The Most Common Deposit Dispute Problems and How to Avoid Them!

Introduction

Since the introduction of tenant deposit protection in 2007, many landlords are unaware of deposit disputes. This is not helped by the conflicting adjudication histories produced by deposit protection schemes and accusations of tenant bias by many agents and landlords.

In this article, I discuss the basic principles behind the tenant deposit, how end-of-lease disputes can be avoided, and discuss some common issues for deposit disputes.

Basic principles

The starting point must be clear that at all times the deposit belongs to the tenant and there is no automatic right to the deposit of the tenants. Some agents and landlords mistakenly believe that they are entitled to a tenant’s deposit.

The tenant pays a security deposit to the landlord for nonpayment of rent, breach of lease terms, damage, or failure to leave the property in the same condition (for example, cleanliness) as it was at the beginning of the lease.

If there are issues at the end of a lease and a landlord wants to make a claim against the tenants deposit, regardless of how “obviously responsible” the tenant is, the tenant agreement should be sought. There is some confusion with first-time landlords who (say, for example, know there is rent arrears) can deduct this from a deposit without getting the tenant’s agreement. I’ve personally heard landlords in that situation say “why would I need a settlement when I’m owed rent?”

If the tenant’s consent to any deduction cannot be obtained, then no matter how “obvious” the claim by the agent or landlord may be, no deductions can be made from the deposit.

If the negotiations fail, the parties can agree on a free award through the deposit system with which the deposit is protected. If either party disagrees with the award, then the only other option is the Court.

avoid disputes

If possible, the ideal scenario is to avoid any deposit disputes at the end of the lease. This does not mean that all tenants are perfect; means that if a proposed deduction is reasonable, understandable, and explained to the tenant, it will be an agreed deposit deduction rather than a dispute.

educating tenants

A critical part of avoiding disputes is helping tenants understand from the start by explaining what they are responsible for and what needs to be done at the end of the lease.

While it is not a legal requirement to have a separate inventory and condition schedule at the beginning and end of a lease, the importance of this cannot be stressed enough.

A common problem with new agents and owners is that there is no or poorly written inventory control/condition program, no control report or poor quality.

A freelance inventory clerk can produce detailed reports, often with photographs. The fact that they are independent from the agent and/or lessor gives the renter confidence from the beginning knowing that the inventory manager is independent and not on anyone’s side.

It is crucial to warn tenants at the outset that the property must be returned in the same condition and cleanliness at the end of the tenancy as it was at the beginning of the tenancy, with the exception of reasonable wear and tear. Reference should be made to the lease and inventory and how, at the end of the lease, the registration documents will be used to compare the condition and cleanliness of the property and verify our compiled report.

Tenants should understand how the inventory/condition schedule is the “starting” document and the “ending” document is the “outgoing inventory/condition schedule” and how problems arise from directly comparing the two.

Agents and landlords should explain in as much detail as possible that before moving in, tenants should use their registration paperwork as a checklist before moving out. This helps tenants understand why a deduction may be proposed.

If a property has been professionally cleaned at the beginning of a tenancy and this is confirmed in an inventory check, this should be reported to the tenants and they are expected to return the property cleaned to a professional and non-domestic level. Any reference to a lease term requiring a written receipt for a professional cleaning should also be explained up front.

inspections

Some disputes can be avoided if an agent or landlord conducts regular inspections during the tenancy. If this is done correctly, any issues can be caught as they occur and highlighted to tenants. This helps avoid last minute surprises at the end of a lease.

Pre-Move-In Inspection

A pre-move-in inspection a few weeks before the end of a lease is helpful in spotting issues that may be a problem at the end of a lease. For example, if a landlord sees damage caused by the tenant, then this is an ideal opportunity to document it and then discuss the matter with the tenant.

If there is an agreement at this stage, then the tenant may be more inclined not to contest any proposed deductions.

