Mistaken rent refund

Question from andy updated on 23rd March 2012:

A rental agency paid money back to a tenant that was moving out as they believed it was overpaid rent. Letters were sent to confirm this. Two months later it was discovered that the rental agency got it wrong. Can the rental agency claim the money back?

Our expert Juliet Robinson responded:

The answer to this question depends very much on the particular facts of your case but on the surface the answer is yes. If a person receives money paid in mistaken belief that it is theirs then the misunderstanding does not make that person entitled to it. A misunderstanding about the facts does not change the facts. However, there are several things to consider. How much money are we talking about? Is it worth the time and effort pursuing the money? What sort of assurance did the confirmation letters give when the agency returned the “overpaid” money to the tenant? I suggest that the agency contact the former tenant and explain the error and try to negotiate the return of the refund. Failing an agreement, the Tenancy Tribunal process is available. Although (from a practical point of view) the agency had better have a very convincing story to persuade the Tribunal that it deserves a refund from the former tenant, after previously asserting that the tenant had overpaid the rent.

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