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borisb
27-02-2007, 16:30 PM
Sorry if this repeats a previous thread but I could really do with some advice. The letting agency I am with has disappeared (shut down) and currently has my deposit of £590.

I moved out of the property last week and am currently in contact with my landlord and would like to know where I stand. The deposit should have been held in a stakeholder account. She has agreed that I left the property in a satisfactory conditon.

However, she is suggesting that the deposit money is mine and as such was held on my behalf so I have lost the money. I however believe that the landlord has a responsibility to pay me back my deposit even though the agency has gone bust.

The query gets more complicated as I signed for a new property with the agents before they went bust and gave a further £110 deposit for it. However I didn't take the property as I couldn't contact the agency or landlord. Is there any way I can get this money back?

Regards

Boris

Poppy
27-02-2007, 16:42 PM
Sorry to learn about your situation.

The previous landlord is responsible for returning your £590 deposit. Take them to court if they fail to pay.

Depends what exactly the £110 covered. What did you sign on handing over this money? Was it a new AST or some kind of holding deposit?

jeffrey
27-02-2007, 16:52 PM
I agree with Poppy. Deposit is tenant's money and should be held by Agent in a client account.
Agent is an arm of the L, so his actions are imputed to L. It follows that L has deposit, because his agent does, so L is contractually bound to return it.

borisb
27-02-2007, 17:20 PM
The £110 was given to the agent when signing the new AST, this was for our new property. However as we had problems contacting the Landlord we decided not to take it as we couldn't contact him and were moving in a week.

We therefore had to sign for a new place. We have since made contact with the original landlord (£110 place) and he agreed to terminate the tenancy. The Landlord has however not received any money from the agents. Where do I stand in getting my £110 back.

Regards
Boris

P.Pilcher
27-02-2007, 18:30 PM
Let's just explain the legal principle here (sublect to Jeffrey's vastly superior knowledge): The agency had a contract with the landlord to represent him, so everything you did with the agent was on the landlord's behalf. Your contract was with the landlord, not the agent, even if you never saw the landlord or he did not sign your AST agreement as the agent signed it on behalf of the landlord and in accordance with his instructions. Now, all monies you handed over were accepted by the agent on behalf of the landlord, thus as you only have a contract with the landlord, you look to him, via court action if necessary for a refund of any deposits paid. The landlord in turn then takes the appropriate action against his agent to recover this money. Any legal action you tke against the agent will therefore fail as you did not have a contract with him.


BUT

You state that the first deposit you paid should have been held by the agent in a stakeholder's account. If this means that the money was held by the agent as a stakeholder, it means that he sits on the money and only releases it to either party when authorised by the other. It is therefore possible that you did have a form of contract with the agent and you may be able to take action against him.
Perhaps one of our experts would care to comment further.

P.P.

PaulF
27-02-2007, 21:02 PM
Let's just explain the legal principle here (sublect to Jeffrey's vastly superior knowledge): The agency had a contract with the landlord to represent him, so everything you did with the agent was on the landlord's behalf. Not necessarily - their administration charges are nothing to do with the landlord which I would suggest is the £110. Your contract was with the landlord, not the agent, even if you never saw the landlord or he did not sign your AST agreement as the agent signed it on behalf of the landlord and in accordance with his instructions. Now, all monies you handed over were accepted by the agent on behalf of the landlord, thus as you only have a contract with the landlord, you look to him, via court action if necessary for a refund of any deposits paid. The landlord in turn then takes the appropriate action against his agent to recover this money. Any legal action you tke against the agent will therefore fail as you did not have a contract with him. Only the dilapoidations deposit is the responsibility of the landlord. You're making complicated issues that don't exist


BUT

You state that the first deposit you paid should have been held by the agent in a stakeholder's account. If this means that the money was held by the agent as a stakeholder, it means that he sits on the money and only releases it to either party when authorised by the other. Absolutely nothing to do with the agent having gone bust, and as they were holding the deposit it must be returned to the tenant by the landlord, less dilapidations It is therefore possible that you did have a form of contract with the agent and you may be able to take action against him. Most unlikely to extract any money as such.
Perhaps one of our experts would care to comment further.

