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Letting Agent Goes Pop With Your Rent & Deposit Money

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If the letting agent goes to the wall whilst you're waiting to move in to a place you've given the letting agent a deposit and one month's rent in advance for, what happens? Especially if the landlord says "don't look at me, they never gave me your rent, matey."

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All money would tend to be direct bank transfer, so it wouldn’t take much to prove who had been paid and who not.

My concern is the suffering estate agent who suddenly, out of shear desperation, open a letting section. It has been known for the sinking ship agents to use deposits to subsidise wages etcetera in the hope that when they can pick up again they can pay it all back. I think it would be unwise to use your local estate agent that has suddenly moved into lettings because its a sure sign they are in trouble

Edited by DemolitionRed

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This is a what if, it hasn't happened to me (yet).

WHAT IF

the agent goes bankrupt (ie "pop") during the 2 or so weeks between handing over the deposit and 1 month's rent to them and my taking possession of the rented property?

It doesn't matter if the money's by cheque or bank transfer, what I am asking is do I effectively lose because the landlord never got the money as the agent went pop before he/she got the money sent on to him/her?

I would think so. If the deposit had safely made it into the deposit scheme, then perhaps yes I'd get that back. But if the rent was in the letting agent's bank and they're a limited company then I think that's it, it's goodbye time to my money unless they had sent it on to the landlord before they went pop or the money's in a ring-fenced account.

If not, the govt should legislate to ensure letting agents have the money in a ring-fenced account, so that this can't happen.

Estate agents who are on the brink and try their hand at lettings are probably the agents who might be the most likely go pop with a rental applicant's money. That doesn't mean all, just some, I'm not suggesting widespread EA insolvency, don't all get offended! Just looking at probabilities.

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The simple answer is no but you could have a wait on your hands.

The agent is acting on behalf of the landlord and very probably uses a trust account where all monies from tenants gets deposited.

If the agent becomes insolvent all monies within that trust account belong to the landlord and not the receivers .

If money is not deposited into a trust account, then all monies will go to the receiver before a dividend is given back to the landlord.

You paid the agents your money on behalf of your landlord and therefore any money owed to you must be returned to you, not by the agent but by the landlord.

If the landlord was to call your bluff and say he never received any money from you, then you would have to put a charging order on his house.

It’s all a bit long winded and something I hope you would never get caught up in but you would eventually get your money back.

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The simple answer is no but you could have a wait on your hands.

The agent is acting on behalf of the landlord and very probably uses a trust account where all monies from tenants gets deposited.

If the agent becomes insolvent all monies within that trust account belong to the landlord and not the receivers .

If money is not deposited into a trust account, then all monies will go to the receiver before a dividend is given back to the landlord.

You paid the agents your money on behalf of your landlord and therefore any money owed to you must be returned to you, not by the agent but by the landlord.

If the landlord was to call your bluff and say he never received any money from you, then you would have to put a charging order on his house.

It’s all a bit long winded and something I hope you would never get caught up in but you would eventually get your money back.

Thanks D R, very interesting and very comprehensive, much obliged.

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Thanks D R, very interesting and very comprehensive, much obliged.

Er...if the LA goes bust with your money...that's it...it is gone.

If anyone here thinks you can get it back, they're either Vested interests or scammers, or a bit dumb.

Don't give 'em anything until you move in, always get a reciept (a LA tried to take my credit check fee without a receipt once, and he was quite adamant...needless to say he gave me one)

Slimey little devils those LA's

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Er...if the LA goes bust with your money...that's it...it is gone.

If anyone here thinks you can get it back, they're either Vested interests or scammers, or a bit dumb.

Don't give 'em anything until you move in, always get a reciept (a LA tried to take my credit check fee without a receipt once, and he was quite adamant...needless to say he gave me one)

Slimey little devils those LA's

I think D R was talking of reputable agents who had put it into a special ring-fenced account, I don't doubt that where that isn't the case you've probably lost it unless you can prove the landlord received it. Not easy when all who's left to talk to at the branch is the bloke boarding up the windows.

