Conflicting S21 advice on late deposit protection?

I served a Section 21 notice on a tenant in May 2018 and when it expired in July I instructed a firm to apply for a possession order. It then came to light that the managing agents had issued the Prescribed Information in time, but not protected the deposit for approx 40 days rather than within 30. In case it is relevant the tenancy agreement is dated September 2013.

Having admitted their error the agents agreed to refund the deposit at their expense, but were not able get bank account details from the tenant so they waited for instructions from me. I sought advice from the NLA who advised that a cheque hand delivered by two people (one to act as a witness) would be an acceptable means of returning the deposit and that I could then issue a new S21 a few days later. They stated it is not necessary to wait for the cheque to clear. We followed this advice and a new S21 was issued a few days later.

A few weeks have now passed and I spoke to solicitors today to prepare well in advance for the application for a possession order. Their advice is totally different from that of the NLA. They state that if the cheque has not cleared before the S21 has been issued the judge may determine the deposit has not been returned and the S21 to be invalid.

So I asked the agents to see when the cheque cleared and discovered it hasn’t been banked. We can prove the tenant received the cheque but as they haven’t banked it the solicitors state the judge could consider the deposit hasn’t been returned.

I then rang the NLA again today, told them the situation and asked if their advice remains the same i.e. that a cheque with witness statements of delivery is sufficient to satisfy the courts that a deposit has been returned. Their advice remained the same and the person I spoke to even checked with other colleagues before ringing me back. They were adamant that providing you can show all reasonable steps have been taken to refund the deposit by hand delivering a cheque with a witness this is acceptable and we should press with the application for a possession order.

So here we are with 2 contradictory opinions not knowing whether we should apply for a possession order or whether we need to find another way of refunding the deposit before issuing yet another S21. If the tenant sits on the cheque for months deliberately what can we do? The solicitor suggests handing the tenant cash in front of a witness who saw it counted but of course he may not be willing to accept it and in any case I live hundreds of miles away so this would be difficult.

Of course the agents should deal with this but they are a large chain with a dedicated legal department and are not being very co-operative.

Any advice or suggestions from those in the know or who have been through a similar experience would be appreciated but most importantly does anybody have first hand experience of who is correct – the NLA or the solicitors?

Thankyou
Kate

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