Negotiating a Settlement in a Deposit Protection Dispute

Tuesday, March 15th, 2011
If, at the end of the tenancy, you and your tenant cannot agree over the distribution of the deposit, tempers can flare. Often relations break down entirely between landlord and tenant and both sides are reduced to communicating by increasingly acrimonious emails.
If your relationship with your ex-tenant is strained, you could be missing out on your best opportunity to resolve the matter quickly and painlessly.

You probably only have a short window to agree an amicable solution before you end up having to go through a long and stressful formal dispute resolution process.

It can be difficult, or impossible, to have a rational discussion with the tenant once the situation has become emotive, but help is available. We are able to negotiate with your ex-tenant on your behalf to try to resolve the situation before it is too late. You simply brief us on the substance of the dispute, and how much you are willing to settle for.
We have formal training in legal negotiation and are able to put your case in the best light while maintaining a detached, business relationship with the tenant. Here is what one of our recent clients had to say:

It was a great relief that you offered to negotiate with the tenants on my behalf. This saved me a lot of time and concern and resulted in a quick resolution.
Mr Vyas. Landlord
If you are struggling to deal with your ex-tenant, why not talk to us about negotiating with the tenant on your behalf.

Landlord Assist

Thursday, March 10th, 2011

I am very pleased to say that we is now helping Landlord Assist clients.

Landlord Assist offer a wide range of legal and property services to residential and commercial landlords. We are very pleased to be an official partner.

Thoughts on Universal Estates v Tiensia and Honeysuckle Properties v Fletcher

Wednesday, March 9th, 2011
Universal Estates v Tiensia and Honeysuckle Properties v Fletcher were joined as a single appeal. The judgment handed down by the Court of Appeal on 11th November 2010 is widely considered to have confirmed a loophole in the deposit protection legislation, but the exact nature of the precedent set has been a cause of some confusion amongst landlords.

The cases stem from possession proceedings brought on the basis of rent arrears. In both cases the landlords protected the deposit with My Deposits, but well outside of the 14 day deadline specified in the Housing Act 2004. Only in Honeysuckle did the the tenant actually counterclaim for the fixed penalty for non-protection. The court looked at Draycott v Hannells where late protection had been considered acceptable by the high court because it did not infringe the initial requirements of the DPS. The Court of Appeal approved of the reasoning in Draycott, and held that the 14 day deadline was only effective as an administrative requirement of the particular scheme, and non-compliance was not a basis for legal action.

The situation as it stands is that, where the tenancy has not yet ended, the deadline for protection of a deposit is the date of the court hearing although, according to the Court of Appeal, landlords can expect to found liable for costs in such circumstances. Whether the higher courts would look so favourably on late protection after the end of the tenancy is still a live issue, although I am aware of lower court decisions where protection on the eve of the case has been held to be sufficient.

A point to note for landlords is that failure to adhere to the 14 day deadline for protection may still be grounds to have a claim pursued through the scheme’s own dispute resolution system thrown out. Notably, landlords using the DPS need not worry about this.

How long this particular loophole will remain open is yet to be seen. Whitehall do not like having swathes of legislation interpreted down by the courts and there are clauses in the Localism Bill, currently being debated in Parliament, which may serve to tighten the legislation governing deposit protection. Watch this space.

Mould: Condensation v Damp

Wednesday, March 2nd, 2011
A conversation with a client last week made me realise just how many deposit protection disputes are over the cost of repairing mould. As an adjudicator, I would dread claims relating to mould, not just because the pictures of black and green slime colonising walls would make my skin crawl, but because they always came down to the same argument, and sometimes it was very difficult to know who was right.

