Deposit protection with section 21 issue?

If you’re paying a solicitor to sort it out, I’d go with their advice.

I would comment though that you can’t prove you didn’t receive it just from a bank statement. It could have been paid in cash or to another bank account.

You will have a problem if the tenant believes they have paid a deposit. Hopefully you’ve got a full audit trail from the commencement of the tenancy which sets out the desk.

I think you will have a problem if the tenant insists that he paid you in cash and your tenancy says that s/he did.
I personally cannot see a statement from the solicitor to the court being of any help as it will only draw attention to the fact that the deposit was possibly taken and not protected. I would just tick the box in the section on the N5B where it asks if a deposit was taken as "No". If later down the line this is queried, you could get give the explanation of the error. This is of course only my opinion.
Worst case scenario could be that you have to pay the tenant 3 times the deposit and give him back the deposit you said you received totalling £4000.
This is no doubt a difficult one especially since you are evicting the tenant.

Lesson learned - your tenancy agreement should state

Deposit Due: £1000

NOT

Deposit Paid: £1000

I recommend asking for proof of payment (bank transfer or receipt for cash). No sensible person will hand over £1000 without asking for a receipt.

Tenant actually claims he paid the previous landlord which was my father , my father says he did not receive anything and I for sure didn't receive anything , tenant is also in just over one month rent arrear which is more than the deposit he paid does that change anything ?

Reply to the comment left by Mohammed at 26/06/2023 - 14:17
I don't think it changes anything as you have stated on the tenancy agreement that you received the deposit.

Hopefully, your tenant is not aware of the tenancy rules & does not claim from you.

Reply to the comment left by Mohammed at 26/06/2023 - 14:17
No. Deposit and rent are not interchangeable. Basically you’ve told the tenant he paid you £1,000 deposit; you now say he didn’t.

You’ve just complicated the matter by involving your father.

I fear you may be about to learn a lesson on the need for documentation to be 100% accurate.

There's only one safe way out of this. Pay in the £1000 and re issue the s21. The 51% burden of proof on you and that includes a cost order. You may be able to get some of it back for any rent arrears or legal costs.

It will cost you a lot more trying to wing it.

Another option is for you to come to a possible compromise where, you tell the tenant that you will wipe out his debt i.e. the arrears and give the tenant a £1000 for what he says he paid as a deposit so that it appears that the tenancy ends on amicable terms.
Now this is the part that you have to get absolutely right if he agrees with you. You prepare a document which you can head it something like "Termination of Tenancy by mutual agreement" and state in the document that by mutual agreement the tenancy has been terminated on whatever date you both agree on and also state that all monies including any money related to the deposit have been fully settled as agreed and there is no monies owed to either party and you both sign it.
From my point of view this is your best option where you don't have to go through the section 21 notice and I personally would even pay him more just to get rid of the tenant and start fresh again as you could have many more months of lost rent and a possible claim of three times the deposit and a return of the deposit.

The biggest problem is not the amount of the money but that you did not put it on protection.
If the tenant argues that they gave you £1000, and you have documented this, you could be liable for up to 3x the deposit plus the deposit.

Do what your solicitor says and hope you don’t get a landlord bashing judge

There is a clause on the rental agreement that if tenant goes into rent arrears than the deposit can be used at the end of the rental agreement , I don't know if that changes anything , I honestly did not receive any deposit and the tenant never mentioned to me in writing that he received one or required a receipt. It was my fault as I acquired property while tenant was still there and I forgot to remove that no deposit was paid. It says "£1000 to be protected by DPS" it doesn't mention anything about received.