What happens when there is a dispute over the return of the
deposit?
Each scheme offers an ADR service to deal with disputes related
to the tenancy deposit. Both the landlord and tenant must let
the scheme know whether or not they agree to using the ADR service.
Where both parties consent to use the ADR service, the decision
made by the adjudicator will be binding.
Disputes relating to the deposit may go to the courts if either the
landlord or tenant does not agree to use the ADR service, or in the
case where there is a dispute in respect of a deposit held under an
insurance based scheme and the landlord is uncontactable. In
the Schemes Members section, under 'Insurance-based
Scheme', see questions:
At the end of a tenancy, what happens if the tenant cannot contact
his landlord? What if the landlord doesn't receive the documents
from the scheme?
Will there be a charge for the use of
ADR?
No. The ADR service is free of charge for both landlords and
tenants.
In the event of a dispute in the insurance-based scheme, what
happens to the deposit?
If there is a dispute and the deposit is safeguarded by an
insurance-based scheme, the landlord must hand over the disputed
amount to the scheme for safekeeping until the dispute is resolved.
Any undisputed deposit amounts that the tenant is entitled to
should be returned to him.
The scheme administrator will divide the disputed amount in
accordance with the ADR service's, or court's, decision within 10
days of being notified of such decision or agreement.
For example, say that a tenant has paid £1000 as a deposit. At the
end of the tenancy the landlord states that he wishes to retain
£200 to pay for replacing damaged furniture, but the tenant
disagrees claiming the property was already in that condition when
he or she moved in. If the landlord considers he is entitled to
retain £200, he must return the remainder of the deposit (£800) to
the tenant. The disputed £200 will then be transferred to the
scheme administrator, who will retain it until the dispute is
settled.
What happens if the landlord fails to transfer the disputed
amount into the insurance-based scheme?
Irrespective of whether the landlord transfers the disputed
amounts into the scheme, the scheme will pay the amount due to the
tenant as a result of the ADR or court decision within 10 days of
being notified of such decision. The scheme is then entitled to
recover the money from the landlord. Both insurance schemes have in
place insurance policies to cover the deposits protected, in the
event that a landlord does not pay in the disputed amount to the
scheme.
In the event of a dispute in the custodial scheme, what happens
to the deposit?
If there is a dispute, the scheme will repay any undisputed
amount in accordance with the agreement notified to the scheme by
the parties. The scheme will continue to hold the disputed amount
until the ADR or courts decide how the disputed amount should be
apportioned between the landlord and tenant.
The scheme administrator will then apportion the disputed amount in
accordance with the decision of the ADR service, or
court.