The landlord’s case was always that the tenant did the laundry, dried their washing, bathed and cooked without properly ventilating the property. This, they argue, caused excessive condensation to build up on the windows and in the corners, and it is in these moist areas that the mould began to grow.
The tenant’s case, without exception, was that the cause was damp. They would usually point to a problem with the building, such as gutters blocked or broken, render cracked or roof in need of repair. This, they argued, was the cause of the moisture, and the mould.
Disputes relating to mould are notoriously difficult to prove and tend to be over quite significant sums of money. When it really takes hold, there is a lot of work to be done, drying out the property and redecorating the damaged areas, and the bills can soon be up to and over the value of the deposit. All the more reason to make sure your claim has the best possible chance of success.
So what can you do to maximise your chances of success. You need an inventory for starters. If you aren’t getting a professional inventory for every tenancy, you are asking for trouble. 
If you suspect that there is a condensation problem building up, you need to conduct an interim inspection. You are entitled to do this. Best to ask your inventory company to do it for you. Give the tenant plenty of notice in writing and give the inventory agent a pass key. They will produce a report, hopefully with corresponding evidence showing the condition of the property. If there are early signs of a problem, write to the tenant explaining what you have seen, what the likely outcome might be and what you think they should do about it. Specify a date for a follow up inspection.
At the end of the tenancy, you should be offering your tenant some kind of check-out meeting as a minimum, where you go through the inventory and discuss any damage. Your inventory agent will be happy to do this for you. If there is mould at the check-out meeting, note it on the report and get some images or video of it. Make sure you get evidence that shows the cause was condensation, rather than damp. Show the mould forming above the bath, or the river marks around the windows from the water drops running down the wall.
If the tenant really wants to make it difficult, commission a report from an expert, but beware; I can recall had a case where each side had an expert’s report backing them up. Now that one really gave me a headache…

Some Thoughts On Inventories

Wednesday, February 23rd, 2011
A recent discussion on a group has sparked this weeks post. There has been a lively debate on the merits of independent inventory agents versus the perceived cost saving of landlords completing inventories themselves.
As a deposit protection adjudicator, it is reassuring to receive independently created inventories as you can be more confident that they are objective and, because the inventory agent wants

to get repeat business, they tend to be more thorough. In my opinion, an independently produced inventory that gives a proper detailed record of the condition of the property at a specific time is invaluable when it comes to resolving damage disputes.

That is not to say that all professional inventories are of good quality. Some suffer from a lack of detail or worse,  can be shown to be inaccurate. Some inventory agents will keep their prices artificially low by cutting and pasting from a previous inventory of the same property. This is not good practice and often leads to serious mistakes in the inventory. Cutting corners in this way is a false economy as when you need the inventory, it will not be reliable evidence.

If, on the other hand, a landlord submits an inventory that they have created themselves, of course an adjudicator will take account of it and give it appropriate evidential weight, but if there is a suggestion of bias or subjectivity, it is difficult for the landlord to overcome without a significant amount of evidence. 

Some landlords are very thorough, provide evidence to support their inventories and get the tenant to check, amend and sign the inventory, and it is rare, but not unheard of, for these landlords to be accused of bias. They tend to create their own inventories because they are not satisfied with the service they have received on previous inventories and want to ensure they get it right.
Other landlords provide very unprofessional documents that often suffer from brevity or a lack of appropriate detail, and which linger on subjective matters. These inventories are only useful up to a point, and there is a very real possibility that they will let the landlord down in court or at deposit protection ADR. I suspect these landlords conduct their own inventories to save money which, when you consider the average deposit dispute is over around £750, is very likely not cost effective.

