In some circumstances, the losses claimed by a landlord or their agent at the end of a tenancy may exceed the value of a deposit. Where a landlord or letting agent is seeking to recover more than the value of the deposit, a landlord and agent may consider that going to Court is necessary. Nevertheless, a landlord or agent should be mindful that litigation is a tool of last resort (see my blog on ADR vs. going to Court).
Even where the claimed losses confirmed by an inventory service company, exceed the value of the deposit, therefore, it may be prudent and economical for a landlord or agent to first utilise an Alternative Dispute Resolution (“ADR”) service first and then claim the remainder at Court.
By doing so, a landlord and agent will have shown that they have taken all reasonable steps to avoid Court and have, therefore, compiled with the Overriding Objective of the Civil Procedure Rules. In such circumstances, typically, an adjudicator’s consideration of the deposit claim will cease once the deposit funds are exhausted.
Tenant’s deposit, inventory checkout evidence and landlord’s claim
For example, if the deposit value was £500.00 and there were valid claims for cleaning based to the check-out inventory report of (£150.00), redecoration (£350.00), and tenancy rent arrears (£300.00) an adjudicator cannot award more than the £500.00 deposit value and as such, the adjudication will cease before all the claims are determined.
In such a circumstance, a landlord may have no other option but to seek recovery of their additional losses via Court. Some schemes will allow landlords or letting agents to set the order in which claims should be considered – as such, landlords and agents should be mindful of which claims they want the ADR service to consider first and which claims should be considered last.
By doing so, for example, a complicated damage dispute based on an independent property inventory report may be determined by ADR, whilst an uncomplicated rent arrears claim may be determined at Court once the deposit funds are exhausted. In any event, however, a landlord or letting agent should be mindful of the costs or risks and time associated with Court proceedings and must weigh up whether it is economic or prudent to do so.
Clear inventory check-out evidence showing the differences from the beginning of the rental period to the end of tenancy conditions will have a role in considering the claims.
Suing a tenant that does not have any money maybe pointless as whilst a landlord or agent may succeed in obtaining a Judgment, the terms of payment could be that a tenant may be paying back the Judgment over a long period of time. Conversely, if a tenant wishes to make a counterclaim, sometimes the only way to do this is via Court as most ADR firms will not consider counterclaims against the landlord or agent. This is due to the fact that the deposit protection ADR firms concern themselves with claims against the deposit only.
For example, after an inventory clerk has issued the inventory check report, showing tenant responsibilities, a tenant may wish to make a claim against a Landlord or the agent for failure to protect a deposit. Such a claim would not be considered by an ADR firm and would need to go before a Judge to be determined.
In any case, the parties would be encouraged to take legal advice before taking the risk of going to Court.