Outstanding Deposit

Tenancy Types and Management

1st time landlord (Help!),using Lawpack AST to inc. basic Guarantor dets. (no refs. sought). Dep. &1st month rent paid Feb. 2007 as per signed agreet. Verbal agreet. made bet. landlord &tenant in presence of witnesses, to allow Tenant to use Dep. payment for next 2 months rent as house sale going thro.pending Divorce settlement.and assumed, wrongly, money would be repaid as agreed. Marital home sold AUg. 07. No payment forthcoming. Request dep. from Tenant who says money is in Trust with Solr. Unable to be released. Wrote letters to Tenant inviting dialogue to resolve issue. Refusing all communication. Wrote Guarantor who states unable to pay. Where do we stand as landlords? Am second guessing Tenant is trying to force eviction to be re-housed as all maintenance and Housing Ben now stopped (2 small kids). we will have no dep. to fall back on re. damages already seen at property and want to sell house by Aug 08 to release equity (tied to mortgage penalty until then).