Deposit in dispute 9 months, any ideas?

[Da8thMonth]

Background information about case:

• Tenancy was agreed in writing
• Tenancy began 15 April 2006 for 12 months
• Rent was £1,200 per calendar month payed monthly
• Tenancy was ended at the end of 12 months, agreement by both parties.
• Tenant moved out 15 April 2007
• Opening inventory was taken and signed by the tenant
• A deposit of £2,400 was taken - is not in the tenancy deposit scheme
• The deposit was held by the landlord's agent
• Closing inventory was taken 1st time, attended by the tenant
• Closing inventory taken 2nd time, not attended by tenant

Case:
The deposit is in dispute.

Tenant has only had contact with agent, as landlord refuses to have contant with tenant.

Agent has refused to give contact details of landlord to tenant.

Landlord's address in tenancy agreement is a PO Box. We believe the landlord lives outside of the country.

1st closing inventory was taken by the same inventory company which took the opening inventory. Tenant never received copy of the 1st inventory.

A second closing inventory was taken, because the landlord was not in agreement with the 1st closing inventory. Landlord believed that more "damages" were present. Second inventory was taken by another company.

It actually appears as if it was taken by the agent (but we have no concrete evidence of this). The company however does not exist on the internet or at companies house.

Tenants were only provided with the 2nd closing inventory, which concluded that the full deposit was needed to cover "damages".

The 2nd closing inventory is not prepared on the same basis as the opening inventory. The second inventory is much more detailed.

The landlord was unhappy with the service provided by the agent and the state of his flat. He decided that he did not want to pay the agent's fee of £2,500 and wanted to keep the deposit in full. We have evidence of this in an email.

The agent never gave the deposit of £2,400 to the landlord, but instead informed the landlord that he was going to use the deposit to reduce the fee the landlord owed the agent. We have evidence of this in an email. The landlord still owes the agent £100.

The tenants disputed the 2nd inventory's estimate of repairs with the landlord and the agent. The landlord wanted to re-furbish the flat:

• entire wood laminate floor needed to be replaced due to a scratch on the floor caused by the broken sofa bed
• all walls needed to be repainted
  all carpets needed to be cleaned
  lightbulbs needed replacing with a quote for £25 per bulb
  etc.

The tenants dispute this because the apartment was not in a "new" condidtion when they moved in. This is evidenced in the opening inventory, where marks are on the walls and carpets are lightly stained.

The tenancy contract also includes "fair wear and tear", which was not taken into account in the estimate of repairs provided by the agent and landlord.

The owner of the flat above the rental flat mentioned that the tenants before us left the hallway in a damaged state. She says she repeatedly contacted the agent to repair the floors in the hallway, but eventually gave up because the agent was not helpful.

We do not have a signed witenss statement from her because she does not want to get involved as she owns the flat in the house and does not want to be on bad terms with the landlord. These same tenants also left the flat in a "damaged" condition.

The landlord never saw the flat when they moved out, so believes that the damages were caused by us.

Therefore, we took the agent and landlord to court. The landlord has not responded to the court summons to file a defence. While, the agent's defense is that the deposit belongs to the landlord and the agent does NOT have the deposit.

We called the landlord shortly after New Year on the mobile telephone number we had for him. He actually answered it for a change and said that he was not aware of legal proceedings and had "evidence". We asked him for new contact details so we could send him details of the court case, but he said that he wouldn't give them to us. He eventually hung up.

The agent has been similarly unhelpful.

Our hearing is in 2 weeks time. We have submitted all our evidence to the court including estimates for the repair to the floor, and lightbulbs and have totally disupted the painting of the walls. We have no issue with the carpet cleaning.

Does anyone know where we stand in regards to getting our deposit back? Will we get it back from the agent or the landlord?

I would like to know a bit more about agency law/ relationships and what it would be in this case.

Thank you

[MrShed]

How is the deposit held according to the tenancy agreement? As stakeholder or as landlords agent?

As a side note, thank you for posting all relevant information in clear, concise form!!!

[Da8thMonth]

Hi Mr.Shed,

I had to go home last night to have a look at the tenancy agreement to answer your question.

I thought that our tenancy agreement did not specifically state how the deposit was held, but I was not 100% sure.

As I suspected though, the tenancy agreement is ambiguous about how the deposit is held and does not state either "stakeholder" or "landlord's agent" (Agent of the Landlord), with regards to holding of the deposit.

This doesn't surprise me though, as the Agent did not provide a very good service to the landlord.

Before you asked yesterday, I didn't even know such a difference existed!

Does this give me any hope in getting my deposit back from the agent?

I'm interested mostly in this because the landlord lives out of the country.

We've already had to sue landlord for over paid rent (£1,200) and got a judgement by default against him. The only bank account of the landlord's we know about is that where we paid rent. We froze this account and are awaiting another hearing at the end of January where his bank will attend and let us know if there is any money in the account to pay us. (Notice an over-riding theme here: the landlord does not want to be found, ignores court summons, and is 'hiding' out of the country)

Other than that, his only other asset we know of is the house. I don't want to have to put a lien on his house as we would rather have the money sooner rather than later.

