Dear Sir/madam

As a landlord ,I would be very interested to know the legal consequences of an agency being declared bankrupt or simply terminating its commercial activities. Could you answer the following?

1. Would the existing contract between landlord and tenant have to be re-negotiated?
2. If the deposit submitted by the tenant was not returned to the landlord from the agency, would the landlord be able to enforce the remittance of another/new one ( assuming the tenant wished to continue to reside at the property)?

Gee, that's a tough one . As far as the agency is concerned, I guess you'd have to chase them as any other debtor. It would be interesting to know whether deposit, if held under the new deposit scheme will be safe, but otherwise, it may have to be forfeited. But as far as tenants are concerned, as long as they wish to stay in the property, there should be no probs (and no managements fees either )

In my experience tenancy agreements are signed by agents who act as landlords' reps and with their authority. So, in principle the contract should stand as it is between the tenants and the landlords. As far as deposits are concerned, it's quite a complex matter and I hope others would share their knowledge and experience for all our benefit. The deposit nowadays needs to be properly registered under the rent-deposit scheme. If it has been, it should be safe if agency goes bust. If it was not property registered, then the tenants will have the right to go for landlord to recover their deposit. I believe, they could get three times the amount if deposit has not been properly registered. Does anyone know if this is so?

Many thanks for your replies so far. Although, cannot say that I am completely 'au fait' with how it works, but certainly have a better understanding. I can see now that tenants should have a right to get their deposit back if their letting agency becomes insolvent, but surely, common sense should prevail and landlord, who also suffered from a financial loss, should not be expected for fork out deposit and something else on top.

It is unfair, lawmakers only seemed to have tenants interests at heart when drafting these regulations. But, as with any sort of business we venture into, we must consider the implications and, unfortunately, possible financial loss is one of them.

Does anyone know a link to a site where you can find statistics about the letting/estate agents that became insolvent in the last year? Am just curious to know whether there is a trend.

Hi Lisa, I have not come accross any such info, but would like to know too.

Hello

I'm a new landlord, and I think the agent I have used has now gone bust. I cant get hold of them, the shutters are down at their shop and rumour has it they have dissappeared owing a lot of people a lot of money.

They never actually sent me any paperwork as promised so I have no idea about any agreements, deposit schemes etc. All I know is they have collected rent from my tenant but have not passed this to me. They also took a deposit from the tenant but I dont know what they have done with it, and as they didnt send me any paperwork, I have had no opportunity to do anything with deposits etc. I dont see how I can be liable for the deposit if the agent has not took the money and not put it in the scheme, or asked me to complete any paperwork. I also have no idea where to go from here. The police cant help and nor can the CAB as I am apparently a business. The agents also still have a set of the house keys, which is a bit worrying.

If anyone can offer any advice, this will be much appreciated.

Thanks

Gary

Really sorry to hear that Cant stand those who cheat! Wouldn't you and your tenants have to sue the agents? Of course, you should not be liable, but the same goes for tenants. Why should they be expected to pay the deposit twice? By the way, have you spoken to your tenants since all this had happened? Its a shame about CAB too. I did some volunteering for them in the past and it's true that they tend to see landlords as the ones who can afford private solicitors and tend not to get involved in advising them.

think you should speak to your tenants first to ensure that from now on rent should go direct into your nominated bank a/c. Deposit could be a problem as you may be liable for it. I know it might seem unfair, but it may be worth considering putting your own money away into a deposit scheme to ensure that tenants do not sue you for it (if this is the case you could be liable for treble amount or smth like this). In the meantime, you could be trying to get your money back through the small claim courts.

Having spoken to the tenants, i'd also change the locks! Who knows, you agents may try and rent your property to another punter

Hi Gary, have you made further enquiries about your agents? They may have put your tenants deposit into the scheme. They should have notified your tenants if they did. If so, it should be protected. Have you seen the actual copy of your tenancy agreement? Usual practice is for the agents to sign as landlords reps. Again if this is the case, the tenancy agreement should stand. Good luck and hope it wont come to worst.

Unfortunately if an agent fails to properly protect a tenant's bond in one of the approved schemes it is the landlord who will be held ultimately responsible. All the more reason for landlords to look for agents who are members of a recognised professional body such as ARLA/NAEA etc.

If the bond has not been protected then the tenant can sue for three times it's value. If i were you i would be seeking legal advice on this matter ASAP.

The thing is, legal costs could add up to a lot more than the actual deposit especially if existing tenants wish to continue staying at the same property.