However, "don't give anything until you move in" - I think we both know there's no such agent as allows that, they always expect cleared funds on the deposit and rent before a tenant gets the keys. Any other sort of agent is as rare as a teetotaller in rehab. Don't tell me that's an arrangement you've come to in the past... roflmao

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I think D R was talking of reputable agents who had put it into a special ring-fenced account, I don't doubt that where that isn't the case you've probably lost it unless you can prove the landlord received it. Not easy when all who's left to talk to at the branch is the bloke boarding up the windows.

However, "don't give anything until you move in" - I think we both know there's no such agent as allows that, they always expect cleared funds on the deposit and rent before a tenant gets the keys. Any other sort of agent is as rare as a teetotaller in rehab. Don't tell me that's an arrangement you've come to in the past... roflmao

Put him on ignore... the rest of us have

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Renterbob I only saw your post because it was quoted but I will say this

They are called agents because they act on behalf of the landlord. In law, receipt by an agent is deemed to be a receipt by his principal (ie the landlord). This is because the landlord chooses his agent and if he chooses one that goes bankrupt or deals in shifty dealings, basically that is his problem.

The only problem could be the landlord doing a bunk, although you could always get a charger on his house. However this would be pointless if it was in negative Equity.

People that are full of hatred are out of control!

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However, "don't give anything until you move in" - I think we both know there's no such agent as allows that, they always expect cleared funds on the deposit and rent before a tenant gets the keys. Any other sort of agent is as rare as a teetotaller in rehab. Don't tell me that's an arrangement you've come to in the past... roflmao

But we are talking minutes rather than weeks and days in that scenario, they don't give you keys until they have deposit and rent but thats literally the same time, you go in hand the money over (in the form of a bankers draft so guaranteed payment), you sign, you get the keys.

In a situation where the LA went bust after that time and the Landlord claims they has not been paid I would imagine it would be pretty easy to convince the landlord it would be in their best interest to let you stay, as you leaving and them having a void for a month or so and then having to pay additional fees to a new LA would do them no favors whatsoever.

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But we are talking minutes rather than weeks and days in that scenario, they don't give you keys until they have deposit and rent but thats literally the same time, you go in hand the money over (in the form of a bankers draft so guaranteed payment), you sign, you get the keys.

In a situation where the LA went bust after that time and the Landlord claims they has not been paid I would imagine it would be pretty easy to convince the landlord it would be in their best interest to let you stay, as you leaving and them having a void for a month or so and then having to pay additional fees to a new LA would do them no favors whatsoever.

Go in with a banker's draft? Get the keys straight away?

Have you people ever rented?!?

You pay your deposit and rent by electronic payment or cheque, either way they wait for it to clear, and then ON the day of AST commencing you collect the keys from the agent. In that interim period, typically 2 weeks between paying and taking up residence and tenancy start, if they go pop then there's the problem.

No one hands over money and gets the keys same day unless an emergency.

I seriously wonder if some of you have rented in a long, long time!

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Go in with a banker's draft? Get the keys straight away?

Have you people ever rented?!?

You pay your deposit and rent by electronic payment or cheque, either way they wait for it to clear, and then ON the day of AST commencing you collect the keys from the agent. In that interim period, typically 2 weeks between paying and taking up residence and tenancy start, if they go pop then there's the problem.

No one hands over money and gets the keys same day unless an emergency.

I seriously wonder if some of you have rented in a long, long time!

Every time I have ever rented, (fair enough it's only four times), I have paid the deposit + one months rental in cash , at the same time as getting the keys. The only thing I have paid in advance is for them to run a "credit check". Most recent rental started May this year.

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How about moving into and occupying the property for a month (i.e. the month you've paid for in the deposit) anyway, even if you have to break in on the day the AST commences? After all, it's not illegal to break into a property you're legally entitled to occupy. Having signed the AST and paid the fees and deposit, you have that legal entitlement.

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Every time I have ever rented, (fair enough it's only four times), I have paid the deposit + one months rental in cash , at the same time as getting the keys. The only thing I have paid in advance is for them to run a "credit check". Most recent rental started May this year.

Well, I'm yet to see that anywhere! They ALWAYS want cleared funds well in advance. If you're suggesting that I say to them I'll bring you cash on the day the rent starts and you then give me the keys it's not a bad idea but I'm very sure they'd decline where I seek to rent. They expect it like this:

Offer is accepted.

