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Returning tenancy deposit by cheque

Yeomans v Newell, Canterbury court 25 May 2016

This case concerned whether a tenancy deposit was considered as having been returned to the tenant by the landlord when the tenant received a cheque, or whether the tenant would be considered as having received the cheque upon cashing the cheque.

The reason the landlord was seeking to the return the tenancy deposit was to enable a the serving of a section 21 notice, as the tenancy deposit had not been protected in time.

The Facts

The landlord granted the tenant an assured shorthold tenancy which commenced  sometimes in 2011. The tenant was supposed to pay the tenancy deposit in instalments, but only paid £300 (less than what the landlord required) and the landlord protected the £300 deposit on 22 December 2015.

The tenancy deposit was protected outside of the required time limit which meant the landlord could not serve a section 21 notice on the tenant without returning the tenancy deposit to the tenant first.

On the 22 December 2015, the deposit was authorised by the landlord to be released in full to the tenant. Then, on 23 December 2015, a section 21 notice was served by the landlord requiring possession of the property.

The tenant actually received payment of the deposit via the DPS on 19 February 2016. Therefore, at the time of service of the section 21, the deposit had not actually been received by the tenant but they could have received the money at anytime from the 22 December onwards.

The court held that the tenancy deposit was deemed to have been repaid on 22 December 2015 as the tenancy deposit was made available to the tenant from 22 December 2015. Accordingly, the court made a possession order.

In the case of Lingfield Point No. 2 v Hodgson High Court (Queen’s Bench Division) Sheffield District Registry 30 July 2015 the court held a cheque was an appropriate means of returning a tenancy deposit, in this case there was no objective by the tenant to receiving their tenancy deposit by cheque.

In the case of Coltrane v Day [2003] EWCA Civ 342 a tenant gave the landlord a cheque on the morning of a possession claim hearing which was brought on grounds of rent arrears. In order to be ordered possession, the landlord had to show the tenant was two months in arrears “on the day of the hearing”. The question for the court was whether cheque was deemed as paid when the landlord received it or whether the landlord would have to present the cheque at the bank before the monies was deemed paid.

It was held that payment of a cheque was deemed to be paid on the day of receipt as the monies were made available to the landlord.

What the courts have held in the above cases may seem perhaps, prima facie, like common sense, they have indeed been of assistance in many other cases where there has been a dispute as to the return of a tenancy deposit paid by cheque.

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