy?
If a tenant doesn't wish to leave, a landlord always has to obtain a court order for possession. He must first serve a s.8 notice (using the grounds in schedule 2) or a s.21 notice informing the tenant that he intends to apply for possession, and the basis on which he intends to apply for possession.


Wouldn't that be more expensive to obtain (court fee, litigator/barrister fees) than just to agree to pay me back my deposit and have me agree to end the tenancy?
Not necessarily. A barrister isn't necessary; many landlords represent themselves at s.8 hearings. The LPA-R may well have in-house staff who deal with possession procedure.

London Bridge
15-04-2010, 16:34 PM
So, again, what is the practical difference for me as tenant with a Section 21 and a Ground 2 for repossesing the property? Is it just down to LPA-R need to fill in another form?

Why is it then deemed a sanction against LL's that do not protect the deposit that they cannot use Section 21 notice?

It just sound like for me as a tenant there is no differnce. My deposit has no legal protection whatsoever in this situation. Failiures of LL and LPA-R have costed me my deposit, and there is no effective sanction against them, and consequently my deposit has never had any legal protection. The Tenant again draws the shortest straw.

jeffrey
15-04-2010, 16:41 PM
Main differences:
1. During fixed term: no s.21 possession rights, only s.8 possession rights.
2. L cannot use g2- only L's mortgagee.
3. Court's discretion is sometimes needed under g2 (but never under s.21).

westminster
15-04-2010, 17:04 PM
Failiures of LL and LPA-R have costed me my deposit, and there is no effective sanction against them.
Unlike the LL's other creditors, you have the option of withholding the last month's rent as a means to get your deposit back.


consequently my deposit has never had any legal protection.
Well, it did originally. Mydeposits are the ones who cancelled the protection.


The Tenant again draws the shortest straw.
The law gives tenants a lot of protection. It's not the law's fault that the LL has gone bust.

If you want to avoid anything like this happening again, rent via an ARLA/NAEA member letting agent as they keep client monies (including tenants' deposits) in a protected account.