Landlord Wont Give Back Bond

[Ed999]

As a tenant, it makes no sense to use a letting agent unless you have satisfied yourself that it is reputable. The Trading Standards officer will tell you whether a particular agency is reputable or not, and the University's accomodation department should keep a list of reputable agencies.

 

Certainly it seems unwise to use a fly-by-night bunch of foreigners, who may flee back to Poland with your money at any moment!

 

Also, you can make a search in the County Court judgements register, or current equivalent, against the landlord for evidence of his circumstances. This will reveal any unpaid County Court debts he may have.

 

As a matter of law, a stakeholder must hold the stake money! It cannot be released until the contract is fully performed. If there is a dispute as to whether this has happened, it is prudent for the stakeholder to retain the stake money until a court order is made as to what shall become of it.

 

If the tenant entered into a contract with an agent, in which (as here) the agent is clearly identified as an agent, then the agent stands in place of the principal (the landlord), who has liability for all lawful acts of his agent, as ever.

 

But, as a matter of the law of agency, the tenant has to sue the landlord, not the agent. The Court might, however, grant an order for substituted service on the agent, if you do not have the landlord's address.

 

In any event, report the matter to the Trading Standards officer. He may already be considering legal action against the landlord or the agent on another matter, if this is a rogue landlord. He may also know the current whereabouts of the landlord.

 

You will not obtain an order for substituted service unless you are prepared to prove to the Judge that you have made all reasonable enquiries to locate the landlord.

 

If the landlord has "done a runner", however, your chances of enforcing any judgement you might obtain are not good!

 

If he has outstanding warrants against him in the County Court judgements register, this also indicates that the chances of enforcing payment are poor.

[Ed999]

If it were quite literally true that a stakeholder cannot release a deposit without both parties' consent then it is open to either party to block its release; that would make it useless as a form of security for the landlord and unfair to a tenant not in default.

 

Clearly the first step an agent should take is to seek both parties' consent and if it is forthcoming there is no problem. I think it is a risky strategy to assume implied consent following no response to a "if we do not hear from you within x days we shall assume consent is given" letter. Seven days is certainly too short.

 

If one party refuses to give consent, then the agent needs to use his discretion. If the case is clear cut the agent can release the deposit. If there is doubt then the agent may retain the deposit until the matter is resolved. I do not think that this necessarily means that the agent can sit back and do nothing since his duty is to administer the deposit in accordance with the terms of the agreement and he must, so far as he is able to, conduct his own investigation. This will usually be easier for an agent who has actively managed throughout. There will of course be cases where the agent is unable to make a decision and I do not think the court would penalise an agent who had made a reasonable attempt to resolve the matter. It is in fact open to a stakeholder to apply to the court for directions as to how to deal with a deposit, but given the amounts usually involved that is rarely a practical option.

 

Disbursing a deposit without consent always involves a degree of risk, but if the agent is unwilling to accept such risk he should not hold deposits - though that is now academic for ASTs in view of the new arrangements.

 

 

I mentioned that the stakeholder's duty is to hold the stake money until the contract has been fully performed.

 

If there is a dispute as to whether that has happened, the stakeholder can still release the money. However, a prudent stakeholder will apply to the Court for directions in that situation, and will not be liable if he acts in accordance with those directions.

 

Alternatively, the stakeholder might pay the money into Court. This might in any case be what the Court directs, if the stakeholder was to apply for directions. If he retains the money, he should place it on deposit to earn interest while the matter remains unresolved.

 

Either party to the contract - i.e. either the landlord or the tenant - can also apply to the Court if the stakeholder does not do so.

 

The stakeholder has no duty to resolve the dispute, or to take any steps. He is only a stakeholder, the holder of the money, not an arbitrator.

[Ed999]

I do not think that is right. If an agent holds a deposit as stakeholder and either

 

(a) passes it to the landlord when he should not have done; or,

 

(b) declines to return it to the tenant when it should be paid to the tenant,

 

then the tenant may sue the agent. The whole point of a deposit being held as stakeholder is the protection that it gives to the person paying the deposit - the assumption of course being that the stakeholder is a professional person of integrity in whom the person paying the deposit may repose his trust. (I make no observation on the fact that The Estate Agents Act 1979 forbids estate agents from holding other than nominal deposits in property transactions.)

 

 

No, that is a misunderstanding.

 

Obviously the stakeholder is liable to the parties to the contract if he pays out the money to the wrong person, or pays it out before the contract has been fully performed. But that is not what I said.

 

I simply made the point that so long as the stakeholder is still holding the stake the tenant must sue the principal, i.e. the landlord, and not the agent. The stakeholder has done nothing wrong, so cannot be sued.

 

Where there is a dispute as to the terms of the contract, the tenant and landlord must sue one another, not the stakeholder, to resolve the dispute.

[Ed999]

Here is a letter I am bashing about with. It of course needs help. So any appreciated. Jec

 

I assumed that my deposits by law should have be held as stakeholder.

 

 

This is where your case breaks down, of course.

 

The deposit which you paid is only held by the intermediary "as stakeholder" if the contract terms expressly say so. Your assumptions are neither here nor there.

