#AskTDS: "What happens to deposits if I buy/sell a tenanted property?"
In this week’s #AskTDS, we answer a landlord’s question, “what happens to deposits if I buy/sell a tenanted property?”
There are many reasons why a landlord may decide to sell their property while a tenant is still living in it – but it is important to understand how that affects the tenants’ deposit(s).
If a property is sold with tenants remaining, they are described as ‘tenants in situ’. It’s the responsibility of both the current landlord and the buyer to manage what happens with the deposit to ensure that it remains protected.
As part of the sale process parties should determine how the deposit is protected, Custodial or Insured. This will determine how the deposit is transferred to new owner.
How does this work under the TDSNI Insurance scheme?
The deposit funds will be held by landlord (or acting agent) selling the property, the conveyancing process should deal with the transfer of deposit funds to new landlord. The selling landlord would end the existing process and the responsibility of new landlord will be to protect the deposit in an approved scheme, custodial or insurance protection.
How does this work under the TDS Custodial scheme?
Under the TDS Custodial scheme, the buyer will need to register an account and the seller should instruct the scheme to transfer it into the buyer’s deposit account. The new landlord would create an account with scheme. If registered with TDSNI the new landlord can provide selling landlord with TDSNI membership number and account name. TDSNI has an online facility to allow the transfer of custodial protection to another member. . The Prescribed Information should also be re-issued.
In both the Insured and Custodial situations, it would also be good practice to amend the tenancy agreement with the new owner/landlord’s name as it is a material change.
If there is a change in circumstances like rent or deposit increase, and a property is being sold with a tenant in situ, landlords should notify TDSNI. We have straightforward processes in place for dealing with these changes.
For more landlord tips please view our landlord FAQ page.
Tenancy Deposit Scheme (TDS) is a Government-approved scheme for the protection of tenancy deposits; TDS offers both Insured and Custodial protection and also provides fair adjudication for disputes that arise over the tenancy deposits that we protect.
We provide invaluable training in tenancy deposit protection and disputes for agents and landlords through the TDS Academy as well as joining with MOL to provide the Technical Award in Residential Tenancy Deposits.
TDS Insured Scheme: where a TDS member can hold the tenancy deposits as stakeholder during the term of the tenancy.
TDS Custodial Scheme: where TDS hold the deposit for the duration of the tenancy.
TDS Academy: TDS provides property professionals with invaluable training in tenancy deposit protection and tenancy deposit disputes.
TDS Northern Ireland: TDS is Northern Ireland's leading and only not for profit tenancy deposit protection scheme.
TDS can only comment on the process for our scheme, other deposit protection schemes may have a different process/require different steps. Content is correct at the time of writing.
These views are those of the author alone and do not necessarily reflect the view of TDS, its officers and employees.