A landlord’s or their agent’s losses after a tenancy may surpass the deposit value in rare cases. When a landlord or letting agency seeks to collect more than the deposit value, the landlord and agent may believe that moving to court is essential. However, it’s actually essential to understand that litigation is always a last resort.
Even if the alleged losses certified by an inventory service business exceed the deposit value, it may be wise and cost-effective for a landlord or agent to first use an Alternative Dispute Resolution (“ADR”) service and then recover the balance in court.
By doing so, a landlord and agent have demonstrated that they have made all reasonable measures to avoid going to court and, as a result, have complied with the Overriding Objective of the Civil Procedure Rules. In such cases, an adjudicator’s review of the deposit claim would generally end after the deposit monies are depleted.
Tenant’s deposit, inventory check-out evidence, and landlord’s claim
For example, if the deposit value was £500.00 and there were valid claims for cleaning (£150.00), redecoration (£350.00), and tenancy rent arrears (£300.00) based on the checkout inventory report, an adjudicator cannot award more than the £500.00 deposit value, and the adjudication will end before all claims are resolved.
A landlord may have little choice in such a case but to seek compensation for their additional losses in court. Some schemes will enable landlords or renting agencies to choose the order in which claims should be evaluated; as a result, landlords and agents should be conscious of which claims they want the ADR service to consider first and which claims they want the ADR service to consider last.
A complex damage dispute based on an independent property inventory report, for example, might be resolved through ADR, but an easy rent arrears claim could be resolved in court after the deposit funds are depleted. In any case, a landlord or renting agent must consider the expenses, dangers, and time involved with court procedures and determine whether it is economically or sensible to proceed.
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Clear inventory checkout evidence
Suing a tenant who does not have any money may be futile since, while a landlord or agent may be successful in getting a judgment, the terms of payment may require the tenant to pay back the judgment over a long period of time. In contrast, if a tenant desires to file a counterclaim, the only method to do so is through the courts, as most ADR firms would not accept counterclaims against the landlord or agent. This is because deposit protection ADR businesses only deal with claims against deposits.
For example, once an inventory clerk has produced an inventory check report outlining tenant obligations, a tenant may seek to file a claim against the landlord or the agent for failing to preserve a deposit. Such a claim would not be considered by an ADR firm and would have to be decided by a judge.
In any instance, the parties would be advised to seek legal counsel before proceeding to court.