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Landlords, tenants and the non-existent deposit

The Property Ombudsman (TPO) Katrine Sporle reviews a complaint from a landlord concerning an agent saying a tenant had paid the deposit, when no deposit had been paid.

Katrine Sporle

Link to The Property Ombudsman

Complaint

The tenants withdrew and it took six weeks for another tenant to be found. The landlord wanted the agent to pay the rent for a six week void period, saying that if she had known that no deposit had been paid, she would not have accepted the offer but would instead have accepted another tenant.

The agent regretted the phrasing of their email to the landlord advising them that the deposit had already been paid was regrettable, for which they apologised. However, they said that when they sent the email, they had understood that the tenant would pay the deposit. They denied allegations of deception from the landlord.

Investigation

In accordance with their obligations under Paragraph 1e of the TPO Lettings Code of Practice, the agent should have provided a service consistent with fairness, integrity and best practice. They were expected to have kept full and clear records of the transaction, in accordance with Paragraph 1i of the Code. The landlord instructed the agent and, a week later, the landlord accepted an offer from a tenant introduced by the agent. The same day they rejected another offer, slightly lower, that had been put to them by the agent.

The landlord then emailed the agent having been approached directly by a private tenant to ask if it was too late to show them the property. The agent replied the same day and advised “our tenant has signed and paid so I would advise you not to! They have booked movers as well.”

The potential tenants’ email advised that they would not be able to pay the monies due until the start of the tenancy.

The landlord accepted this and said she would let the private tenants know. Two weeks later, the agent emailed the landlord and said that whilst the potential tenants had signed the contract (a fortnight ago) and had advised at that time that they had made a transfer of the monies, the tenants had not in fact authorised the transfer and hence no monies had been received. The agent had chased this, but the potential tenants emailed saying they no longer wanted to proceed and were withdrawing from the transaction.

Katrine Sporle image

Katrine Sporle

Upon investigation by TPO, the agent’s file evidenced an email from the potential tenants to the agent showing that they had advised that they would not be in a position to pay full move in monies due until a few weeks later, on the start date of the tenancy. The agent asked if they could pay the full deposit. The potential tenants said that they would pay that afternoon.

The agent did not provide clear records of what happened thereafter in terms of the deposit though it was clear that the potential tenants were sent a Tenancy Agreement, which they signed electronically and stated that a month’s rent and the deposit should be paid in cleared funds on the signing of the Agreement. The tenants had withdrawn a fortnight after signing the agreement, having paid no monies. The agent should have established whether the payment had in fact cleared prior to advising the landlord that it had when sending the email “our tenant has signed and paid”. The Ombudsman was critical that there was no evidence to suggest that the agent had checked that any payment had been received. No steps had been taken to verify that payment had been made by the tenant on the date that they had signed the agreement, despite the tenants saying that they would do so, and the matter had not been chased up.

Outcome

The landlord was seeking for the agent to be held liable for the void period between when the original tenancy had been due to begin and a new tenancy commencing, which had been agreed through another agent.

The landlord did reject a lower offer that had been made. However, there was no guarantee that this offer would have resulted in a tenancy being agreed, for example, the tenants may not have passed referencing. Similarly, had the landlord gone ahead with their private viewing there was no guarantee that they would have made an offer.

The Ombudsman was however critical that the agent was unable to prove that they had verified that the deposit payment had been made at the point that they advised the landlord. They should not have advised that monies had been received when that was not the case; the landlord should have been correctly advised of the situation before making a decision to continue with this tenancy.

The Ombudsman considered that the landlord suffered avoidable aggravation as a result of the agent’s actions and therefore supported this complaint. A compensatory award of £500 was made.

November 6, 2019

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