Tenant Refused Deposit Back!

Reply to the comment left by "Mark Alexander" at "29/07/2013 - 17:44":

I made an appointment for an inspection following the works being completed.

I could do the same but am sure they will refuse, currently they have accused me of intimidation and frightening them, so relations are poor and another inpection now is too soon.

Deposit and first months rent paid in cash. I never took any bank account details at the time of sign up only copies of passports.

By the way appreciate the advice but is this too public and could it count against me?

Reply to the comment left by "Giuliana Quadernucci" at "29/07/2013 - 17:49":

Have you considered employing a document server to deliver the cash to them?

8am on a Saturday morning is prime time

Reply to the comment left by "Giuliana Quadernucci" at "29/07/2013 - 17:49":

If anything, this forum thread might even help you, especially in Court as you have openly admitted your mistake and you are clearly trying to find ways to rectify that mistake.

It's also very clear that the tenant is trying to use the law against you by refusing to accept the return of the deposit.
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You should ideally always have a bank account or similar which allows transactions to be audited.
This would mean a tenant cannot deny receiving the deposit if it is traced from your account to their's!
If your tenant refuses to accept return off the deposit you won't be able to use the S21 process.
I am not sure if this also affects the S 8 process; if it does you will NEVER be able to seek possession and the property will be repossessed unless you carry on paying the mortgage.
Would you really do that.
You would have to try and bribe them out..............................................not likely to succeed when they have 6 years to take to the cleaners for the deposit issue.
Whether a cash encouragement with a signed letter indicating they would drop all future claims for the deposit issues, would be acceptable in court, if they did try and claim later on; I don't know!
Just shows you how tenants can think asymetrically when it comes to dealing with dopey LL who make mistakes.
I think we all have been dopey LL at some stage but hopefully grow out of it.
You still have your growing to do!!
You are in a sticky situation.
Lots of LL will be in a similar position as you!!
Can't see how to get out of without you paying your tenant to leave and that is NOT guaranteed.
Effectively this tenant has accommodation FREE for life; or rather for as long as you pay the mortgage.
Perhaps stop paying the mortgage.
Have receivers take over.
Allow them to evict the tenant.
Then before they try and sell the property pay all the mortgage arrears and costs and then the receiver about 6 months return the property to you.
Trouble is you have a damaged credit file and will be unable to obtain credit for about 6 years!!
Find out from your mortgage provider what would happen if the mortgage wasn't paid.
DON'T give your account no or name!
Ask on a generic basis.

I agree with Mary Latham, you are dealing with some very smart tenants here.

Brace yourself, chances are very high these tenants will take you to Court and claim 3 times rent as compensation for your failure to protect their deposit. As Mary has said, there is nothing you can do about that. Look upon this as a learning experience and spend more time on forums like this if you plan to stay in this business. In the short term, whilst you are learning the business, I recommend to to use a letting agent. As we've seen from this forum, it needn't cost you a fortune.

I do have a solution for you.

Under the circumstances you have described your tenant is outside the protected period and has no right to take you to a rent tribunal. Therefore, you are well within your rights to serve a section 13 notice trebling their rent.

Chances are they will move out and you will have achieved your objective. They will still be able to claim up to 3 times rent but the point I have made above deals with that. Lesson learned!

If they stay you can be sure they will not pay the rent increase. Assuming your rent is payable monthly they will soon be two months in arrears, if may be as quick as one month and one day. You will then be able to serve a section 8 notice as this is not dependent upon you having protected their deposit. Section 8 allows you to apply for a possession order after just two weeks.

if in doubt use a firm like Landlord action to follow this process for you. If you are inexperienced it is very easy to get wrong. See the legal section of this forum on evicting tenants.

If your tenants then take you to Court to claim 3 times the deposit you will then be in a position to counter claim for the unpaid rent which will effectively be 6 times what they have been paying you (2 months rent @ 3 times the current level), perhaps more by the time you get to Court to get a possession order.

If they pay the rent at 3X the current level then I very much doubt you will be too upset about that will you?

If I was in this situation I would apply for a possession order using the S21 served after the deposit had been returned by cheque. A judge can then decide if the return was valid.

At the same time I would, as Mark suggested, get a document server to return the deposit in cash, if the tenant returns the cash deposit protect it, serve the prescribed information, send a letter to tenant (keep a copy and proof of postage etc) thanking him for his NEW deposit and then serve another S21.

This link is worth a read, including the painsmith reference

http://www.landlordzone.co.uk/forums/showthread.php?48699-CAN-T-return-deposit-how-to-evict

That is what I would do but I hate paying for qualified legal advice which is probably what you should do considering it might take you months to find out I am wrong!

I've just done a bit of checking (if you'll pardon the pun). A cheque is not legal tender ie it is not legally treated as satisfying the legal definition of payment, until it has been presented to the bank and honoured. This is because a cheque is a request to the bank to pay the bearer of the cheque - payment is not therefore legally made until the bank actually pays the bearer. So (unfortunately) you have not paid the deposit back therefore the Section 21 notice is not valid.
As to useful suggestions - I think Mary's is the best option, short of a reverse mugging where you give them money instead of taking it!!

Reply to the comment left by "Chris Best" at "30/07/2013 - 16:07":

What about Anon's suggestion?

In this instance, perhaps two wrongs could make a right?

But then again, legally Anon's suggestion is no more wrong than what the tenant is doing.
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the way i see it there is a problem, but why do you want them out?, if they are paying the rent just leave them in there, if they stop paying then issue section 8 notice