What can be done if the deposit is returned to the wrong tenant?

Here is a question to the blog clinic from Karen (not her real name) which is about return of the tenancy deposit

My girlfriend and I moved into a house in September 2010, we initially shared with another person who left two years later. This person was not replaced by another tenant and my girlfriend and I continued to pay the rent until the end of the tenancy.

I paid the deposit and when the third person left, we made a private payment arrangement of their portion. The contract was in all our names and when the third person left we asked the agent to remove their name. We did not sign another contract in just mine and my girlfriend’s names.

We moved out at the end of June and contacted the agent regarding the deposit, they told us that they had to assess the property for damage etc and to allow 14 days for the money to be returned.

The agent told us that we would receive a cheque unless we had requested a direct payment to a bank account.

At the end of July we still hadn’t received anything so we chased the agent and discovered that the deposit had been refunded to a bank account that neither myself or my girlfriend recognised. They showed us a form dated June 2010 which was signed by the third person with bank details filled in.

The agent explained in an email that the form gave consent for the deposit to be returned to that account and told us we would need to contact that person to reclaim the money. They have refused to help us any further. They also advised that the third person had not been removed from the contract as requested.

We did not give our consent for the money to be released to the bank account and have no contact with the person who it has been sent to. We are extremely angry and feel the agent should re-pay us the money.

We were told to contact the deposit resolution service but they have told us that they cannot assist if the money has already been released.

Please can you advise what we can do to reclaim the money which is rightly ours?

I would be interested to hear what views others have on this situation but, assuming the deposit was protected with the DPS under the custodial scheme, I don’t think the tenants have any comeback against the deposit company.

It is unfortunate that this form was signed by the initial third tenant, who was presumably the lead tenant at that time, and unfortunate that this was not picked up and changed at the time the third party moved out.  However the DPS have no knowledge of the situation at the property and are entitled to rely on the authorities provided to them.

As the agents say, the tenant’s remedy is to bring a claim against the third tenant.

If the deposit was NOT protected with the DPS but was held by the agents under an insured scheme, then the situation may be different as they were aware of the situation at the property.  I would have expected them to make enquiry of the tenants before blindly paying the money into an account on a form signed by a tenant they knew had vacated.

Again, the tenants best course of action is to claim against the third tenant.  However if this is impossible then there may possibly be some recourse against the agents, but I think it would be a difficult claim to bring.

What do other people think?

A warning to tenants

This should be a warning to any tenants in a similar situation – if one of the tenants vacates, make sure you check what authorities have been given to the agents / DPS regarding return of the deposit at the time, and arrange for them to be amended as appropriate.