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borisb
07-03-2007, 09:15 AM
Further to my agency going bust, I have withheld the last months rent. However I have received a letter from my landlord, shown below. As such she is demanding I pay the outstanding rent, but I intended to only pay if I receive my deposit back. The issue surrounds who is responsible for the deposit. I would appreciate it, if my situation is explained.

What do you recommend?

Extract from the landlords letter

Liability to pay the deposit
Because the letting agent holds the deposit as a stakeholder (and not as my agent), the money is held on trust for the benefit of the landlord and tenant. Neither party is entitled to the deposit at any stage before the end of the tenancy.

Therefore, despite the fact that there is no contract between you and the letting agent, the trust under which the money is held creates a legal relationship. Should the letting agent not deal with the deposit as it should under the tenancy agreement, you would be entitled to claim it back from them because the letting agent would be in breach of trust.
The deposit cannot be claimed from me because the money does not belong to me. I am not liable either to pay it to you or to claim it from the agent for you.
You should be able to claim the deposit back from the agent as it should not form part of the agent's working capital. The deposit is not the agent's money. Therefore the agent should be holding the deposit on trust, and following the terms of the tenancy agreement it should be paid to you.

Bel
07-03-2007, 10:15 AM
For members not familiar with the original thread:
http://www.landlordzone.co.uk/forums/showthread.php?t=5254

From the previous thread there are 2 schools of thought. You would be wise then to get an expert opinion from a specialist solicitor. Perhaps you could ask the Shelter helpline first.

If you have not already done so, I would write to her using info posted on the previous thread that would help your case; ie referring to the law of agency, and argue your case as best you can. Sound confident. The ball is in her court, so then do nothing.

The next step for her is to threaten court action. You will definately need good legal advice by then

Please post back on any professional advice you recieve.

Paragon
07-03-2007, 12:02 PM
Many of us are very interested in the legal opinion you receive. Follow Bel's advice and let's see what happens.

attilathelandlord
07-03-2007, 13:15 PM
The landlord's letter is rubbish.

The landlord is liable for the return of your deposit. Don't pay the last month's rent. The landlord can then sue the agent for return of deposit to cover last month's rent.

Bel
07-03-2007, 21:38 PM
The landlord can then sue the agent for return of deposit to cover last month's rent.

But the agent has gone bust, hence neither the tenant or the LL wants to be the loser in the end.

attilathelandlord
08-03-2007, 11:53 AM
No I don't suppose they do but it doesn't change the fact that the LL must repay the deposit if the agent has disappeared/gone bust.

paul_c
08-03-2007, 12:54 PM
No I don't suppose they do but it doesn't change the fact that the LL must repay the deposit if the agent has disappeared/gone bust.


Maybe, but the tenant also has a duty to pay the rent, to the landlord if necessary, even if the agent has disappeared. Has he paid the final month's rent? Can't have it all ways, not paying the rent and asking for his deposit back too.

Paragon
08-03-2007, 14:06 PM
STAKEHOLDER - A third person, chosen by two or more persons, to keep in deposit property, the right or possession of which is contested between them and to be delivered to the one who shall establish his right to it. Thus each of them is considered as depositing the whole thing. This distinguishes this contract from that which takes place when two or more tenants in common deposit a thing with a bailee.

A person having in his hands money or other property claimed by several others, is considered in equity as a stakeholder.

The duties of a stakeholder are to deliver the thing holden by him to the person entitled to it on demand. It is frequently questionable who is entitled to it. In case of an unlawful wager, although be may be justified for delivering the thing to the winner, by the express or implied consent of the loser yet if before the event has happened he has been required by either party to give up the thing deposited with him by such party, he is bound so to deliver it or if, after the event has happened, the losing party give notice to the stakeholder not to pay the winner, a payment made to him afterwards will be made in his own wrong, and the party who deposited the money or thing may recover it from the stakeholder.

Bel
08-03-2007, 15:01 PM
Maybe, but the tenant also has a duty to pay the rent, to the landlord if necessary, even if the agent has disappeared. Has he paid the final month's rent? Can't have it all ways, not paying the rent and asking for his deposit back too.

You are right, he does have a duty to pay rent. But he is also bright enough to realise that if he pays the rent, she will not be giving his deposit back, as she has just said that she doesn't think she is liable because the agent is responsible in her eyes. From reading other threads, it seems that if you have good reason to expect the landlord to withold your deposit for no good reason (eg you know he has done it before), then witholding the rent can be legally (?) justified. He is saving himself the trouble and expense of taking her to the county court to get his deposit back.

The OP also says he will pay the rent when he gets the deposit back.

attilathelandlord
08-03-2007, 15:35 PM
Agree with you there Bel

Ruth Less
08-03-2007, 19:30 PM
STAKEHOLDER - A third person, chosen by two or more persons, to keep in deposit property, the right or possession of which is contested between them

Presumably a general definition of stakeholder, but not one that applies in this case as the tenant doesn't have a say in choosing the agent or how the deposit is held. The choice is solely down to the landlord so if a dodgy agent has been chosen that's solely down to the landlord. Unless you realistically claim a tenant can get the agent to be changed? I don't think so. What if the landlord chooses his EA mate as a stakeholder? You need more equal parties which isn't the case for the landlord's choice of an agent.

Paul_f
08-03-2007, 20:19 PM
You're all getting sidetracked about the "stakeholder" bit!

