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Deposit not protected question

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We are in a very tricky situation ATM, our landlady of five years decided she wanted to sell her property. to cut a long story short, she's didn't issue us.a section 21 and then we also discovered she hadn't put our deposit in one of those deposit scheme things meaning she couldn't legally evict us with the section 21. The council phoned her to inform her of this and she went mental and told them she would get us out of her house 'outside of the law'. Since this happened a few weeks ago we have found a place to move to and have paid deposits etc on it. I've tried to contact my landlady a few time to let her know we're looking, found somewhere, to expect a phone all for references, and more recently to say we are now moving out this weekend.

Sh finally got back to me this pm after nothing for the whole month saying the returning the deposit wasn't a problem but we couldn't have it for 28 days as its lodged at the DPS. She's only just put it in there after all this time and just before we're about to move out.

Can she actually do this and is it valid? Any help would be greatly appreciated.

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