P.P.You haven't really thought this through

Paragon
27-02-2007, 23:04 PM
I contend that if the contract actually states that the agent is acting as a stakeholder, then he is acting independently of the landlord and would therefore be liable for the deposit. The landlord has no access to this deposit without the express approval of the tenant.

It looks like I disagree with the majority on this one.

Paragon
27-02-2007, 23:24 PM
Further to my previous post, I now contend that if the agent is acting as a stakeholder, he is then holding the deposit for the benefit of both the tenant and the landlord, and would be unable to release any funds without an agreement between the two. Should there be a dispute, then the agent's obligations are to turn the funds over to the court until final settlement.

As the agent has disappeared with the funds, it is then the responsibility of both the tenant and the landlord to jointly pursue the agent as co-plantiffs againt the agent, the defendant.

Bel
28-02-2007, 00:13 AM
Sorry if this link goes out of date:
http://www.residentiallandlord.co.uk/feature.htm

"Sometimes, where an agent is involved, the tenancy agreement will say that the agent is holding the deposit as ‘stakeholder’. This means that the agent holds the money in a separate trust account and is responsible for it. At the end of the tenancy, it is the agent that is responsible for deciding whether any deductions should be made, not the landlord. If the agent does not hold as stakeholder, then legally the firm is always acting for the landlord and it is the landlord who has ultimate responsibility (although in practice most landlords just leave it up to the agents)."

Seems to support Parragons view???

attilathelandlord
28-02-2007, 08:32 AM
No, being a stakeholder only states how the deposit is held. The ultimate responsibility is for the landlord to refund the deposit to the tenant, as the deposit belongs to the tenant and the agent works for the landlord. The landlord would then chase the agent for a refund.

Another reason why I never use agents and on the rare occasions that I have done, they never hold deposits for me.

Was the agent ARLA registered and therefore presumably bonded?

Paragon
28-02-2007, 09:29 AM
Very good article by Tessa Shepperson. Many thanks Bel. Good research. You picked up on my failings i.e. unsourced statement.

Paragon
28-02-2007, 09:30 AM
No, being a stakeholder only states how the deposit is held. The ultimate responsibility is for the landlord to refund the deposit to the tenant, as the deposit belongs to the tenant and the agent works for the landlord. The landlord would then chase the agent for a refund.

Another reason why I never use agents and on the rare occasions that I have done, they never hold deposits for me.

Was the agent ARLA registered and therefore presumably bonded?


It states a lot more than that. Please provide a counter source for your hypothesis. The agent works for the landlord, except in the case where the agent chooses to be a stakeholder, as opposed to just holding the deposit at the landlord's direction.

Paragon
28-02-2007, 09:51 AM
"Sometimes, where an agent is involved, the tenancy agreement will say that the agent is holding the deposit as ‘stakeholder’. This means that the agent holds the money in a separate trust account and is responsible for it. At the end of the tenancy, it is the agent that is responsible for deciding whether any deductions should be made, not the landlord. If the agent does NOT hold as stakeholder, then legally the firm is always acting for the landlord and it is the landlord who has ultimate responsibility (although in practice most landlords just leave it up to the agents).

If the deposit is being held by an agent as stakeholder, the stakeholder keeps the interest as part of its fee. Otherwise, as the money strictly speaking belongs to the tenant, interest is payable, unless the tenancy agreement provides otherwise (which most do)."

Quote from Tessa Shepperson, Solicitor and contributor to Residential Landlord

attilathelandlord
28-02-2007, 09:57 AM
Study the law of agency.

The agent acting as a stakeholder regards deposit disputes, not the eventuality of the agent disappearing with the deposit.

The landlord is the principal, the agent is just that, the agent and the landlord will be responsible at all times for the deposit to the tenant, regardless of where and how it is held.

The landlord cannot hide behind the stakeholder issue in order to deny responsibility if the agent disappears with the monies.

The tenant in all cases will sue the landlord if monies not returned, not the agent.

The agent is to be regarded as " a glass window" through which the principal (landlord) may be viewed.

Paragon
28-02-2007, 10:17 AM
Study the law of agency.

