I am a landlord and was hoping that the forum members could help me with a problem. The situation I had a tenant rent a room in a shared house from me. The tenancy started in June 2012. The tenant has been difficult throughout the tenancy. Initially she stated that she moved out of a flat and needs to sort through her possessions. The room was filled up to 2m high with boxes and she even changed the bed to a folding bed, as there was no space left for a permanent bed. She also stored boxes in the communal areas. Although I received at least 1-2 email per week about all aspects of the flat that apparently need repair I always responded promptly and resolved/paid for repairs & new items for the flat. Around Christmas 2012 I asked the tenant to remove her items from the communal areas as it was affecting the other tenants. There are 4 tenants in the flat in total. Although the situation temporarily improved, the communal areas were used again for storage shortly after. I sent the tenant another email asking her to please keep the communal areas clear and bring her room back to a reasonable standard. This was a polite request and I did not ask her to move out. The tenant decided that the 'situation is not workable' and decided to move out on the following weekend, which seemed like a overreaction neither me nor the other housemates could understand. I was glad to see her leave and wanted resolve the situation as soon as possible so, I agreed that she would only have to pay rent up the day she moves out, and I did not insist on the notice period. The tenant was not able to organise her move in time and moved out one day late. We agreed she would pay rent for one additional day only. Shortly after she had left I refunded her deposit in full and she confirmed receipt. I do admit that I failed to protect the deposit. This was a genuine mistake, which I regret. I have other tenants and can prove that their deposits are protected. The tenant is now suing me for three times the monthly rent for not protecting her deposit. Additional factors The tenant has been very difficult throughout the tenancy and managed to fall out with the other housemates before moving out. One of the housemate's friends who works in mental health suggested that she suffers from psychological problems and she has clearly a tendency to hoard things. The housemates even told me that she brought items into the flat she found on the street. I am mentioning this as I believe there is no realistic chance to settle this out of court. I believe I have always acted very reasonably and made multiple exceptions to meet the tenant’s requests. The tenant has suffered no loss. I found that the tenant has posted an advert on Gumtree.com stating my full name, calling me '**** bag' and that I allegedly have cheated her out of hundreds of pounds and kept her deposit, which is not true. My Questions: Can the tenant sue me for not protecting the deposit, given I have acted reasonably and refunded her deposit in full? Are there any recent cases where the landlord has been sued for not protecting the deposit despite retuning it in full? I understand that even if the court orders me to pay compensation, I can avoid having a CCJ against my name if I pay within 28 days. Is that correct? Avoiding any CCJ against my name is the most important thing in this case for me. Would counter-suing for slander be advisable? I have contacted Gumtree.com and they said they would provide the details of the person who posted the advert to a lawyer or the police. Thanks in advance for your responses!