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Joshua, Lawyer
Category: Law
Satisfied Customers: 26626
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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An estate agent obtain the incorrect amount as security

Customer Question

An estate agent obtain the incorrect amount as security deposit...I asked for 6 week deposit. He obtain 4 week and change a fee of £200.00 from the tenant I sent him. Three on he hasn’t deposited nor transfer her deposit with DPS. I sent him an email a week back to transfer the funds to my DPS account. No reply from him. Help please
Assistant: Where are you? It matters because laws vary by location.
Customer: London....Property in Manchester
Assistant: What steps have you taken so far?
Customer: Emailed him seeking the funds be transferred to my DPS account
Assistant: Anything else you want the lawyer to know before I connect you?
Customer: I am allowed to seek 6 weeks deposit from a tenant?
Submitted: 6 months ago.
Category: Law
Expert:  Joshua replied 6 months ago.

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

  1. May I ask is this an AST tenancy or a licence for a room in a house? I assume it is an AST given the reference to DPS.
  2. Do you know what the tenancy agreement provided for in terms of deposit? i.e. 4 weeks, 6 etc?
  3. Do you know if the agent has given the tenant written confirmation that they could pay a lower deposit for any period of the tenancy?
Customer: replied 6 months ago.
AST tenancy for 36 months... I didn’t approve it.
Just recorded 4 weeks on the AST for Security deposit.
Nothing in writing to confirm a lower deposit.
Customer: replied 6 months ago.
I can email you the poor copy of the tenancy agreement
Expert:  Joshua replied 6 months ago.

Thank you. From what you say you did not approve the tenancy agreement nor give the agent permission to sign it on your behalf and you have not signed a standing mandate to authorise him to sign tenancy agreements on your behalf?

Customer: replied 6 months ago.
Correct, I was asking for the AST agreement before the tenant moved in
, so I could approve it. The agent hasn’t sent me a copy. Tenant sent me a poor copy by email
Expert:  Joshua replied 6 months ago.

Thanks and you have no standing mandate to authorise agent to sign tenancy agreements on your behalf?

Customer: replied 6 months ago.
Correct I have NO standing mandate authorising the agent to sign tenancy agreement on my behalf
Expert:  Joshua replied 6 months ago.

Thanks. I am afraid on these facts if the agent has included provision for a 4 week deposit to the tenancy agreement the position would be that there is no real scope for you to be able to retrospectively seek the further 2 weeks deposit from the tenant at this stage because you are bound y your agents representations on your behalf (authorised or not) by Agency Law. There is a limited exception if you can prove that the tenant knew that the agent was acting contrary to your authority but this is in practice very difficult to prove and rarely allowed. However his is very far from the end of the story.

If the agent signed a tenancy agreement without your authority and you suffer loss as a result this raises the issue of negligence on the part of the agent. Agency law lays down a number of fiduciary duties the agent owes you as its principal. They are the fundamental principles that govern an agent - principal relationship notwithstanding the agency agreement itself. Essentially they owe you a duty of loyalty, obedience, skill and care, and a duty to account to you as principal.

From what you say the agent acted without your authority and has failed to register the deposit. He is therefore in breach of his duties of obedience, skill and care. As you know the deposit must be regitered within 30 days or you can be liable for compensation to the tenant. If this occurs you would have a claim against the agent for loss.

As regards ***** ***** at this time you are not able to show you have suffered a loss unless you usually receive interest from the deposit though even then the loss is likely to be so small as to not be worth your time disputing. However if you find cause to claim against the deposit and the existing deposit does not cover the damages and you are unable to claim further monies from the tenant you may seek to claim the difference from the agent on grounds of negligence.

You could do so in the small claims court or via the Property Dispute Service for free which the agent is required to be a member of. This is the most common one though not the only service:

For now you can put the agent on notice that you consider his actions negligent, that you require him to carry out your instructions regarding the deposit or you will hold him liable for any compensation you become liable for and that you reserve your rights in respect of any losses you suffer as a result of his actions.

Does the above answer all your questions? If it does, I should be very grateful if you would kindly take a moment to click a rating for my service to you today. Your feedback is important to me. If there is anything else I can help with please reply back to me though

Customer: replied 6 months ago.
Furthermore I asked the tenant to pay the security deposit and rent directly into my bank account. details that I provided to her by text instead she chose to pay everything to the agent ...the agent now paid the rent of £725 and has kept the deposit of £725 Plus £200 arrangement fee that I did not ask for. As I did not approve the tenancy agreement and have no mandate is the tenancy agreement not illegal. Or can I not void the tenancy agreement because I mentioned to the estate agent a £15 increase yearly that he did not pass on to the tenant.
Expert:  Joshua replied 6 months ago.

If you had appointed the agent to act as your agent, albeit did not authorise his above actions, then as your agent he binds you to his actions. The only practical exception to this would be if you had expressly notified the tenant that he did not act as your agent and had no authority to represent you. If you had done so then you could claim not to be bound by his actions and seek to void the tenancy in court if necessary. However from what you say this would not appear to be possible - telling your tenant to pay rent to your account is not sufficient for the above purposes I regret.

Unilateral termination of a tenancy agreement carries a very high threshold and these facts would not appear to meet them. However none of that alters your redress as against the agent for negligence discussed above against whom you would certainly appear to haev a potential claim for loss as and when you suffer any financial losses as a result of his actions. Nor is the agent entitled to retain the deposit contrary to your instructions though of course the deposit must be protected in one of the protection schemes.

Does the above answer all your questions or is there anything I can clarify or help you with any further?

Customer: replied 6 months ago.
Can the tenant asked the agent for her deposit back as he has not registered it. And she has proof of payment. Am I allowed to terminate my relationship with this agency in writing
Expert:  Joshua replied 6 months ago.

The tenant has no redress until more than 30 days has passed since payment. At that point the tenant can sue for the return of her deposit and between 1-3 times the amount in compensation at the courts discretion. If that happened you would have a claim against the agent for negligence.

The above is a ground to seek to terminate your agreement with the agency as binding a client to a contract without permission is a serious breach of duty which goes to heart of contract. You can make a complaint to the Ombudsman regulator free of charge and seek compensation and a decision on the above. Their decision is binding upon the agent though not on you and if you are not happy with the Ombudsman's decision you can elect to go to court instead.

Is there anything above I can clarify for you?

Expert:  Joshua replied 6 months ago.

Does the above answer all your questions or is there anything I can clarify or help you with any further?

Expert:  Joshua replied 6 months ago.

I'm just following up on our above conversation. I hope the above was of some assistance. Please let me know if you have any further queries. If you have a moment I should be very grateful if you would kindly take a moment to click a rating to rate my service or alternatively just provide some brief feedback so I know if I was able to help. I'd be most grateful. All the best

Customer: replied 6 months ago.
I did not authorise the tenancy agreement
Expert:  Joshua replied 6 months ago.

Thanks for your reply. We discussed this point above. I'd be delighted to continue to assist - I have sent an offer for more Q&A time so we can cover any additional questions you have.