Agent taking fees off deposit, amongst other things

[Granola]

To cut a painful story short: we've had a tenant who didn't pay the rent and we successfully evicted with a Section 21. They still owe us over £5k in rent which we are pursuing separately, but the amount of damage to the property exceeded the deposit held.

The Tenancy Agreement stated the amount of deposit held and was signed by all parties. We have been repaid what was left of the deposit for the damage, but were short about £1100. I asked for a breakdown and (amongst uncontested charges) it included their administration charges for sending out rent arrears letters and more significantly the amount they said that comprised the deposit was less than stated on the agreement because it (SLA) "was badly worded". They have given no other proof of what was taken from the tenants by way of deposit and we have a signed agreement stating the amount.

I feel that if we take them to court, a signed Agreement with the stated amount is unarguable. (one hopes). However, the deposit is primarily for damage and since it didn't cover all the damage, then the agent can go and do what we did and sue the ex-tenant themselves. I do not and cannot believe that they are entitled to take their fees off the deposit when it has so clearly not covered its primary purpose.

The latter amount is not as significant as the discrepancy in what the Agreement says they took as deposit and what they are now saying they took as the deposit. However, I feel that it is a very clear case of signed contracts are what matters, but as a matter of principal I want to fight them on taking their fees off. They can jolly well go through the legal processes too !

I would appreciate any thoughts or advice!

[jeffrey]

In suing T for debt, Agent must have had your authority.
The claim should have sought payment (by T) of not only the rent etc. but also the legal fees and Court costs. You won, so why are you being debited the fees which should have been recovered from T?

[Granola]

Sorry, I didn't make myself clear. The Agent stated they had collected a deposit amounting to 3 months rent. That is in the Tenancy Agreement. They actually collected 2 months rent. They are saying the loss is our problem, not theirs. I think otherwise, because the 3 months is what is stated in the Agreement.

The rent arrears is a different matter and we are currently waiting for court bailiffs to go in.

[jeffrey]

No.
Agency Agreement is between you (as L) and agent.
Tenancy Agreement is between you and T.
Keep this distinction in mind. Agent is not party to (nor involved in) Tenancy Agreement. However, Agent has not complied with Agency Agreemennt (failure to collect full deposit) so that can scarcely be your fault!

[Granola]

Thanks very much for your replies. I must be more accurate about which agreement - especially when filling out the court papers !

The Tenancy Agreement stipulates how the Security Deposit will be dealt with. The first clause is about damage and compensation for damage. Clause 5 mentions unpaid rent and agent administration fees. The deposit (even with the right amount collected) does not cover the damages. Is the Agent right to deduct their administration costs and leave us short on the damages?

[jeffrey]

Agent does have right to set-off, i.e. to deduct:
a. what you owe Agent; from
b. what Agent owes you.

The point is what Agent should have collected on your behalf (and, if not all collected, why not).

[Granola]

Okay.

Thanks very much for that.

[Paul_f]

I just wonder why agent can set off against the deposit because they certainly cannot deduct commission from it if they are "regulated" This comes up time & again at NAEA as agents are in breach of Rule 1(3) of NAEA's Rules of Conduct if they deduct anything from the deposit concerning any of their fees or other costs without due authority.

[jeffrey]

It's the "due authority" bit that is critical. If L authorises (whether explicitly or in Terms of Engagement) Agent to make such deduction, it's OK.

[Paul_f]

Sorry! I should clarify - a regulated agent cannot deduct fees from tenants deposits even if authorised by the landlord - it's in the ROC.

[Granola]

This is a regulated agent: ARLA.

The fees they have taken are for sending out rent arrears letter, whose payment is the responsibility of the tenant sure, but the deposit didn't cover all the damage to the property let alone enough to pay the agent's fees.

So at the end of the day, the agent sits pretty and isn't out of pocket (except lost commission on the rent), but leaves us even more out of pocket as to the damage to the property which is surely the primary function of the security deposit?