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Can any one tell me after 1 year giving the official receiver the paperwork asked for. I am now being asked for repeats if the paperwork. I have been given 1 week to get them together before I have to go to a meeting to see if my actions were fraudulent.

Any help would be appreciated. There is more to the story.

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I am sorry about that. I went for an official meeting with the official receiver because my company had gone into liquidation. I took all of the paperwork they asked for. I was then told that because in our landlords agreement was written 'a dedicated clients account' and I had only the firms account that this could be looked on as fraud. I understood that letting agents didn't need a seperate account. I have been asked to take on paper work they have already received and I am wondering why. I spoke to tbe official receiver she said it could be construed as fraud meaning people came to us because their money was safe. We spoke to no landlords about this and people came to us because I was good but also giving a cheaper percentage than anyone else in the area. I am being taken to court by one landlord who is a solicitor and has said we should have had a designated account. Hope this makes a bit more sense. I have to see her on Thursday and take the slreAdy viewed documents with me.

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Thread moved to General Legal Issues.

 

 

Regards

 

Andy

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http://www.oft.gov.uk/about-the-oft/legal-powers/legal/estate-agents-act/handling-money#.UrBmVP6YY5s

 

 

There is some information provided by the Office of Fair Trading regarding Client accounts - have a read and see if there is anything of value.

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And also here..

 

 

http://www.mydeposits.co.uk/letting-agents/resources-and-guides/the-law-obligations

 

 

 

Legal Information for Letting Agents

 

 

The Law

 

It is common practice for a letting agent to take a deposit from their tenants to protect against breaches of the tenancy agreement, including failure to pay rent or bills, damage to the furniture and property.

 

Since the 6 April 2007 all agents who take a deposit from their tenant on an Assured short hold Tenancy (AST) in England and Wales must protect it in a government-authorised deposit protection scheme. The law states that the deposit must be protected within 30 days of receiving it from the tenant.

 

On 6th April 2012 changes to the legislation were enacted via the Localism Bill allowing landlords and agents more time to protect a tenant's deposit. The changes mean that agents now have 30 days to protect the deposit and provide the Prescribed Information to the tenant. However it has also closed loopholes, and penalties for non-compliance will be strictly enforced. Prior to the changes, agents were required to protect the deposit and provide the required information within 14 days of receiving the deposit. A summary of the TDP changes, including FAQ's can be found on the Department for Communities and Local Government website.

 

 

 

There is a lot more so you will need to read the article for both the content and link to the TDP changes to be found on the Department for Communities and Local Government website.

Have we helped you ...?         Please Donate button to the Consumer Action Group

 

Uploading documents to CAG ** Instructions **

 

Looking for a draft letter? Use the CAG Library

Dealing with Customer Service Departments? - read the CAG Guide first

 

1: Making a PPI claim ? - Q & A's and spreadsheets for single premium policy - HERE

2: Take back control of your finances - Debt Diaries

3: Feel Bullied by Creditors or Debt Collectors? Read Here

4: Staying Calm About Debt  Read Here

5: Forum rules - These have been updated - Please Read

 

 

BCOBS

 

2: Does your Bank play fair - You can force your Bank to play Fair with you

3: Banking Conduct of Business Regulations - The Hidden Rules

4: BCOBS and Unfair Treatment - Common Examples of Banks Behaving Badly

5: Fair Treatment for Credit Card Holders and Borrowers - COBS

 

Advice & opinions given by citizenb are personal, are not endorsed by Consumer Action Group or Bank Action Group, and are offered informally, without prejudice & without liability. Your decisions and actions are your own, and should you be in any doubt, you are advised to seek the opinion of a qualified professional.

 

PLEASE DO NOT ASK ME TO GIVE ADVICE BY PM - IF YOU PROVIDE A LINK TO YOUR THREAD THEN I WILL BE HAPPY TO OFFER ADVICE THERE:D

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And also here..

 

 

http://www.mydeposits.co.uk/letting-agents/resources-and-guides/the-law-obligations

 

 

 

 

There is a lot more so you will need to read the article for both the content and link to the TDP changes to be found on the Department for Communities and Local Government website.

 

I always registered the tenants deposits with a government scheme.

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I realise my management contracts should have taken that wording out. Our business account is where all monies went in and put from. I can account for every penny right up to our liquidation. I offered the official receiver our computers and all things that were left in the office. She turned them saying they had no room for any hardware. She had access to our bank account which showed where every penny went

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Why did you write that there is a separate client account in your agreement, and then fail to maintain a separate account?

