Rent arrears recovery from a limited company tenant?

Rent arrears recovery from a limited company tenant?

0:07 AM, 19th January 2024, About 11 months ago 6

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Hello, Can anyone help? I rented my HMO property through an agent to a limited company on a tenancy agreement which was not an AST. The limited company paid one month’s deposit which is held in my agent’s client account, i.e. not in a deposit protection scheme. The limited company tenant was legally evicted owing me about 6 weeks rent.

I asked my agent to offset the deposit against the rent arrears, but he advised that he could only do this with the tenant’s consent. Despite my agent’s repeated efforts to contact the tenant (over many months), there has been no response.

My agent will not release the deposit without a court order.

My only option is to make a small claims court (the deposit is under £10,000). However, looking through the small claims procedure guidelines on internet websites I could not find anything relevant for my case.

The procedure covers rental deposits held in the Deposit Protection Scheme and then, only from the tenant’s point of view; not landlords.

So, my option may be that I’d have to engage a legal expert to resolve this, but the costs involved could potentially negate my claim and hence not worth the effort.

I would appreciate it if Property118 readers have any suggestions?

Thank you,

N


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Comments

Graham Bowcock

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9:45 AM, 19th January 2024, About 11 months ago

Two points here:

I don't see why you can't claim using the online claim system; it's just a debt. Reference to standard deposits under ASTs is not relevant to your case. If you had a proper lease (as opposed to a residential tenancy) then DPS, etc.you should be able to just sue. For the costs involved there's not a lot to lose.

As for the agent holding the deposit, you need to look at the terms of the lease and your agreement with the agent. I get that they may wish to protect themselves against the tenant coming back, but at the end of the day they act for you. If there's a good case for holding the deposit back then they should not need a court order.

Michael Booth

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20:53 PM, 19th January 2024, About 11 months ago

Good luck with that limited company is what it's says on the time you are not a secured debt go and seek legal advice.

JC

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8:48 AM, 20th January 2024, About 11 months ago

Contact your solicitor.
You should have a company let agreement via your agent.
If you do not then your agent is an idiot or crook or both.
If you do have a company let agreement then a standard clause would be payment within 14 days of demand and if payment is not received then you can reclaim possession of your property.
Not the same as the lengthy AST eviction process.
Speak with your solicitor today or contact Legal Mentor (google).
Simple.

Graham Bowcock

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15:54 PM, 20th January 2024, About 11 months ago

Reply to the comment left by J C at 20/01/2024 - 08:48
JC
Reading the post it looks like possession has already been obtained and there was no issue with the tenancy. The problem seems to be simply getting hold of the deposit.

BTL Property Owner

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10:05 AM, 21st January 2024, About 11 months ago

Reply to Graham Bowcock.

Many thanks to everyone for comments. The individual tenants were evicted (by high court bailiffs) after possession order was obtained. The tenancy agreement stated that the tenant cannot offset rental arrears by using the deposit. Only other costs (e.g. damage to property). The agreement is silent on whether the landlord can offset it.
I was also thinking whether I can imdemnify my agent (I would pay for the insurance premium, if cost effective) against the tenant coming back to claim the deposit. But I can't see on what basis because of the rental arrears. Note that 6 months have now passed since eviction.
Thanks

Graham Bowcock

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9:08 AM, 22nd January 2024, About 11 months ago

Reply to the comment left by BTL Property Owner at 21/01/2024 - 10:05
If I was the agent and could see what had happened, I'd accept an indemnity from the landlord and pay the deposit over.

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