The agent acting as a stakeholder regards deposit disputes, not the eventuality of the agent disappearing with the deposit.

The landlord is the principal, the agent is just that, the agent and the landlord will be responsible at all times for the deposit to the tenant, regardless of where and how it is held.

The landlord cannot hide behind the stakeholder issue in order to deny responsibility if the agent disappears with the monies.

The tenant in all cases will sue the landlord if monies not returned, not the agent.

The agent is to be regarded as " a glass window" through which the principal (landlord) may be viewed.

Give us a link to your sources. Otherwise, your sweeping statements could be regarded as wishful thinking or even pure fabrication. Certainly, not saying that it is, but we do need some backup.

A tenant can sue anyone he likes, whether a judge would throw the claim out as being without merit is another question. We all know that, at the county court level, a judge has enormous powers of discretion. He can even override the letter of the law and support the spirit of the law. So, you never know until the day.

attilathelandlord
28-02-2007, 11:15 AM
Maybe you missed my source: The Law of Agency. Go read.


Or here is an interesting ruling that explains that a principal is always liable for the actions of the agent:

perseus.herts.ac.uk/uhinfo/library/d31858_3.pdf

borisb
28-02-2007, 13:05 PM
So what do you suggest the best way forward is?

My landlord is suggesting that she will be taking me to court as I withheld my last months rent when I became aware of the situation with my deposit.

However if the landlord take my rent from the deposit she still owes me approximately 100 pounds. I'm arguing that she needs to pay me the balance of the deposit. She however states she is 500 pound out of pocket as the deposit has gone.

P.Pilcher
28-02-2007, 15:11 PM
From the above discussion it is pretty obvious that the landlord is responsible for returning your deposit. If she continues to try and sue you for the last month's rent then you will have to countersue for the return of the deposit. I suggest that you get in first by writing to the LL pointing out that you require your deposit to be returned forthwith as there are no issues concerning the property condition. From this she may deduct the last month's rent which you agree you owe. Unless you receive this from her in (say) 14 days, you will have no alternative than to take action in the small claims court. The moneyclaim on line procedure is quite simple.

You may care to point out that as the agent was engaged by her, she may care to look to him for any monies due to her, however as your contract was with her, not the agent, you are looking to her for return of the balance of your deposit.

P.P.

Paragon
28-02-2007, 15:56 PM
PP -

I think this case will be beyond the scope of the small claims court, especially if they are going to use an 1893 case as precedent, a case still evidently on the books, but only used once in selling cigars.
In fact, this case would be beyond the ability of even the best CAB lawyer.

One can say read The Agents Law re: Principal vs. agent, but one might just as well say read all the tomes on contract law. Unless I see an actual case concerning "stakeholders" legal obligations, I can't see a tenant winning this one. If I was the defendant, I would relish the chance to argue the case in a magistrates court, which is where it will have to go.

Bel
28-02-2007, 16:16 PM
BorisB

Tessa Shepperson has a site called Landlord Law; for a fee you can join and ask questions. Also there are specialists advertised on this site. If you do get legal advice,pLease share it with us, and put us out of our misery.

attilathelandlord
28-02-2007, 16:57 PM
Paragon, with the greatest of respect, you have no idea what you're talking about.

Cases as precedent can be many hundreds of years old but they still carry legal weight. It is not the subject matter but the principle involved that is important.

Magistrates courts are for CRIMINAL CASES so I think you would find it very hard to sue anyone there!

Landlord is liable pure and simple.

Paragon
28-02-2007, 17:17 PM
I agree re: magistrates court. But were we not speaking about the deposit being retained by the agent as a stakeholder and the agent disappearing with it. Would this not be stolen property?

attilathelandlord
28-02-2007, 17:24 PM
It may well be fraudulent, but the landlord still has to cough up the deposit to the tenant and then try and recover monies from his/her agent.

No amount of twisting or turning is going to change that fact

Paragon
28-02-2007, 17:41 PM
But, I believe we all agree that the deposit is the tenant's property. The landlord never received the property nor, may not have even asked the agent to take a deposit. It could have been the agent's own decision compatible with his designs to unilaterally declare himself a stakeholder with the express intention to steal the money.