 

Because I was foolish and it said 'a designated account' which I wrongly assumed meant my business bank account

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I presume you had a limited company that went into liquidation. If so the Official Receiver is now considering disqualification proceedings against you and has therefore spent the last 12 months gathering information from you and third parties (eg. bank/ accountant/ deposit scheme etc.).

 

 

If you had kept your deposit monies in a separate client account (some deposit schemes actually require you to do this to be a member), when you went into liquidation, those monies would still have been there and could be repaid to the tenants/ landlords and not touched as an asset of the company. If they went into your normal account I presume that you have used the funds for the general expenditure of the company and as such they are now no longer available to repay to landlords/ tenants. If it was written into your management contract then you have breached the contract.

 

 

The Official Receiver will consider this to be misconduct and disqualify you. I have an example here of someone who did a similar thing http://insolvency.presscentre.com/Press-Releases/10-year-total-ban-for-Newcastle-directors-for-failure-to-secure-lettings-deposits-694bf.aspx although they also did not secure the deposits properly.

 

 

Whether the Official Receiver will also consider it a prosecutable offence I don't know.

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Fraud will trigger personal liability, despite the fact it was the company which was party to the contract.

 

In order to avoid liability you will need to argue that even if the company was careless/negligent/in breach of contract, it was not deliberate and hence you were not fraudulent or dishonest.

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I presume you had a limited company that went into liquidation. If so the Official Receiver is now considering disqualification proceedings against you and has therefore spent the last 12 months gathering information from you and third parties (eg. bank/ accountant/ deposit scheme etc.).

 

 

If you had kept your deposit monies in a separate client account (some deposit schemes actually require you to do this to be a member), when you went into liquidation, those monies would still have been there and could be repaid to the tenants/ landlords and not touched as an asset of the company. If they went into your normal account I presume that you have used the funds for the general expenditure of the company and as such they are now no longer available to repay to landlords/ tenants. If it was written into your management contract then you have breached the contract.

 

 

The Official Receiver will consider this to be misconduct and disqualify you. I have an example here of someone who did a similar thing http://insolvency.presscentre.com/Press-Releases/10-year-total-ban-for-Newcastle-directors-for-failure-to-secure-lettings-deposits-694bf.aspx although they also did not secure the deposits properly.

 

 

Whether the Official Receiver will also consider it a prosecutable offence I don't know.

 

 

Hi and thanks. Although we received some deposit monies into our account these were sent out of that account directly to the government custodial scheme. We stopped taking any deposits after April 2012. At liquidation there were no tenant deposit monies in that account. The issue here is solely about client money and my view that the wording 'designated client account' did not mean that this was a 'protected money account' as used by various landlord associations or 'designated client money account' as defined by the FSA and in any case we believed that the fact we were a letting agent excluded us from the requirement to protect client money under the landlord act. We think that this is where the receiver is coming from. We just cannt see her legal argument.

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Fraud will trigger personal liability, despite the fact it was the company which was party to the contract.

 

In order to avoid liability you will need to argue that even if the company was careless/negligent/in breach of contract, it was not deliberate and hence you were not fraudulent or dishonest.

 

I thought that for fraud to be proved or shown there had to be some personal gain I.e money or asset . I lost more money than anyone in this venture and have ended in an iVA. I can show from landlord statements and bank accounts that I was actually keeping the business running from income from my properties and personal savings. When I recognised that the business was failing to grow and all efforts had fail I had to liquidate... Oh and I never took any wages, dividends or loans .... So how could this be viewed as fraud!

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When you went into liquidation, who were the creditors? Were they trade creditors, HMRC or landlords and who applied to wind the co up? (Don't provide exact figures...can you provide an approximates) What client moneys had been paid into the account as per the terms and conditions of your contract if it was not deposits (rent money?). What stage is the OR's investigation up to? Usually you would have an initial meeting followed at a later stage by one or more in depth meetings at which they will try and clarify facts and also put any potential allegations to you to get your side of the story.

 

 

I cannot understand why simply not having a client account is an issue if no client monies were lost at the end. If there were clients who lost out, and you led clients to believe that their moneys were secure, then this would be grounds for disqualification as it would br breach of the contracts you offered the landlords, oblivious of whether you were or were not required to secure the moneys by legislation.

