Here is a question to the blog clinic from Alice (not her real name) who is a landlord.
I live in Australia and the DPS is refusing to return the deposit to us because the tenant who refused to use the ADR process informed them she was initiating court proceedings. This was 12 months ago, which was 12 months of trying to negotiate with a tenant who would not communicate with either us or our solicitor.
Under their terms & conditions if the tenant had not provided evidence of serving court proceedings within six months and had refused to use the ADR service, we were entitled to request the deposits return. The tenancy ended in 2013 and we have tried to no avail to either deal with the tenant or the DPS.
The tenant left the house needing a good clean and as it was professionally cleaned before she took the tenancy, it was made clear to her on taking the house that this would be required when she left. However, she moved in her boyfriend who was bankrupt and had convictions for fraud which was contrary to what we were told i.e. her ‘husband’ worked in Spain and would only be visiting and would not need a reference check. My agent failed us badly and we later found out they were known to the agent who took the view if they paid the rent who cares.
After the six months we refused to renew the tenancy and on leaving we discovered that she had removed an integral bed head in the master bedroom causing damage to the walls and ceilings which had to be repaired. We did not give her permission to do this. On top of this, she refused to let tradesmen into the property to carry out repairs and accused one of making advances so he wouldn’t go back at all. All in all I lost well over the deposit with one tradesmen disappearing with the 2.5K I sent to have the bargeboards repaired which she wouldn’t let him do.
I could go on all day but subsequent to her leaving, she left no address, refused to contact my solicitor with regards to the repayment of the deposit (in the end I asked solely for the cleaning costs of 450GBP) but above all refused the ADR process.
2 years on I am still trying to get the deposit repaid as I now feel with solicitors costs it should be released 100% to us, though I would still be willing to negotiate. The DPS will not let us have it, it keeps quoting its terms & conditions and every six months goes back to the tenant to see if she has instigated proceedings, she tells them yes and here we go again, having to wait a further six months, when it clearly states that after six months if nothing is heard, then the deposit should be paid out.
How can you win in a situation like this. I understand the tenant has six years in which to claim a deposit – I appear to have no rights at all and I am the one out of pocket.
This is of course why many landlords are unhappy about using the DPS custodial scheme to protect deposits.
Looking at the terms and conditions however, there is a single payment process where, if you are unable to contact the tenants, you make a statutory declaration before a solicitor (or in Australia it would be some other official) after which the DPS are obliged to deal with the matter.
You don’t mention this in your question but I assume that at some stage either your solicitors or the DPS themselves must have told you about this and maybe the statutory declaration has been made.
As is usual with the free blog clinic questions (which are answered in rotation) it is now several months since you asked your question and maybe by now the money has been repaid.
However it would be interesting to hear from the various schemes as to what they would advise landlords to do in this situation. Particularly as the two other deposit schemes are due to launch their own custodial scheme in a few months time.
Response from the DPS
I am grateful to the DPS for providing this response to the question and answer:
As always, it’s difficult to provide a response to a specific case without knowing the full details, and if the landlord in question would like to get in touch directly, we’d be happy to discuss their case.
98% of the time, landlords and tenants agree over how deposits should be repaid. On the rare occasion this doesn’t happen, we offer a free, impartial Alternative Dispute Resolution (ADR) service. By law ADR can only be used when both landlord and tenant sign up – we cannot force anyone – and both parties must agree in advance that they’ll follow whatever decision is made. However, if either party refuses to take part, the dispute must go through the courts. We’re legally obliged to keep the money safely until the court tells us to release it. However, if the person who will not agree to repayment cannot provide evidence that court proceedings have begun within six months and still refuse to take part in ADR, we will pay the deposit to the other party.
As you are aware we also have a ‘single claim’ process, which can be used where a party is uncontactable or is not engaging with the repayment process. However, this can only be used in those specific circumstances and, if both parties have been in contact, and one has refused to use the ADR service, then this process cannot be used again.”