Help is now at hand for residential landlords who have forgotten to handle a tenants deposit in the way in which the law requires, thanks to a recent Court of Appeal decision.
Since the 6 April 2007, within 14 days from the date of receiving a deposit from a tenant, the landlord has to protect that payment with one of the authorised schemes. He or she is also required to give the tenant what is called 'prescribed information' relating to the protection of that deposit.
The sting in the tail for landlords who don't do that, either because they have forgotten or for some other reason, is that they are liable to pay the tenant a penalty of 3 times the deposit. Many tenants are well briefed about their rights these days and most of them won't miss the opportunity to hit the landlord with a claim for 3 times deposit if they think the landlord has slipped up.
However, a recent Court of Appeal decision throws landlords a lifeline. The Court has decided that inadvertent mistakes on the part of a landlord shouldn't be penalised.
The effect of the decision is this. Provided the landlord protects the deposit and provides the prescribed information to the tenant before the tenant starts his claim against the landlord then the claim will fail and the landlord won't have to pay the tenant a penalty
If the landlord protects the deposit and provides the prescribed information after a tenant has started a claim against him but before the hearing of that claim then there still won't be any liability on the landlord - although in that situation a landlord probably will still have to pay to the tenant all or some part of his legal costs in starting the claim.
Thus the lesson to be learned for landlords is that as soon as you realise you have failed to comply with the requirement to protect the deposit and give the tenant prescribed information, it's not too late. Get on and do it as soon as possible. If you do that before the tenant starts his claim against you then you won't have any liability at all.
If you need advice about any aspect of the law affecting landlords and tenants then please contact Nick Lambert on 0114 266 6660 or email [email protected].