Small Claims Court As An Alternative To Deposit Protection ADR

Friday, February 11th, 2011
Several people have asked my opinion recently on using the small claims court as an alternative to pursuing a dispute through the deposit protection schemes. In the most part, this comes in response to adverse decisions from the schemes which appeared unjustified. One letting agent in particular felt that judgments from small claims action were more predictable than adjudication decisions, but when I asked some more about how they operate it turned out that the agent herself was traipsing off to court every time and spending at least half a day waiting for the case to be heard, and well over two hours in the hearing every time.
As we all know, deposit protection disputes are resolved on the basis of paper submissions, and don’t involve a hearing. If you opt for the small claims court, you are most likely to have the opportunity of having your claim heard in open court, where the judge can question the parties on their evidence. If your written submissions aren’t clear, you will have a better chance of getting your point across in court than in a deposit dispute, where the adjudicator only has your written statement to go on. If, on the other hand, your written claim is properly made out, you will get the result you deserve from a deposit protection adjudicator.
Courts are also expensive, whereas deposit disputes are free of charge. Your court fee may only be £100 or so for a low value case, but then there is your time in attending. That’s half a day, at least, where you are not making any money because you are sitting, chewing your nails in an airless court waiting area. Paying someone else to attend the hearing on your behalf is not always advisable, because you will almost certainly get the pupil barrister or the most junior person in the office, not that you would know it from their fees. If you choose to attend yourself to save money, be prepared to be confronted by the very well informed lawyer that your tenant has engaged on a no-win no-fee basis. 
To avoid the expense of court, you may opt not to attend the hearing, and not to send anyone else in your place. This is perfectly proper, but it effectively means you are voluntarily accepting all the disadvantages of a deposit dispute by restricting your claim to written evidence, while the tenant enjoys all the advantages of a hearing in person. This imbalance will not help your chances of winning.
You should also consider the potential for for having to pay the other side’s costs, even in small claims. Even if you lose a deposit dispute, the other side cannot claim costs against you. If you lose in court, you usually find yourself with a bill for at least some of the other side’s legal fees. Talk about kicking a man when he’s down.
Then of course there’s the lengthy delays waiting for a court date, compared to deposit disputes, which usually are resolved within a matter of weeks; and the difficulty in enforcing county court judgments against slippery tenants. We’ve all heard of cases where landlords have won their court case, only to find the tenant persuades the judge to let them pay back the debt at just a few pounds a month, meaning it might be years until they’ve paid what you are owed. Even worse, sometimes they just disappear, leaving you with the stark choice of writing off the debt, or paying out more money to a debt collection firm.
All things considered, in the majority of cases, I would rather prep my evidence properly and take my chances with an adjudicator, than get involved in all that stress just over a deposit.
By way of a footnote, however, there are also cases that simply cannot be adequately resolved by the schemes, which might include claims for damages in excess of the deposit. The deposit protection schemes can only award you the deposit, whereas a court is not limited to a fixed amount. 

Prevention, Rather Than Cure

Thursday, January 27th, 2011
It’s the nature of the business that I’m in that I deal with a lot of unhappy landlords. Landlords who have had their trust abused, been ripped off and left to clear up someone else’s mess. Most of the people reading this blog will have been in that situation at some time or another.
Most landlords come to me for help sorting the situation out, but we often get round to discussing how to prevent it happening next time. Naturally we talk about inventories, interim inspections and properly drafted tenancy agreements, which I will no doubt discuss the finer points of in the future, but I also raise the issue of tenant referencing. 
Landlords who use agents to find their tenants will tend to rely on their agent to perform background checks on the prospective tenant, but few enquire as to the nature of the checks. A surprising number of independent landlords perform no background check at all on potential tenants, not even a credit check. When I ask them why not, they seem to think it is something expensive that only big companies can do. For a start, credit checks can be performed for very little, but did you know that the most effective form of tenant check is free?

I met the guys from Landlord Referencing Service (LRS) last year at a landlord event in Cardiff and I was amazed at the story behind the website. It was set up by Paul Routledge, a landlord who was stabbed and left for dead by one of his own tenants, which is one hell of a way to spot a gap in the market. Seeing a need to check his own tenants more thoroughly, Paul conceived a way for landlords to exchange information over the internet. 
LRS is a very modern service, as it relies entirely on user input and is completely free of charge to use. All it requires is for landlords in your area to log on and post warnings about difficult tenants. The information can then be accessed by other landlords to help prevent them having the same problems you’ve had. Once registered, the system will even alert you when particularly difficult tenants are house hunting in your area.
I fully support the scheme, and I’m sure you will see the benefits once you’ve looked at the site. After all, you don’t want what happened to Paul to happen to you.
Did I mention it’s free to use?