UK Landlord Forum / Life

I need some help from anyone who has had this kind of issue. Long story short, I set up a TDS scheme within the 30 day limit for a new tenant. Something went wrong with the bank transfer and I only became aware of it after the 30 day period had elapsed. So technically speaking I was in breach of the law at the time and I'm fully aware of it.

This became more of a problem when the tenant also realised there was an issue and then withheld rent from me until I had resolved the problem or they said they would take it further, i.e. legal proceedings. I certainly don't blame them for being concerned because they obviously wanted their deposit protected properly, as indeed I did also. So I set up a new deposit scheme and this time it was successfully completed. However I had still been in breach of the law because it had gone beyond the 30 day limit.

The tenants then left the property at the end of their lease agreement and, because there had been a mistake over the deposit protection, I decided to return their full deposit and not deduct the professional cleaning fee as laid out in the lease agreement (they had walked away without cleaning the house). The tenant confirmed and accepted the full deposit.

Now some months later I get an email from a no-win, no-fee legal company requesting the deposit details so that their client can make a claim against me. So I did some research on Google and found that they have me over a barrel on this and that I'll probably be fined anywhere between 1x to 3x the deposit amount. This does look a lot like profiteering to me rather than an 'injury'-based claim but that's besides the point.

To get a better idea of how to handle this situation, I rang a free legal advice helpline run by a specialist property law firm and they told me that the former tenant has no valid claim because they knew the situation before the tenancy was over and had asked for a resolution at the time, which they got obviously. They view it as a settled matter.

So I'm confused. On the one hand I read everywhere that the tenant can still make the claim regardless of the deposit being fully returned. And on the other hand, because the deposit was returned and accepted under the knowledge there had been issue, the tenant's claim is not valid.

I still have a couple of weeks before I need to respond to the initial claim so am doing what I can in the meantime to prepare my response.

Any thoughts on this?

The Tenant's claim is perfectly valid and the advice you've been given is erroneous. Maybe they're a specialist property law firm, but the advice was free, I suppose that's the clue. I wonder if they'd put their money where their mouth is? Have them cite appropriate case law to you. A Tenant can make a claim for non-protection or late protection of a Deposit for up to 6 years after it was supposed to be protected (or the end of the tenancy, not 100% sure which - but it's a long time). The issue with the law is unrelated to what actually happened with the Deposit - whether it was returned in full, or not.

My advice in this kind of situation is to make a pragmatic offer - understanding your best case and (theoretical) worst case scenario. No-one really wants to go to Court, but the chances of a 3x penalty are less likely, unless you're an experienced Landlord who should know better and, maybe, has a track record of non-compliance... are you?

It's not "technically speaking" that you were in breach of the law - you just were. Good luck.

Thank you for the reply and advice.

I wasn't an experienced landlord when I first let the property out but I am now. Wiser and about to be poorer, which is why I've gone back to using an agency (and yes I've checked they've secured the deposit with the new tenants).

The only defence I could possibly mount is that the tenant had already settled the matter with me, implied in the messages sent between us, i.e. they threatened to sue unless I complied, which I did. I'm expecting a claim of 1x, based on what I've read from other cases.

By the way, are you qualified to offer legal advice or are you just offering the benefit of your experience?

Of course I'm qualified. But anyone in this game knows this stuff; after all, it's really, really basic - Landlord 101. You have no defence to possibly mount. It's not defend-a-bubble. But - the other strategy could be to just put your head in the sand and hope it goes away... it really might. Stranger things have happened. I would not expect a claim of 1x... I'd expect a claim of 3x to put the frighteners on you. Realistically speaking it won't fly. As I say - get your [free] advisor to provide you with some case law that backs up their position. It's not nice to be on the receiving-end of a potential claim like this... I always advise folk to do whatever you can to bring the uncertainty to an end ASAP - not to roll over and be bullied into submission - to just recognise where the fault lies and limit any losses. A no-win-no-fee firm is unlikely to take the case on without merit (merit should be written in inverted commas, like 'merit').

