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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25953
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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Hi I have a flat in Hertfordshire. I live in Middlesex. My

Resolved Question:

Hi

I have a flat in Hertfordshire. I live in Middlesex.

My estate agent who found me a tenant took my deposit and registered it with Tenancy Deposit Scheme (TDS). I received a certificate for it.

12 months later the estate agent went into liquidation and opened under a new name. One of the original partners remained in the business. I received a letter to inform me that the business name had changed.

12 months later my tenant is leaving and wants his deposit back.

I have tried to contact the estate agent however the shop is empty and their phone numbers are not working. I contacted TDS who informed me that 12 months ago (when the original agent went into liquidation) they wrote to my tenant to ask him to send a form back to secure his deposit. They gave him 3 months to respond. I've spoken to him and he has ignored the letter. I had no knowledge of this.

I have no way of contacting the estate agent. Am I liable to pay this deposit now?
Any help you can give me will be much appreciated.

Thanks
Submitted: 3 years ago.
Category: Law
Expert:  Joshua replied 3 years ago.

Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

May I ask if the agent was a limited company or a partnership please?

Joshua :

Did the agent keep deposit and rent etc in a separate client account or in their business account?

Customer:

Limited company.

Customer:

I don't know which account they used for the deposit.

Joshua :

Thanks. There is potential for significant difficulty here and further investigation will be required with the administrators of the company.

Joshua :

TDS is an insurance based protection fund not a deposit based fund. This means deposits are protected not by actually transferring money to the deposit protection fund but by way of an insurance policy. This is compliant with the law but leaves landlords exposed in the event that the agent holds the deposit and goes bust; the tenant will be covered by the insurance and would receive back his deposit if appropriate but TDS would then come after you as landlord to recover.

Joshua :

The first step is to contact the administrators / liquidators of the company to see whether a separate client account was maintained. This is a requirement of ARLA and other lettings codes of practice though not all agents are members. If a separate client account was maintained for the deposit then you can make a claim against it for the deposit. If there was a client account but it was raided then the director or directors may be personally liable to you.

Joshua :

If there was no client account then unfortunately the position could be rather bleak. You would in these circumstances be limited to making a claim as an unsecured creditor with the liquidators which is unlikely to recover the full deposit.

Joshua :

Where using an agent, particularly a limited company, consider in future insisting on use of DPS which requires actual transfer of funds into their account or that the deposit is held by you and you will make arrangements for protection.

Customer:

How do I find out who the administrators are? I have no way of contacting the agent at all.

Customer:

Also in the meantime do I have to pay the deposit to the tenant out of my own money?

Customer:

Seems unfair considering that he ignored the letter.

Joshua :

The administrators can be located by going to Companies House and typing in the name of the company. The administrators or liquidators will be shown on the company page.

Joshua :

http://wck2.companieshouse.gov.uk//wcframe?name=accessCompanyInfo

Joshua :

Notwithstanding any deductions you propose to make for damage unfortunately you are liable for the repayment of the deposit as the agents principal (i.e. client). You can dispute any amounts you disgagree with the tenant in terms of damage deduction and still use the TDS service for resolution in the usual way.

Joshua :

This sort of situation is very unfair on landlords who behave entirely properly and in good faith. In future you can protect yourself armed with the above approaches re deposit but it doesn't help retrospectively.

Joshua :

However you may find that the agent did maintain a separate client account so it is not time to despair quite yet. Contact with the liquidators is crucial as soon as possible

Joshua :

Is there anything above I can clarify for you?

Customer:

No I think I understand. Thank you.

Joshua :

A pleasure. I sincerely XXXXX XXXXX obtain some good news from the liquidators and in any event ensure that you protect yourself in the above manner from ever being exposed to this risk in the future. If I can assist any further as the situation develops please do no hesitate to let me know.

Joshua :

If you have no further questions for now I should be very grateful if you would kindly take a moment to rate my service to you today. Your feedback is important to me. If there is anything else I can help with though please reply back to me though.

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