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Tenancy Deposit dispute – What can the landlord do?

by • May 17, 2020 • property legal matters, tenancy agreementComments (0)360

This is the landlord guide. Tenancy Deposit Dispute is a major headache. To avoid it, it involves a well structured tenancy agreement, clear rules with clear demarcation of responsibility, good relationship between tenant and landlord and of course decent and reasonable people.  No amount of clauses in the contract will be able to deal with bad characters both from the Tenant side and the landlord, hence we recommend an amicable approach to try to resolve issues.

By Ms Nicolette Tan

tenancy deposit dispute

Image 1: Tenancy deposit dispute Landlord-Tenant Contract,  Shahid Abdullah from Pixabay

At the end of a tenancy, a landlord’s mind is on ensuring the speedy and fuss-free handover of the premises without further ado.  Unfortunately this may not always be the case and a landlord may need to remedy issues with the premises out of the tenant’s deposit.

Ascertaining your contractual rights and obligations to avoid tenancy deposit dispute

Typically, at the end of the tenancy period, a Landlord will have his attention on ensuring that:-

  1. the premises is reinstated to the condition it was in at the beginning of the tenancy period; and
  2. all charges incurred by the tenant during the tenancy in respect of the property (e.g. electricity charges, utility charges, internet charges) are fully settled.
  3. A landlord should take note of the contractual obligations set out in the tenancy agreement.  Typically, the tenant’s obligation to reinstate the premises excepts fair wear and tear.  The tenancy agreement may also apportion the responsibility for repair works between the landlord and tenant (e.g. for the tenant to be responsible for minor repairs, and the landlord to be responsible for repairs above a certain value).
  4. The tenant is typically required to have these obligations fulfilled by the end of the tenancy period.  If the tenant fails to do so, the landlord may have recourse against the tenant by withholding the tenant’s deposit.

Deductions to the deposit in accordance with the tenancy agreement to avoid Tenancy deposit dispute

Where the tenant has failed to observe the contractual obligation(s) set out in the tenancy agreement, the landlord may be entitled to deduct a corresponding amount from the tenant’s deposit to ensure the relevant obligation(s) can be fulfilled (e.g. a deduction to account for the cost of the landlord having to hire electricians to undo unauthorised electrical installations made to the property by the tenant).

In support of any deduction(s) made against the deposit, the landlord should:-

  1. be able to document and produce on request details of the specific reinstatement works required for the premises; and/or
  2. be able to produce the letter(s) of demand for unpaid charges accrued by the tenant, and receipts for such charges paid by the landlord on the tenant’s behalf where applicable.

Where there are tenancy deposit disputes they are: –

  1. Where the reinstatement works or tenant’s unpaid charges exceed the amount held in the deposit, the landlord is entitled to forfeit the whole deposit and take further legal steps to claim the difference from the tenant.
  2. It may also be the case that the tenant disputes the landlord’s claims, such as for the nature and cost of reinstatement works required.  The tenant in this scenario may issue a letter of demand for the return of the deposit.
  3. In certain cases, prior to the end of the tenancy period, a landlord and tenant may disagree as to the party responsible for certain costs in respect of the premises.  In such a situation, a tenant may withhold payment of rent, and a landlord may wish to terminate the tenancy agreement, deduct the amount of rent unpaid from the deposit, and make use of the remainder to reinstate the premises, if that obligation is not fulfilled by the tenant.
  4. In the above situations, the landlord would benefit from engaging legal advisers.  Your legal advisers would be able to preserve your legal rights, while also advising you on your possible dispute resolutions options.  Where necessary, your legal advisers would also be able to advise you on terminating the tenancy agreement before the expiry of the tenancy period.

Landlord guide: Other points of consideration

Legal advisers need not be relied on as a last resort.  To avoid tenancy deposit disputes down the line, a landlord should consider obtaining legal services to review, advise on and where necessary, draft the tenancy agreement, to ensure that the contractual stipulations within adequately and clearly protect his or her interest. 

Landlord guide on tenancy deposit dispute, things to consider:-

  1. where the premises is to be rented out to a foreigner tenant, are there adequate protections within the tenancy agreement to account for any claim(s) the landlord may have to bring against that tenant at the end of the tenancy period;
  2. whether the contractual stipulations within the tenancy agreement adequately protect certain features of the premises the landlord may consider crucial to the premises’ value (e.g. the façade of heritage buildings);
  3. in the context of commercial properties, where the premises is being used by a tenant for certain specific purposes, whether the deposit held is adequate to address any issues which may arise from such use (e.g. deep cleaning services at the end of the tenancy to remove stains and odours caused by a tenant’s food and beverage business).

Issues posed by the Circuit Breaker period and the COVID-19 (Temporary Measures) Act 2020 and related regulations

Landlords may also face further tenancy deposit dispute issues during this period, including:-

  1. tenants’ inability to pay rent in part or full, or complete reinstatement works and handover the premises in the time stipulated in the tenancy agreement; and/or
  2. conducting end-of-tenancy inspections of the property, and viewings with potential tenants.
  3. Amongst other things, landlords may consider negotiating terms in respect of how deposits will be held and other connected contractual terms, so that their interests are protected during this period and beyond. 
  4. Landlords will benefit from having commercially-minded legal strategies and solutions, and advice on the framing of their rights in the relevant agreements, which protect their rights while navigating newly introduced laws and regulations.

Need some advice? Contact our lawyer Ms Nicolette Tan at 63275794 of ASCENTSIA LAW CORPORATION located conveniently at 10 Anson Road #03-22 International Plaza Singapore 079903 (Tg Pagar MRT) or contact us HERE.

 

“Very often when landlord rent out their premises, they simply deduct their financing cost from the monthly rent to arrive at their collectible rental income.

However, there are other unaccounted costs like monthly maintenance cost which you have to be responsible for; and if you are renting out the entire premises, the repair cost; and if your apartment is rather old (there are bound to be things that will breakdown during the lease), and higher property tax of 10% (based on property tax annual value) instead of 4% when you are not staying in it. So do take these costs into consideration when deciding on your monthly rent. ” Says, Edmund Ee – Senior Division Director – ERA

Paul Ho, Founder and CEO of iCompareLoan.com opines, “No matter how well structured a tenancy agreement is, the landlord and the tenant needs to be reasonable people to find common ground resolve any potential tenancy deposit dispute. And in some cases, the tenant may have lost their job and may start to miss monthly payments, and this tends to eat into the tenancy deposit. If the tenant is also quite a messy and destructive person or family, spoiling a lot of things along the way, the landlord may not be able to recover the cost of repairs even after withholding the entire tenancy deposit. The actual yield of an investment property may not be as high as initially imagined, moreover you will still need to make sure to continuously refinance your property to ensure that your returns stays high.”

The contents herein do not constitute legal or other professional advice
or an opinion of any kind and should not be relied upon as such.
Accessing or using this web site does not create a lawyer-client
relationship. Formal legal advice should be sought in particular
matters.

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