Tenant coughs up hefty admin fee for so-called referencing and documentation by agent, cash or debit card usually.

Agents

Agent asks for usually 1 month's rent in advance and deposit of usually one month's rent but more often 1.5 month's rent nowadays. This usually is sent over by BGC (3 or 4 days though supposedly quicker now) or cheque about 2 weeks ahead of AST commencement typically. As we all know, a cheque can take from 5 days to much longer to clear, it's just assumed a cheque has cleared in 5 days if the receiving bank doesn't get a notification otherwise, but cheques can bounce even after a few weeks or more so agents prefer electronic payment.

Day of AST or the eve of it, agent releases the keys.

How about moving into and occupying the property for a month (i.e. the month you've paid for in the deposit) anyway, even if you have to break in on the day the AST commences? After all, it's not illegal to break into a property you're legally entitled to occupy. Having signed the AST and paid the fees and deposit, you have that legal entitlement.

I'm 99% sure that it'd be an offence since the tenant does not have Legal Title to the property.

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Surely that legal title begins once the AST is signed by both parties?

I think what you say is fine common sense and if you and me made the laws probably all would be well, but I've a pretty strong suspicion it could be breaking & entering and or criminal damage, whether in practice Old Bill would then say "Ok it's a civil matter now" I don't know. I'm not saying you're wrong but I think it's safest to assume things ain't never that sensibly straightforward. That said, I believe in some cases even actual squatters can get the phone and electric connected if they pay a deposit!

Edited by The Last Bear

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Normally an AST will first be signed by the tenant before being sent off to the LL for a signature.

Supposing the LL has already signed the contract before the agent went 'pop' then you are entitled to use reasonable force to enter 'your' premises but remember that it is only 'your premises once the LL has signed.

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Normally an AST will first be signed by the tenant before being sent off to the LL for a signature.

Supposing the LL has already signed the contract before the agent went 'pop' then you are entitled to use reasonable force to enter 'your' premises but remember that it is only 'your premises once the LL has signed.

No offence, but I doubt that's so. I think in such circumstances you need to apply to a court for permission to enter, it can be done same day.

If you specifically know different, then I gladly stand corrected!

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No offence, but I doubt that's so. I think in such circumstances you need to apply to a court for permission to enter, it can be done same day.

If you specifically know different, then I gladly stand corrected!

When in doubt I always ask my partner! He's a barrister so a great sauce for knowing and understanding how the law works.

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Go in with a banker's draft? Get the keys straight away?

Have you people ever rented?!?

You pay your deposit and rent by electronic payment or cheque, either way they wait for it to clear, and then ON the day of AST commencing you collect the keys from the agent. In that interim period, typically 2 weeks between paying and taking up residence and tenancy start, if they go pop then there's the problem.

No one hands over money and gets the keys same day unless an emergency.

I seriously wonder if some of you have rented in a long, long time!

I think you will find I have rent more places recently than you seem to have.

With the exception of a small holding deposit and fees for reference checks (sub £200) nothing changes hands until the day you go and sign contracts, pay your money either in cash or a bankers draft and you then get the keys there and then. Done it twice in the last 8 months and was the same 3 years before that.

You might not want to believe it but thats what happens.

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When in doubt I always ask my partner! He's a barrister so a great sauce for knowing and understanding how the law works.

Handy! Thanks for the info. I'll say all that as the Old Bill bundle me into the van! ;)

I think you will find I have rent more places recently than you seem to have.

With the exception of a small holding deposit and fees for reference checks (sub £200) nothing changes hands until the day you go and sign contracts, pay your money either in cash or a bankers draft and you then get the keys there and then. Done it twice in the last 8 months and was the same 3 years before that.

You might not want to believe it but thats what happens.

I honestly have never heard of such an arrangement hear in the South/London. Is it a special term that you insist on? In which areas approximately have LAs agreed to this? I will certainly try and work this one, but I assure you it's very different to how things go at the LAs I used before. Thanks for the insight, I may well try this.

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Handy! Thanks for the info. I'll say all that as the Old Bill bundle me into the van! ;)

Well he's not much good for anything else but he does keep me in check!! :P

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  • 399 Brexit, House prices and Summer 2020

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      • down 5% +
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      • Even
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      • up 5%



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