 

Unless there is an express term in the contract to that effect, the deposit is held by the third party as agent for the landlord, and can be immediately paid to him.

 

If the third party is anyone's agent, then he is certainly the landlord's agent, not the tenant's: so, as agent, he owes no duty to the tenant.

 

 

You can serve the writ, or address any correspondence to, the landlord at the address stated in the tenancy agreement; or at the property itself.

 

The family home address is the WRONG place to send a letter before action (or a writ/claim). You MUST address all legal proceedings in accordance with the terms of the letting agreement.

 

Write to the landlord, by name. Address the letter, or writ/claim, to the address for the landlord as stated in the tenancy agreement.

 

Or have the court bailiff serve the writ at the premises by nailing it to the front door. In a dispute relating to land, the Court will always accept the property itself as a valid address for service.

 

As a last resort, ask the court for an order for substituted service on the letting agents. But you may not get it in this case, because service at the premises is good service.

 

 

Not all land is registered at the Land Registry. A lot of properties are still unregistered. If the premises are registered there will be an address for service of proceedings on the registered owner. But BEWARE! The registered owner may not be the landlord with whom you had a letting contract.

 

It is not uncommon for there to be a sub-letting. You may have a contract with the head tenant, rather than with the freeholder. It will be the latter who is registered as the proprietor of the land.

 

 

It is no good at all corresponding with the letting agent, so don't name them in the letter before action. Address the letter to the landlord, even if you send it to the business premises of the letting agent (if that is the address for the landlord that's given in the tenancy agreement). As a matter of the law of agency, you have to sue the landlord not the agent.

 

The landlord is liable for all acts of his agent. But not vice versa.

 

 

I accept that the amount of money in dispute is too small to engage a solicitor, but you can always issue a small claim in the county court yourself.

 

I laughed (sorry!) when you said you had been told the landlord had died. The number of times I've heard that old chestnut! That's a standard lie, frequently told in these situations, equivalent to "the cheque is in the post" !

[Ed999]

The position of stakeholder for tenants deposits has come more to the fore since April 6th. This is because the mandatory tenancy deposit scheme require all deposits to be held as stakeholder and to be protected.

 

 

Has it not occured to you that the reason why it was necessary for the government to introduce the tenancy deposit scheme was because the pre-existing law did not require the deposit to be held as stakeholder?

 

As I stated previously, unless the letting contract specifies that the deposit is to be held as stakeholder then it is held as agent for the landlord, and can immediately be passed to him.

 

For instance, in Ryan v Pilkington [1959] 1 WLR 403 it was held to be within the implied authority of an agent to receive a deposit as "agent for the vendor", instead of as "stakeholder".

 

The old law will be of less importance in future, now that the tenancy deposit scheme is in force under the 2004 Act.

[Ed999]

I still maintain, and although I have only had dealings in the county court which does not set a precedent, no judge has ever queried the matter of stakeholder in a silent agreement.

 

You can't say that. It falls a *long* way short of citing an authority in support of your opinion.

 

 

One thing to bear in mind is whether it is better to send out your letters to one or both agent or landlord. If you leave out either, you are limiting your options. Sending to both keeps your options open and gives you time to consider further moves.

 

This is certainly a sensible approach. But I do suggest sending all correspondence by recorded delivery.

 

I note that landlordzone.co.uk supports me on one point: "Courts usually dismiss claims by the tenant against the landlord’s agent as they are acting with the landlord’s authority as his agent."

 

That being the case, I repeat my opinion that the tenant can only sue the landlord, not his agent. A contract of agency does not make the agent liable for the acts of the principal.

 

A stakeholder might be sued, if the tenant can prove that the person in question is a stakeholder. But if the tenancy agreement is silent on the point then the tenant will face difficulties in proving that.

 

The sensible course of action is to sue the landlord.

 

 

If the agent company is now in liquidation, a claim against a company in liquidation survives, against the liquidator. You should write to the liquidator instead of the company, but everything else remains the same. If you have rights against the company they can still be enforced. Companies House will tell you the name and address of the liquidator.

 

A members voluntary winding-up is not possible unless the company is solvent (a declaration of solvency must be made by a director under s.89 of the Insolvency Act 1986), so a winding-up is not an automatic indication that there is no money in the company.

 

However, if it is an insolvent winding-up then obviously there will be no money. A prosecution might be possible against a company director personally, for fraudulent trading, if a company continued trading when it was already insolvent.

 

Chapter X of the Insolvency Act contains a lengthy list of offences commited during an insolvent winding-up, including in respect of fraudulent trading (s.213) and wrongful trading (s.214).

 

Setting up a new company with a similar name and the same directors is an old trick, and (if true) should be reported to Trading Standards. There is a restriction on the re-use of company names after an insolvent liquidation, in s.216 of the Insolvency Act.

 

There are also powers to disqualify directors who have been a director of two or more companies which have gone into insolvent liquidation within a prescribed period.

 

In the light of the denial that the company has been wound-up, the first step you must take is to determin whether the directors of the old company have in fact formed the new company. Are the directors of both substantially the same?