If we get a judgement against the landlord, we will need to hire someone to find his bank accounts. We know he has another tenant in the same flat we rented from him. We went around last weekend, but they were not home. They must be paying him rent to some bank account, so there is definately another one out there.

[Da8thMonth]

UPDATE

Yesterday we received a call from the estate agent. He said he was on holiday and did not receive our case evidence until today. This was why he didn't get back to us sooner.

He now says he wants to discuss with the return of our deposit with us. This was all we wanted him to do 9 months ago! Why is he calling us now 10 days before the hearing?

He says that he will have to show up in court and defend the landlord's decision. We asked if this was fair, and he didn't respond.

He also mentioned that he's done this before and it will be easy to convince the judge that we left many marks on the wall, which are more than fair wear and tear. The other main issue is the total replacement of the laminate wood floor due to the scratch caused by the landlord's broken sofa bed. He said that again, it would be easy to convince the judge that we are responsible for the floor.

He said that he was also going to sue the landlord for the fees he has not yet been paid. The reason he has not done this yet, was because he did not know what the outcome of our case would be. He's had 9 months to sue the landlord, I don't believe this for a second. He has our deposit, so the landlord only owes him £100. However, if he loses this case, the landlord will "owe" him the payment of our deposit as well.

The landlord is currently in the British Virgin Islands we have found out. Check out what our landlord has done with the deposit:

DeepBlue - Luxury Yacht Crew

He won't be attending the hearing.

The agent suggested we drop him from the case, and just sue the landlord. We would then get a judgement for our full deposit, but wouldn't get the cash. We could only get a lien on his house.

I'm not sure what's better, getting the cash now (but not all of it), or waiting until the house is sold in the future (and getting all of our deposit).

I guess money today is worth more than money tomorrow.

I feel like our only hope is to try to get the inventory company, who performed the 1st closing inventory, to provide us with a copy of that inventory. This would prove that the 2nd closing inventory, performed by the estate agent and landlord, is grossly incorrect.

I don't know how to make them do this though. If I call, they will say that since it was paid for by the landlord/ agent they can not provide us with a copy.

The court documents for the hearing however say that everyone must provide copies of the inventory, but I'm sure the estate agent won't bring the 1st closing inventory with him. We were never given a copy.

Can we take the court documents to the inventory agency and force them to give us a copy of the inventory? Are we in any way legally entitled to receive a copy of the inventory for them as evidence in a court case?

Help!

[Aequitas]

Can you set out the deposit clause in the tenancy agreement word for word?

[Esio Trot]

Originally Posted by Da8thMonth

I had to go home last night to have a look at the tenancy agreement to answer your question.

I thought that our tenancy agreement did not specifically state how the deposit was held, but I was not 100% sure.

As I suspected though, the tenancy agreement is ambiguous about how the deposit is held and does not state either "stakeholder" or "landlord's agent" (Agent of the Landlord), with regards to holding of the deposit.

Where a deposit is held by an agent and the tenancy agreement does not state whether Stakeholder or Landlords Agent, the presumption in law is that it is held as Stakeholder - and this is the better option for you.

Although the letting agent is agent for the landlord in all his doings, and thus is not normally party to any legal proceedings, it is not the case where they act as Stakeholder.

The reason for this is that the position of stakeholder is that of quasi-trustee status. Thus the agent has a duty of care towards both parties in the administration and disposal of the deposit. (under the new mandatory tenants deposit schemes, all deposits are held as stakeholder).

When the case gets to a hearing, make sure that you point out the stakeholder bit. The agent will then have to explain what he did to absolve his duty of care - if the explanation is lacking, it will be the agent that has to stump up the cash not the landlord!

[Da8thMonth]

Firstly, thank you Esio Trot, Aequitas and Mr. Shed, for responding to my posting.

With 1 week before the hearing I wanted to give you and UPDATE and see what you think.

As previously in my post, there were 2 closing inventories performed, approx 3 weeks apart.

We attended the 1st closing inventory and were not told about or allowed to attend the 2nd closing inventory.

We have contacted the inventory company to try to get a copy of the 1st closing inventory, as the agent/ landlord did not give us a copy of this inventory.

We only received the 2nd closing inventory, which was not what we were expecting after our attendence at the 1st closing inventory.

The inventory company remembered us and the inventory. We asked if they had performed 2 closing inventories, and they said "NO".

We sent them the 2nd closing inventory we received from the agent/ landlord and the inventory company told us "they did not write this inventory".

They were very upset that the agent had used their company name at the top of an inventory which they had not performed. They also told us they do not work anymore with this agent. Humm . . . I wonder why?

The inventory company is still trying to find the 1st closing inventory from 9 months ago, but has not yet been able to find it. I really hope they do find it, as it will make the agent/ landlord look like the fraudsters that they are!

Can any one advise me on what to do if the inventory company can not find the original 1st closing inventory?

Can I get a witness statement from them to bring to my hearing next week?

