who holds the deposit?

[widwarts]

Hi All

My letting agent is retained on a 'part-managed' arrangement. She takes a monthly fee for a tenant find but no management. Should the tenant have a problem he calls her, she calls me, i fix the problem.

She is saying she holds the deposit as a 'stakeholder' is that appropriate? Any suggestions on my position as I would liek to hold the deposit and to do the check out. She did the check in but we disagree which is unresolved. She continues to quote laws to give me the impression that she can hold this deposit. It makes me v uneasy though!

Many thanks

Ann

[Trenners]

Hi Anne,

The first thing to ensure is that the Security Deposit is being held by the letting agent in a "client account". This is important because if the letting agent was to go bust and the money was not in a client account then the money would be lost !!

Secondly, the Security Deposit belongs to the TENANT and not the LANDLORD. If the letting agent told the tenant that they would be holding the deposit as stakeholder - check the tenancy agreement and letting agent terms of business - then you have no right to demand that the TENANTS money be passed to you.

It is quite normal for the Letting Agent to hold the deposit as "stakeholder". This means that no deductions can be made from the Security Deposit at the end of the tenancy unless BOTH the landlord and tenant agree. If agreement cannot be reached then the Letting Agent holds onto "the stake" until agreement is reached.

In April 2007, assuming the legislation is finally implemented, all Letting Agents and Landlords who take a Security Deposit will need to join or be part of a mandatory Tenancy Deposit Scheme.

Finally, the tenant gave the letting agent the deposit in good faith. If the letting agent passes the deposit onto the landlord and there is a dispute between landlord and tenant (over deductions) at the end of the tenancy then the letting agent is placed in an untenable position.

In summary, I agree that if you use a letting agent they should hold the deposit.

Best Wishes,

Mark

[widwarts]

Thanks Mark

This is disappointing. I want to sever all arrangements with this agent. We disagree on everything and she does not recorded the inventory in the detail I prefer. I was told that it was illegal for the agent to hold the deposit and six months rent in advance as it is my property. Other agencies seem to give the six month's rent in advance without question albeit on a find tenancy only fee. They also appear to hand over the deposits so why the disparity?

Thanks again for the clarity of your advice

kind regards

Ann

[Trenners]

Hi Anne,

I agree that you are entitled to the 6 months rent in advance and you should push VERY HARD for this money. I would threaten to take legal action against the Letting Agent if the money is not passed to you immediately. They would be a brave (or stupid) letting agent to withstand that amount of pressure.

Write a formal letter giving 14 days to pay. If they don't pay I would serve notice in the small claims court.

The "legal beagles" on this forum will point out that "rent in advance" is technically the tenants and is only payable to the landlord as the rent becomes due on the rent day.

Although I agree with the legal argument this does not give the LETTING AGENT the authority to hold the rent - almost certainly earning interest for them - in their bank accounts.

What bank account is the rent held in by the Letting Agent. Is it a Client Account or do you risk losing all of your rent if the agency was to go bust. Also, is the account interest bearing ? What do the Ts and Cs state.

Once you've got your money, terminate your agreement and NAME and SHAME the agent on this forum !