If your tenant accepted the deposit back as full and final settlement of the matter then that would prevent this subsequent claim. The trouble is it sounds like you haven't got a nice signed document from your tenant saying something like "I acknowledge receipt of £x without deductions, in full and final settlement of the failure to protect my deposit within the statutory time period". In the absence of that, it's your word against his as to whether the non-deduction for cleaning was intended and accepted as being the final settlement. Still, you might put it in your reply to the lawyers, as it makes things less cut-and-dried. (there's a fair chance their client will have neglected to mention it). If there's a possibility, albeit small, that they might end up with nothing if it came before a judge, then it makes it more likely that they'll settle for a modest sum.

You don't mention how much later than 30 days before it was protected? Also,do you have any evidence of the failed effort to do the transfer,or an apology from the bank if they screwed up? If so,I suppose it might be some mitigation.Generally though,I expect they have heard every excuse under the sun,so I can't see how you will get away without 1x deposit. Having realised the situation,I am surprised that you did not get something signed as described above.I have never heard the kind of "expert" advice you were given mentioned anywhere else,and it is a very common question on forums.

Thanks to all for your help so far.

Following further consultation, this time paying for legal advice, I find that the situation is not completely indefensible. There are other factors to take into account that I haven't listed previously in detail. For one thing, I have a text trail between myself and the tenant that implies on at least three occasion that they accepted the settlement and wanted things to end amicably and positively. Clearly they have decided against doing that. The only drawback there is that the explicit words 'full and final settlement' are not used. My solicitor believes there's a chance of success but, as with all these things, there's a level of interpretation that could go either way depending on the judge on the day.

To answer someone else's point, yes I have documented evidence that I at least attempted to set up the deposit in time and also the money transfer on my bank statement. I know this alone won't deflect the responsibility from me but it does indicate (hopefully) that there was an action intended to comply with the law.

I'm certainly not going to be burying my head in the sand and will be pushing back on the claim. In fact I will be counterclaiming for the cleaning and gardening that the tenant failed to do. An independent letting agent attended the check-out day with me and witnessed an extremely aggressive tenant who at first tried to claim that they had the property cleaned but refused to say who did it. After some argument they then agreed to pay the cleaning costs and then phoned the letting agent to ask them to be a 3rd party representative to arrange cleaning and later saying they wouldn't pay. The tenant also said in a text to me that he couldn't see where in the signed contract it mentioned professional cleaning. The letting agent spotted the clause in seconds.

The tenant, as I've now found out, has a documented history of violating gentlemen's agreements, opportunistic behaviour in property dealings and questionable sharp practice. The very same tenant also has a documented history of dissolved businesses where he's walked away owing tens of thousands of pounds only to open new companies to carry on in the same trade. The (paid) solicitor says this is worth bringing into the mix.

In summary, I messed up, I was extremely naive and failed to protect myself. This tenant came to us through a local acquaintance, personally referred and all seemed very relaxed when I took him on. It's only with the benefit of hindsight that I made a massive mistake, I'm just too trusting, turns out I was dealing with an opportunist.So I've learned a painful lesson regardless of how this all turns out.

I am prepared to be fined (even though I literally have no spare funds right now to cover it) but I am also prepared to fight back. I will update this thread as and when I get further news. It may help someone else in the future, who knows. I could be completely delusional about my chances and that the judge will take a black & white view and completely disregard any mitigating circumstances I put forward.

Hippogriff - I appreciate your responses and shoot-from-the-hip advice. However the only thing I would say is that your tone, for a qualified solicitor, comes across as being a little condescending, patronising, even arrogant. It may just be me who sees it that way but I'm going to tell you anyway. It doesn't devalue your advice per se but it does have a tendency to feel like you're kicking someone when they're already down.