I further contend that this dispute is more complicated than you would have the tenant believe. NO case is as cut and dried as you make out. No lawyer would ever say their case is 100%. Lawyer's know they win on average only 50% of their cases, no matter what previous cases they quote, to include the Magna Carta, feudal laws, common law, civil rights law or agency law.

Beeber
28-02-2007, 17:49 PM
I agree re: magistrates court. But were we not speaking about the deposit being retained by the agent as a stakeholder and the agent disappearing with it. Would this not be stolen property?

A letting agency is a business. Businesses go bust every day due to many factors - including poor management and poor cash-flow - without it necessarily leading to criminal offences for the company director.

In the case of the following estate agency company which has been dissolved, the Police clearly indicated it was a civil matter. There are posts on numerous forums from disgruntled tenants and landlords who allege this agency hasn't returned any deposits or handover the rent and which also allege that a second company that the director was involved with in some capacity (not necessarily as a director) has also folded.

http://www.richmondandtwickenhamtimes.co.uk/search/display.var.1104095.0.police_probe_property_firm.p hp

Paragon
28-02-2007, 18:02 PM
You're right. I just read again the OP post and it does say went bust. Thanks for pointing that out. I believe it might be prudent in that case to file a claim with the administrators.

But it doesn't change my contention that the agent who has unilaterally declared themselves a stakeholder for all their landlords is ultimately responsible for the funds. I think Tessa Shepperson will have to go into more detail why she, as a letting solicitor, feels this is the case.

Paragon
01-03-2007, 15:10 PM
Law Dictionary Library > Legal > Law Dictionary Stakeholder
"a third party chosen by two or more persons to keep in deposit property or money the right or possession of which is contested between them, and to be delivered to the one who shall establish his right to it." 162 S.E. 2d 765, 770. See interpleader.

It is my contention that the letting agent acting as a stakeholder is acting as much as for the tenant as the landlord. In fact, since it is the tenant's money, that the tenant has contracted with the agent and probably paid a fee for this service. It is my belief that this stakeholder status puts the case outside The Agency Law as previously referred to.

attilathelandlord
01-03-2007, 16:55 PM
Yawn.

Yawn.

Yawn.

Paragon
01-03-2007, 17:03 PM
Yawn.

Yawn.

Yawn.

How to be show your ignorant and idiotic attitude in three words!!! Well done!!!

attilathelandlord
01-03-2007, 17:15 PM
Don't mention it mate! At least I know what courts I can sue in!!!!

Seriously though, I ran the scenario past my partner who is a trainee barrister specialising in property.

The law of agency wins out in this scenario.

The only possible scenario where the landlord would not be liable (possibly) is where he/she expressly states that a deposit should not be taken, one is and then the agent disappears with the cash.

Paragon
01-03-2007, 17:33 PM
If the agent didn't officially declare bankruptcy, then it still could be theft and therefore criminal. I don't think your trainee barister should move much beyond being a trainee.

attilathelandlord
02-03-2007, 06:22 AM
Yes you're right in every respect oh great wise, powerful and all knowing Paragon.

You obviously know much more than the legal profession combined!!!!

I just hope no-one here is relying on your advice!!!

I must stop posting to this thread now, although it is too much fun winding you up!

Paragon
02-03-2007, 10:19 AM
I actually found the sharing of thoughts and information on this particular subject very informative. Especially, your link to the 1893 case history, one which I hadn't seen before. It's a shame to discover that the discussion degenerated into a wee bit of slanging. I certainly don't think it helped our credibility on this forum.

The only advice I gave to the OP was essentially that it may not be as straightforward as he may expect. There are interesting arguments for and against.

curmudgeon
02-03-2007, 22:09 PM
f the agent didn't officially declare bankruptcy, then it still could be theft and therefore criminal. I don't think your trainee barister should move much beyond being a trainee.

But Paragon, how can you have theft wuithout the mens rea?

Paragon
02-03-2007, 23:00 PM
Have no idea what his attitude was. As you are implying, could be just negligence albeit careless negligence by not putting funds in escrow.