What information needs to be on a witness statement for it to be accepted in court?

I think that the inventory company would give us a statement as their name was falsely used.

Thanks for all the support!

[Esio Trot]

Don't fret too much about the inventory/lack of it.

There is a thing called Civil Procedure Rules for court hearings. Search on Disclosure.

The other side cannot try and hijack you at the hearing by producing documents that you have not had a chance to see and study beforehand. If they do this, you will have to voice your concern and ask for the evidence to be ruled inadmissible. If this fails, ask for an adjournment to another date so that you can see and study the documentation provided.

You might be asked to allow the documents to be admitted. As you are a Litigant in person, point this out and say that you do not know if this will be to your disadvantage, so cannot agree.

[21stcentury]

Hi,

Just a note to bear in mind the Landlords address on a tenancy agreement cant legally be a PO Box, it has to be an address where legal documents can be served. It can be a Care of address, but no PO Box. You might like to point that out to the letting agent as he has drawn up the contract, thus making it void. With regards to the landlord being overseas, the agent will know this, because if the landlord is overseas he has to deduct tax from the rent collected from you.

[Da8thMonth]

Hi Everyone,

Just an update on my case:

Today just received a judgement in default from the court on the landlord for +£3,000.

The judge told us we had no claim against our estate agent, despite the fact that:

• the landlord address in the tenancy contract is a PO box (thanks 21stcentury)
• and that it is not clearly stated that the deposit was "Agent of the Landlord"

The judge also thought it would be very difficult to get our money back from the landlord (he lives out of the country). To make matters more difficult, the landlord has closed the PO Box address listed in our tennancy contract, so we have no way at the moment of serving him any further court documents.

I wanted to run my next idea past the forum to see if you think they are good or have any other ideas.

1. I got a copy of the title register of the landlord's property in the UK. On the title register, it lists the Landlord's address as the property in the UK. Is this enough "evidence" that the landlord can be served on this address (i.e. the flat we formerly rented)?
2. I actually have interests in two cases at the moment against the same landlord.
   1. The disputed deposit (see below on this post)
   2. Overpaid rent. Another tenant in the flat is persuing this against the landlord (it was his bank account the rent was paid from). Here too we received a judgement in default and persued a third party debt order. The hearing with the bank present is in early February. We will then know if the bank account has enough money in it to pay us £1,200 (probably £2,000 in total with fees and interest).
3. Assuming we are not able to collect our overpaid rent we will want to persue a charging order on the landlord's UK property for both amounts. Will the court give us a charging order on both the £3,000 (disputed deposit) and £2,000 (over paid rent). Are these over the deminimus limits? Are there deminimus limits for a charging order?

Thanks again for all the help and advice I've gotten from this forum so far. You've all been great!

Da8thMonth

[demon_x_slash]

I'm able to answer the first one for you: yes, you can serve papers at the property registered to him if you have no other address for him.

[21stcentury]

I agree serve the papers, and register it at your previous address.

I have to ask you state that you are sure the Landlord is abroad, are you 100%? If so the letting agent should have been deducting the tax directly from the rent and paying the landlord NETT. If you have any proof that the letting agent knows the landlord is abroad then i would supply the proof to HMRC as the letting agent has a duty to collect the tax. It may be worth advising the letting agent that you are going to do, they may offer to make a goodwill payment to you and then you can serve the charging order on his property.

Well done for keeping going it is all too easy to give up, i think the landlord is getting his just deserves.

Derek

[Esio Trot]

Originally Posted by 21stcentury

I i would supply the proof to HMRC as the letting agent has a duty to collect the tax.

I would be careful with this one!

HMRC, as in a lot of their legislation, have a cover all clause. If you get them to accept that the landlord was abroad, and they cannot get the money out of the agent, guess who is next in line to pay them what was due?

With penalties/interest you will be into four figures of tax owed. Don't do anything that might make it fall on your shoulders.

[21stcentury]

The onus does not fall on the tenant, the onus is on the letting agent ONLY unless their is an exemption certificate which the letting agent has to hold a copy of in the property file.

I would still put it to the letting agent as this if theyh have done wrong will spur them into making some payment to the tenants who are out of pocket.

The letting agents are the only party responsible on this one. So go for it

[MrShed]

I agree with Esio here, because the other possibility is that the landlord gets collared. That could jeapordise your judgement, in the fact that I am willing to bet that HMRC would ensure that they get their owed money before you do....

[21stcentury]

Yes the landlord may get collared, but the letting agency will get it worse, it is their duty not the landlord. They have to reclaim it from the letting agency.

But yes i think you are right the HMRC always ge ttheir money. I have had first hand experience when a tenant done the same thing to me. I as the letting agent had to pay the tax applicable. Which mounted up and i had to try and recover from landlord. It was my fault. In then end i was unable to recover it from the landlord. However i never forget, so he will pop up again at somepoint in the future.
A big thing to remember here is the letting agency wanted to negotiate just before the court date. He knows what is on his mind, maybe he knows he is in the wrong. Also the biggest rip off with deposits not being returned is the letting agents anyway.