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RECOVERING ARREARS: USING THE RENT DEPOSIT
Before using any rent deposit, a landlord should check the
terms of the Rent Deposit Deed to ensure that it covers the
particular arrears owed by the tenant. A landlord also needs
to check on notice requirements in the Rent Deposit Deed,
e.g. there may be a requirement to give notice to the tenant
before making a withdrawal from the deposit.
The Rent Deposit Deed will usually allow the landlord to
require the tenant to replenish the rent deposit. If the tenant
is having financial problems, it may be unable to do so. Accordingly,
before withdrawing from the rent deposit, a landlord should
consider whether it would prefer to keep the rent deposit
to use to settle other arrears in the future, particularly
where these future claims could be more complicated, e.g.
damages for dilapidations.
Remember: If the landlord serves notice to require
the tenant to replenish the rent deposit but the tenant fails
to do so, this may give the landlord a further right to forfeit
the lease. Check the terms of the Rent Deposit Deed to see
if this is possible.
Advantages:
+ Fairly simple procedure.
+ Gives immediate cashflow.
Disadvantages:
- May put the tenant under less pressure than some other
methods of recovery because it has less direct effect on its
financial position.
- Less monies to cover future liabilities if the tenant fails
to replenish the deposit.
For further information or advice please contact propertylitigation@charlesrussell.co.uk
These notes represent only an outline summary
of relevant principles and detailed advice should always be
sought in particular cases.
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