Pre-Move-in Checklist

Another helpful tool is a letter or checklist to the tenant a week before moving in as a gentle reminder of how the property is to be returned at the end of the lease.

The combination of a clear understanding of responsibilities up front, inspections during the tenancy, pre-move-in inspection, and final checklist/letter should provide the tenant every opportunity to understand any proposed deduction from a deposit. (as long as the costs are reasonable).

Most common problems

It seems that certain issues come up frequently like tenant deposit disputes. These include cleaning, mold, redecoration, damage, and missing items.

Cleaning

One of the biggest areas of tenant deposit disputes is cleaning. Typically, cleanliness disputes center on the level and degree of cleanliness of a property at the beginning of the lease.

An inventory control/conditions schedule should be very clear about cleanliness. The first part of the cleanup to define is the cleanup standard; Has it been cleaned domestically by the owner or if professional cleaners were hired? This creates the standard by which property can be judged at the end of a lease.

If a landlord has had a property professionally cleaned at the beginning of the tenancy, they can insist that the property be professionally cleaned at the end of the tenancy. Landlords/agents must keep bills and receipts as proof of professional cleaning before tenants move in. It is not enough for a tenant to simply clean the property to a domestic level.

The next part of the cleanup that should be clearly highlighted in the registration documentation is the scope of the cleanup.

Let’s say a property has been professionally deep cleaned with no items left intact. A condition inventory/schedule check should state this in very clear terms so that it is clear to the tenant that the property has been professionally cleaned but also deep cleaned and that there are no cleanliness issues at all.

If an item is dirty, for example an oven, then it is not very useful to simply mark this item as “not clean”. Think about it logically, what was that really? What does a comment like “not clean” tell someone about the degree of cleanliness? Any description of cleaning issues must be clear and precise to avoid misunderstandings and disputes later. A description of a dirty oven might be “small crumbs on the bottom, very little grease on the back of the oven, otherwise clean.”

Mold

Another big area of ​​dispute is mold, in particular; in bathrooms of floors or floors where there is no window.

It is crucial that where there is no window in a bathroom, a ventilation fan is installed. Without any ventilation, a landlord would fail on a mold claim.

Mold forms if bathroom ventilation is not used properly and the bathroom is left wet.

Agents/landlords should make sure tenants are made aware from the start that mold is not wear and tear. Tenants should also be informed not to turn off any fans and if there are any windows, open them to ventilate the bathroom. Some tenants turn off the fan, causing mold to grow.

On inspections, the agent/owner should verify that the ventilation fan (if present) is turned on and advise the tenant to ensure that the caulking is not left wet and that the bathroom is properly ventilated.

The same principles apply if a tenant is drying clothes on the property and not properly ventilating.

redecoration

Most ASTs prohibit redecoration of any kind without the express written permission of the owner.

Tenants should be advised that if they wish to redecorate, it is in their interest to obtain the owners’ written permission. In most cases, the owner will agree as long as the colors and work standard are agreed upon.

damage

Property damage can range from minimal to almost anything. The key here is regular inspections and a pre-move-in inspection; in particular, where there is more damage, it may be visible. Make sure the tenant understands their responsibility and the cost of the repair to agree to deductions at the end of a lease.

Lost objects

Tenants sometimes mistakenly take landlords’ belongings, and of course there will be instances of theft. The key is to emphasize to the tenant that the “end point” will be compared to what was on the property at the beginning of the tenancy, with the exception of any items that were reported as removed by agreement during the tenancy.

When a tenant has a copy of the inventory record, there is less chance of the owner’s items being lost, as the tenant can work room-by-room with a copy of the inventory to make sure they don’t take anything that doesn’t belong to them.

conclusion

Be clear with tenants from the start what their responsibilities are; With the help of detailed inventories at check-in and check-out, along with regular inspections and pre-move-in procedures, you should ensure that while there may be agreed deductions from the tenant’s deposit, there will not be a dispute over the deposit. .