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Hi

 

When I liquidated the company I did so as soon as I realised from the figures that I was no longer able to prop it up using personal money and it's client base was decreasing rather than increasing - recession I believe. Anyway the creditors were mainly landlords with amounts of between 100 and 6000. Total of about 35k which was in fact last 2 months rent collected. I had been having to use one clients rent to pay another clients payment over a period of time so as I say it just got to a no go point. My husband was actually the largest single creditor at 17k - he's not included in the 35k above. I lost a lot on this business mainly due to reducing client base against static overhead costs. Tenant rental arrears didn't help either. We also did some refurb work to try and get money in but priced very low to get jobs and probably lost money each time!

Hope this makes sense

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I thought that for fraud to be proved or shown there had to be some personal gain I.e money or asset . I lost more money than anyone in this venture and have ended in an iVA. I can show from landlord statements and bank accounts that I was actually keeping the business running from income from my properties and personal savings. When I recognised that the business was failing to grow and all efforts had fail I had to liquidate... Oh and I never took any wages, dividends or loans .... So how could this be viewed as fraud!

 

No personal gain is required.

 

The basis of fraud is dishonest intention. This applies to both civil fraud and criminal fraud.

 

In cases where fraud causes you a personal gain, you are required to disgorge that gain. In cases where fraud has caused a victim loss, you are required to compensate for that loss.

 

I am speculating here, but I imagine this is the basis of the solicitor trying to claim against you personally. If I was acting for the claimant my argument would run along the following lines:

 

 

  1. you told your clients you were using a segregated client account to hold their money.
  2. this was fraudulent since you knew that the money was not being put into a segregated client account. Instead you used the money to help the company cash-flow and you knew you were not entitled to do so.
  3. as a result, the claimant has suffered loss. Had the money been paid into a segregated client account, the money would have been repaid in full ahead of other creditors despite the insolvency.

The weak point of a claim like this is part 2 - they need to prove the allegation of dishonesty on a balance of probabilities.

 

Whether or not you were required to have a client account is actually not central to the claim. This is more of a regulatory issue than an issue which goes to your personal legal liability. However if everyone in the lettings industry is required to use segregated client accounts and this is common knowledge then that might be used in evidence to support an allegation of dishonesty, but it still isn't the fundamental basis of the allegation.

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No personal gain is required.

 

The basis of fraud is dishonest intention. This applies to both civil fraud and criminal fraud.

 

In cases where fraud causes you a personal gain, you are required to disgorge that gain. In cases where fraud has caused a victim loss, you are required to compensate for that loss.

 

I am speculating here, but I imagine this is the basis of the solicitor trying to claim against you personally. If I was acting for the claimant my argument would run along the following lines:

 

 

  1. you told your clients you were using a segregated client account to hold their money.
  2. this was fraudulent since you knew that the money was not being put into a segregated client account. Instead you used the money to help the company cash-flow and you knew you were not entitled to do so.
  3. as a result, the claimant has suffered loss. Had the money been paid into a segregated client account, the money would have been repaid in full ahead of other creditors despite the insolvency.

The weak point of a claim like this is part 2 - they need to prove the allegation of dishonesty on a balance of probabilities.

 

Whether or not you were required to have a client account is actually not central to the claim. This is more of a regulatory issue than an issue which goes to your personal legal liability. However if everyone in the lettings industry is required to use segregated client accounts and this is common knowledge then that might be used in evidence to support an allegation of dishonesty, but it still isn't the fundamental basis of the allegation.

 

Thanks for your reply. Can you flesh out your comments on your point 2 ?? . I never represented in any way that we had a protected money account in place - this is what you have to put in place if you are a member of any of the letting agent trade bodies so I would argue that non members typically didn't operate money protection accounts as a norm. It's the 'probability' bit I haven't got my head around!!

Thanks

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Thanks for your reply. Can you flesh out your comments on your point 2 ?? . I never represented in any way that we had a protected money account in place - this is what you have to put in place if you are a member of any of the letting agent trade bodies so I would argue that non members typically didn't operate money protection accounts as a norm. It's the 'probability' bit I haven't got my head around!!

Thanks

 

In a technical legal sense, you represented that there was a segregated client account because it was written in your contract.

 

In order to avoid personal liability you would need to convince the judge that this representation was innocent or negligent, but not fraudulent.

 

In civil courts, the burden of proof is 'balance of probabilities'. This means that absolute proof is not required. It means the judge will decide the case by ruling on what he thinks was most likely to be the truth. The key question is likely to be whether the judge thinks it is more likely than not that you were dishonest.

 

I should note that I am speculating here. Obviously I would need to know more about what is actually written in the claimant's particulars of claim to be sure.

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