With all due respect,you missed out quite a few relevant bits of information in your first query.That said,you were presumably not entirely convinced yourself about the quality of the legal advice you were given.otherwise why ask again?Your ex -tenant does sound like a scumbag,and I fully understand your desire to give him his comeuppance.Just be realistic though,many landlords have had to just suck it up,and learn from their mistakes.
I was rather struck by the tone of your question to Hippogriff,about his qualifications to advise.It came out as rather blunt and rude I thought,considering he was not charging you a penny for his time.
Can I also offer one bit of advice.It really is not a good idea to have no money whatsoever in reserve.What if an emergency repair arises,or a tenant stops paying rent?

Thanks for your input heavykarma. I guess I was initially looking for feedback from anyone who has successfully defended such a claim (or not). You'll note that I have thanked the moderator for his/her advice but I think it's fair to ask if someone is qualified or not, after all there are enough people out there in cyberspace who are happy to offer an opinion based on little to no experience. Also you notice that he/she initially asked me if if I had a track record of non-compliance, which I found a little presumptuous. Ironically enough, the moderator was rubbishing the 'free' advice I'd received and yet he/she is offering me free advice, as you rightly pointed out.

And yes you're absolutely right about having a reserve as a backup. Unfortunately I've been stuck in a negative cashflow situation in my business for the last few months and with a substantial amount still being owed to me. As you would imagine I'm working frantically to resolve that and also now dealing with claims from 'scumbags'

Like I said, I'll update this thread once a resolution has been reached.

Once again, thanks to everyone for their input.

heavykarma....just looking at the site's disclaimer and the following line states: "Any advice I give is my opinion based on my experience"...so not quite 'qualified' then

I have no legal qualifications whatsoever,but I know some of the others do work in that field.My own comments are based entirely on 20 years of sometimes quite bruising experiences as a landlord,and the bitter realisatiionn that regardless of what the law might say,often the law is an ass,and the good guys get shafted.I have benefited hugely from the experiences related on this forum,and the empirical knowledge (always the most valuable kind) shared freely.  You should never enter into battle unless you can afford to lose.I do wish you luck though,and hope your own business improves, if it remains viable. 

You have to bear in mind this is a landlords' forum, so the moderators and most of the regulars are landlords. Solicitors are unlikely to hang around here doling out free advice when they could be changing you for it at rates that would make a hooker blush. You might try sending a personal message to this chap: https://www.landlordforumproject.co.uk/index.php?action=profile;u=17677 - he doesn't post much in the forums but he fields a lot of questions regarding deposit protection on the main blog. I gather he specializes in this sort of thing so he may be better placed to advice you than a more generalist solicitor.

The trouble is, when you're talking about a relatively trivial sum of money, it doesn't take long for the costs (financial and emotional) of fighting it to outweigh the cost of paying up and moving on, especially if you end up losing anyway.

Quote from: Consumer Champion on June 03, 2018, 10:11:03 AMheavykarma....just looking at the site's disclaimer and the following line states: "Any advice I give is my opinion based on my experience"...so not quite 'qualified' then

You pay for your qualified advice, as you're finding out. Please don't be ultra-naïve and think you can go onto any forum and receive free qualified advice - why would a professional take their time out to help you for free when there are so many people out there who will pay? As you now are. I don't know what you're quoting there - but you appear to be acting under the misapprehension those are my words - they're not; though they might very well apply to nearly every contributor here, for sure.

