Practice Note
Tenant deposits paid by
third parties
The first of a series of Practice Notes that deal with the nitty
gritty of residential letting.
It is common for a tenant’s deposit to be paid by a third party such as a
parent, guarantor or friend.
If this financial help is given by means of a payment that goes directly
to the tenant’s bank account, then the agent/landlord has no concerns.
However, if the payment by a third party is made directly to the agent/
landlord, then all the rules relating to deposits, including reservation or
holding deposits, apply.
The third party, on their own account, is entitled to the full benefits
of the deposit regulations and must receive a copy of the Prescribed
Information within 14 days of the registration of the deposit and the
Notice must be served on both tenant and the third party.
Failure to do so may incur the Sanctions under Section 214 and 215 of
the Act, which include:
Sec tion 21 Notices are of no effect. Therefore possession of the
property cannot be obtained until the tenant is willing to leave.
A C ounty Court, once notified, must award a fine equal to the
deposit x 3 to the tenant.
If an agent neglects to serve the Notice on the third party and the
landlord suffers loss as a result, the landlord has cause for action against
the agent.
Good Practice
A lert front-line staff, and property managers who deal with
Y
our
and
extensions and change of tenants in joint and several tenancies,
compan
e
xperience
to the need to check the identity of anyone who pays a cheque or
y
cash on behalf of a tenant.
+
R ecord the payee’s name, address and relationship. If the
question is queried, state: “This is to ensure that your part of the
Isn’t this
= our
T
RANQUILITYknowledge
deposit is protected”.
D evise a simple form for this purpose that must be attached to
what we are
the tenancy papers. Note computer records accordingly.
all looking for?
Hold a small stock of the inf ormation provided by the approved
bodies that may hold or register deposits.
P ost a copy of the Notice to the third party, by registered post, as
part of the tenancy completion and signature process.
A ttach the Post Office receipt to the office copy of the tenancy
agreement.
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