It's nothing to do with this situation, it's only to do with assessment of dilapidations in that the landlord and tenant jointly have to agree to its apportionment when this aspect has been resolved. The landlord still has the legal responsibility to account for it.

What you have here is that the agent who is the landlord's agent after all, is holding the deposit on behalf of the landlord (but crucially in trust for the tenant as well), and whose duty it is to return the balance of the deposit after assessment of dilapidations.

As the agent has presumably disappeared with the money, then the landlord has the responsibility to account to the tenant for his deposit.

Attilla is exactly right when he says the landlord's letter is bovine excrement.

I would be withholding the last month's rent if it is equivalent to the deposit too! Saves a lot of problems later, and you can bet it won't get to court if that's what the tenant decides to do.

borisb
16-03-2007, 14:23 PM
Just to let people know I have been advised by a solicitor that as the money is held as a 'stakeholder' I can't claim it back from the landlord. If it was held as an agent I would have been able to reclaim the money. I now have to pay the landlord.

I do however intend to take the agents to small claims court. It turns out then are not bust they are just closing the company.

Do I sue the director as an individual or the company??

Paragon
16-03-2007, 14:31 PM
Thank you for that borisb. I guess your solicitor didn't understand all the ramblings about Agency Law either.

Beeber
16-03-2007, 14:35 PM
Big Caveat - I know little about the closure of companies and I am still baffled why the agent is deemed to be responsible, plus doubly baffled by the admission that it is merely winding itself down for no discernible reason....

However, if the letting agency is a limited company (as opposed to a sole trader), information at Companies House indicates that creditors can prevent the company from dissolving itself

http://www.companies-house.gov.uk/about/gbhtml/gbw2.shtml

If it's a limited company, then I suggest you contact Companies House to see how you can object to its proposed dissolution or run this past your solicitor.

You could check records on the web check service that belongs to the Companies House website.

Bel
16-03-2007, 15:09 PM
Just to let people know I have been advised by a solicitor that as the money is held as a 'stakeholder' I can't claim it back from the landlord. If it was held as an agent I would have been able to reclaim the money. I now have to pay the landlord.



Question; do you think your solicitor is right? Solicitors opinions vary....thats why they have court cases where each side thinks they are right. Paul F has respected experience and legal contacts in letting. This goes against his advice in the post above. I would think carefully about giving money back if you are not sure.

rewop46
16-03-2007, 21:36 PM
Boris, the agent is acting on the landlord's behalf as been pointed out in these posts. Whatever the legalities here, morally it's not your problem, one of them has your money.

If you dig your heels in then it's up to the landlord to take you to court at his expense. While he's running around doing this there is every chance that this situation may be resolved anyway. You may have moved on by then. Trust me, there's a good chance he won't go that far. If you think he's serious then offer to meet him halfway, you never know. See the previous post from Bel.

It pains me to say this as a landlord because this is happening to me at the moment; one of my (ex) agents has 3 bonds plus several months rent. Some of the properties that we are taking over to manage were previously managed by Yeoman Edwards (Lord Lucan) who ran off with £200k. One landlord was owed £7,000 :eek:

There are references to this on this site and my blog http://isis-cardiff.blogspot.com

rewop

borisb
20-03-2007, 14:33 PM
I've now received advice from the Shelter helpline. They have stated I am not within my rights to withold the rent.

However I am able to sue the landlord for non return of my deposit. They informed me it's still the landlords repsonsibility to return my deposit, event hough it was held as a 'stakeholder' by the landlord. They said I could do this even though it was held as 'stakeholder'.

What do people think?

Bel
20-03-2007, 16:48 PM
I've now received advice from the Shelter helpline. They have stated I am not within my rights to withold the rent.

However I am able to sue the landlord for non return of my deposit. They informed me it's still the landlords repsonsibility to return my deposit, event hough it was held as a 'stakeholder' by the landlord. They said I could do this even though it was held as 'stakeholder'.

What do people think?

I wouldnt part with cash as you will have so much hassle going to court to claim it back.

You must convince the LL that she must honour the deposit and settle (hopefully) between yourselves.

borisb
21-03-2007, 07:50 AM
The actual tenancy states:
The tenant shall pay on the signing hereof a deposit of XX to the Landlord's Agents to be dealt with in accordance with clause 5(b).

Clause 5(b) states
'The agents shall hold the deposit herein before referred to throughout the term of the tenancy hereby created as stakeholder as security for compliance by the tenant with the obligations of the tenant under this agreement and the payment holding and use the same shall be without prejudice to any other rights and remedies of the landlord whether express or implied.'

Surely this states the landlord is responsible for returning the depsoit to me as it refers to the 'Landlords agents' not the tenants, I understand it's still held as a stakeholder for security.

borisb
21-03-2007, 09:35 AM
Another extract:
As soon as practicable after the detemrination of the tenancy (howsoever the same may be determined) the agents shall retain (and account to the Landlord for) such part of the deposit the agents shall deem necessary to enable the landlord as at the date of such determination to make good any breach or non compliance by the tenant.

jeffrey
21-03-2007, 11:23 AM
Another extract:
As soon as practicable after the detemrination of the tenancy (howsoever the same may be determined) the agents shall retain (and account to the Landlord for) such part of the deposit the agents shall deem necessary to enable the landlord as at the date of such determination to make good any breach or non compliance by the tenant.

As Agent is not a party to Letting Agreement (L and T parties), Agent cannot be bound by its burdens AND can take its benefits only if Contracts (Rights of Third Parties) Act 1999 applies.