If you feel you're being harshly treated, it's because you kinda are. It's basic Landlording stuff that you failed to do - for no good reason certainly that I can fathom - we still don't know what went wrong with the bank transfer - maybe what went wrong was that it just never happened? Landlords like you bring us all down, right? I wished you luck at the beginning, rest assured I still do now. I do hope it gets cleared-up for you without you losing anything at all. I just really don't want you to waste time and effort clutching at straws. All we want to see is the [now paid for] advice you've received backed-up somehow. My understanding here has always been that the Court must take a black-and-white view - extenuating circumstances are only for the scale of the penalty - 1x minimum to 3x maximum - so if you failed to protect the Deposit [in the time allowed] then the Court must find in favour of the Tenant. Therefore, if the Court finds in favour of the Tenant then you must accept a penalty... and there will be costs - the Court cannot find in favour of the Tenant and award £0 penalty. Please be very, very careful indeed here. I could only contemplate a clear win for you if you had that "in full and final settlement" but that would certainly imply they got something from that - not just the Deposit protected, as it should have been already. I don't think them saying they'd take it further if you didn't protect the Deposit, then them saying they wouldn't take it [the failure to protect] further once you had, then somehow implies that they've let you off the hook for the non-protection. I don't join those dots like you are hoping, but I admit I'm not privy to the chain of communications. There is a reason timescales exists like they do - so Tenants can sue their ex-Landlords once they've safely departed the property where the issue existed and the direct ties are cut. There is also a reason only Lawyers win in any case. This is really not "do you feel lucky, punk" at all.

BTW, anyway I clearly never said I was a qualified Solicitor... why on earth would I want to be? I have my Cycling Proficiency Badge.

Well look, I'm not here to cause grief, only to understand what the ins and outs are. And, like I've said a number of times, I'm grateful for everyone's advice. I wasn't looking for, nor expecting, free legal advice on this forum but when it's an area you don't fully understand then other people's experiences are worth hearing about. Tell me what landlord has never had an issue!. So I've paid for an initial consultation and, while the news is not as positive, at least I know how to go into a court case should it arise. I spoke to my accountant today, who is also a professional letting agent, and he gave some sound advice regarding that approach. It's more to limit the damage rather than try to win outright. There are mitigating factors that may or may not work in my favour but at least the judge should expect to have the full facts in front of them when making a ruling.

The failed bank transfer I referred to is not a figment of my imagination I can assure you,  even though you're hinting at it. My bank statement says otherwise. It was most likely returned by the deposit protection scheme because perhaps not all the details submitted were correct or something like that. They haven't been able to tell me.

"Landlords like you bring us all down, right?" Well if by that you mean a first time self-letter who didn't do enough to protect himself but tried to do right thing once the mistake was realised, then yes, I'm that kind of landlord. No longer though, as the house is now under a professional agency and it will be sold when the tenancy is up next year. No more lettings for me!

When I asked if you were qualified to give legal advice you replied "Of course I'm qualified". Guess I took it that you meant you were qualified to give legal advice. Apologies for getting it wrong.

Cheers All!

No worries at all - we have thick skins here. We encourage this for all Landlords... it helps, really.

Issue resolved. The former tenant backed off following my discussion and submission of evidence with their claim company. They got the full deposit back and that was that. They managed to avoid £800 in legitimate deductions but I managed to avoid being fined 1x-3x the deposit. Kind of a win-win in a perverse kind of way.

Thanks to all for your help and advice.

It is a win-win. £800 to the Tenant, but only if you feel negatively about things in that way. Otherwise, it's a win for you. If you ended up taking the legitimate Deposit deductions through ADR you might have been told that they're not as legitimate as you thought. Certainty is a good thing.

Really pleased for you.I know it still sticks in the throat that they got an extra £800,and left the place in a bad state,but it could have been much worse.It sounds as if you have learned some valuable lessons.
"Fool me once,shame on you.Fool me twice,shame on me" is a good motto.

Thanks for the replies guys...

I made a stupid mistake. End of. The £800 aspect worries me far less than the predicament I'd put myself in. As you say, lessons learned.

Looking back, I know I was played by the tenant because he showed he knew the law far better than I did and used that his advantage. Once again, I allowed that to happen.

Still, we move on.

The new tenants have been in for couple of months and are super-nice people. Professional, educated people who have had properties they've let themselves, they know what's like from both sides. An agency is handling all the technicalities so we can only hope that they do their job properly.

Cheers!