Who is responsible for recovering deposit from letting agent

[nms]

Our letting agent has become insolvant and I have since found out that they had not protected the tenants deposit. A deposit id was created with the DPS which was cancelled as no funds were transferred.

Am I as the landlord still liable for returning the deposit to the tenants (even though no money was ever passed on to me) or does the tenants need to recover the deposit from the agents directly.

Thanks.

[jta]

Originally Posted by nms

Am I as the landlord still liable for returning the deposit to the tenants (even though no money was ever passed on to me) or does the tenants need to recover the deposit from the agents directly.

Thanks.

Yes you are, and what's more, the tenant could sue you for the 3x deposit since the deposit was never protected. The tenant paid the deposit to your agent, therefore paying it to you.
The best thing you could do at the moment is pay the deposit into the scheme out of your own pocket and then go after the agent, an expensive lesson, but one that more and more LL's are learning.

[rustyhughes]

Under what principle is the Landlord ultimately responsible to return the Deposit?

[Mars Mug]

Any deposit claim against the tenant would come from the landlord, and be paid to the landlord if agreed, which makes the landlord responsible in my opinion.

[jeffrey]

Originally Posted by rustyhughes

Under what principle is the Landlord ultimately responsible to return the Deposit?

Because:
a. it's payable (and potentially repayable) only under the Letting Agreement; and
b. the Letting Agreement is between only L and T- i.e. L's letting agent is, in legal parlance, a 'stranger' to that contract.