Landlords and receivership

conorh91

what is the general situation with deposits when a residential landlord enters receivership?

is the deposit re-payable when the receivership process begins? Common sense would dictate that when the landlord loses control of the property, the deposit should be returned to the tenant and a new tenancy should begin with the receiver.

Anyone able to provide clarity here?

doublej

I find that the whole area of deposits and businesses accepting them to be unsatisfactory .
The deposit, unless placed in a seperate escrow account and ring fenced for the specific purpose of holding deposits.
It otherwise is viewed as part of assets and a receiver/ examiner/ liquidator considers it as part of the pot.
Legislation is needed to provide for securing deposits in a way that they can be accessed in full if there are trading problems

conorh91

sorry my language was unclear. I'm talking about fixed charge receivership, not receivership in the traditional business sense.

If a landlord has lost control and a receiver is appointed, what is the status of the original tenancy?

I am aware that the tenant retains right of residence, but is not the original tenancy expired, and the deposit due to be refunded to the tenant, even when the tenant remains in situ?

Marcusm

Do a search on here and you will find plenty of previous threads; the tenant will not necessarily retain residence rights and the receiver may disown liability for the deposit as well as asking the tenant to leave. It's not an outcome with which I agree but having reviewed the previous posts, I can understand it. There is a document about tenancies and receiverships issued by the Irish Bankers Federation , which many will argue is biased, which sets out the basis. The most sensible thing is to get in touch with the receiver and establish what they intend. In my own case, the receiver took over 200 apartments, gave undertakings to honour the deposit and the tenancies. This is the exception rather than the norm. The receiver's job is to secure the cash flows from the property for the benefit of the lender but as agent of the landlord. Without the agreement of both he cannot agree to honour the deposit. If the landlord is uncooperative, this may not be forthcoming.

conorh91

Thanks Marcusm

I have read a range of documents including the IBF document on receiverships, as well as online contributions.

I am clear on what you have said above, but unfortunately I still cannot find an answer to my central questions… where does responsibility lie for repayment of a deposit? where both the former landlord and the receiver deny responsibility. If responsibility lies with the former landlord, is that deposit repayable at the commencement of the receivership?

I have managed to glean from a boards.ie search that the law is perceived to be ambiguous, so i'm just wondering if anyone has any special insight.

Marcusm

I don't think that there's any ambiguity in that the landlord remains liable in respect of the deposit. However, given that the receiver will have been appointed as a result of the landlord failing to meet his obligations to the lender, I would not be enormously confident of recovering it later. Given that the tenancy is continuing (assuming the receiver has not issued you with notice to quit), it's hard to see how you could force the landlord to give it back to you at this stage.

Personally I would approach the receiver for a confirmation that they regard themselves as responsible for the return of the deposit. If they do not then I would take reasonable action to protect myself financially taking all matters into account (including the ease of obtaining alternative accommodation, any increased costs, the impact of not obtaining a reference if your action was not regarded as reasonable by the receiver etc).

conorh91

Marcusm wrote: »

I don't think that there's any ambiguity in that the landlord remains liable in respect of the deposit.

As the agent of the mortgagor, the receiver is obliged to make certain payments as set out in s.109 of the Land and Conveyancing Law Reform Act 2009, and I think there is some ambiguity re whether the security deposit is one of those payments, especially if the tenancy/lease has survived the appointment of the receiver.

Marcusm wrote: »

Given that the tenancy is continuing (assuming the receiver has not issued you with notice to quit), it's hard to see how you could force the landlord to give it back to you at this stage.

The reason I think there's ambiguity is because it is not clear whether a tenant's rights, following the appointment of a receiver, flow from the lease or from the RTAs. There are contradictory viewpoints here, each plausible in their own right.

But where a landlord has effectively walked away from his obligations, I find it hard to avoid the conclusion that he is in possession of money that is not his property, and should now be lodged with the receiver or the tenant. But unfortunately this is not supported by anything i have seen, hence the problem.

Marcusm

conorh91 wrote: »

As the agent of the mortgagor, the receiver is obliged to make certain payments as set out in s.109 of the Land and Conveyancing Law Reform Act 2009, and I think there is some ambiguity re whether the security deposit is one of those payments, especially if the tenancy/lease has survived the appointment of the receiver.

Good luck with that; I can't see that the deposit could be construed as an "other outgoing" in respect of the mortgaged property. None of the other categories apply on their face.

conorh91 wrote: »

The reason I think there's ambiguity is because it is not clear whether a tenant's rights, following the appointment of a receiver, flow from the lease or from the RTAs. There are contradictory viewpoints here, each plausible in their own right.

But where a landlord has effectively walked away from his obligations, I find it hard to avoid the conclusion that he is in possession of money that is not his property, and should now be lodged with the receiver or the tenant. But unfortunately this is not supported by anything i have seen, hence the problem.

There was an interesting analysis some time ago to the effect that unless the mortgagee (the bank) has assented to the lease, it does not exist as a matter of land law but is more of a personal contract against the landlord (as opposed to the creation of an interest in the land title). Thereafter, if the receiver accepts rent then he is likely subject to the RTA on the basis that the landlord is a person entitled to the rent. None of that covers the deposit. I fully agree with you that the landlord needs to be held to account.

Lantus

receivers operate on vagueness. there is no clear law as it was never envisaged they would be operating in such large numbers as is the current situation.

As the bank is the 'real' owner they can basically do as they please within some reason and give instructions to the receiver as required. either they will keep you on as a tenant for a period or turf you out straight away. Sometimes the owner takes control back, more than often they allow the tenant to leave and sell the property.