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Tag Archives: Tenancy Deposit

Can the tenant claim the deposit penalty if the deposit was not actually paid?

Getting adviceHere is a question to the blog clinic from Hans who is a landlord:

Our tenant of 6 years 6 months August 2007 to Feb 2014 has only ever agreed to renew the AST once during this period and that was as they needed a new agreement to obtain housing benefits.

The first AST in 2007 did not have a deposit requirement and we did not receive one.

Over the next three years we have had to deal with late payments of rent, arrears which got paid and then built up again. In 2012 when the tenant required a new AST to obtain housing benefits they promised to pay the £900 arrears within the year.

Even though we had had rent problems with them we accepted their offer and issued a new AST which included the provision of a deposit of £900, being one months rent.

The tenants signed and the rent payments improved and things settled down for the next 18 months. However the tenants then refused to renew the AST again. Rent arrears started to increase again. We decided it was time for them to go and issued a s21, followed by a s8 on the grounds of arrears of more than 12 weeks in Nov 2013.

At this point they had actually been in arrears for the £900 from Jan 2012. The tenants agree to move out 1st Feb. In Nov we realised we had not put the required deposit in scheme and following advice from our family solicitors place the £900. on deposit with MyDeposits and issued the paperwork to the tenants.

Over the following months and many letters relating to the arrears, of now £3600 we eventually got our property back, unfit for re-let with considerable damage.  We did get payment of the arrears over three months.

We then get a solicitors letter informing us that the tenants are intending court action for the return of the deposit and compensation of up to three time that amount as we where late putting the deposit on deposit.

However, when we check the tenants payment history we find no record of the tenants paying any deposit to us against the 2012 AST.

We have asked them to provide proof of a deposit paid. I have an email say they can not provide this. Can they still claim against us for the late deposit by us when they have not paid a deposit. Their solicitor said they can. Any advise please.

We are planning a counter claim for all the damaged which exceeds their claim. The tenants also declined the MyDeposit ADR stating they are seeking compensation through the courts. Where do we stand?

I have to say that when reading your question I wondered whether the tenants had actually paid the deposit but then you said you had placed it in a scheme on your solicitors advice – so I assumed (until I got to the end of your question) that they must have.

This is going to be your problem.  You have protected the money and served the prescribed information.  Why would you do this if the money was never received?

So if you are now going to claim that the deposit money was never received, this is a bit of a hurdle you are going to have to overcome.

I assume that the only reason you did this was because of your solicitors advice. So you need to take a look at the advice you got and see what they said and why.

Did you tell them that you had never had the deposit money?  (Or is it something they should have spotted?)  Did they tell you to go ahead and protect anyway – if so, I think this was bad advice and you may have a claim against them.

Or did they think that you had received the money and  give the advice on that basis?  In which case it may be your fault for not providing them with the proper information.

So far as the proposed litigation is concerned – here are a few comments:

They may be calling your bluff

It is easy to threaten to bring a claim.  Actually doing it is something else.

The tenants will have to finance the court fees and their solicitors fees.  You know from your experience in getting rent from them, that they are bad payers.

Few solicitors firms are prepared to act on tenancy deposit penalty claims on a no win no fee basis, and if they are not acting on a no win no fee basis they will want a substantial payment on account before they do anything.

So it is possible that the claim will never happen.  You can’t count on this though.

Make a without prejudice offer

If you make a reasonable offer to settle the case, this makes it considerably less likely that a claim will ever be issued.

For example you could offer to withdraw your claim for damage on the basis that they withdraw their claim for the penalty.  Point out that your claim for compensation is higher than the compensation claim plus they cannot actually prove that the deposit money was ever paid.

You could also say that if they ignore your offer and proceed with the claim and lose, that they will have been wasting court time and you will be asking for an order for costs against the solicitors personally.  If they are acting under a no win no fee agreement this will deter them.

This sort of letter however would be better coming from another firm of solicitors.

See if your solicitors will act for you without charge

If your former solicitors did not advise you properly, they may be prepared to act for you without charge to sort things out – particularly if you say you are considering a claim for negligence / compensation against them.

If they had not advised you to protect the deposit you would be in a much stronger position now.

See if your insurers can help

If you are able to claim for the damage against your insurers, they may be prepared to assist you with a claim against your former tenants.  If your former solicitors won’t help you, this may be worth a try.  Or your insurance policy may cover you for legal costs anyway.  Check it out.

I hope these comments are of some help to you.  What does anyone else think?

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Tessa is an English lawyer specialising in residential landlord and tenant law.

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