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ALTERNATIVE DISPUTE RESOLUTION

ADR for landlords

Alternative dispute resolution (ADR) for landlords includes dispute resolution processes and techniques that fall outside of the government judicial process. Despite historic resistance to Alternative dispute resolution (ADR) by both landlords and tenants and their advocates. ADR has gained widespread acceptance among both the general public and the legal profession in recent years, in fact, some courts now require some parties to resort to (ADR) of some type, usually mediation, before permitting the parties' cases to be tried.

This rising popularity of Alternative Dispute Resolution (ADR) can be explained by the increasing caseload of traditional courts.  It also imposes fewer costs than litigation, and provides a preference for confidentiality.

Alternative Dispute Resolution (ADR) is generally classified into at least three subtypes: negotiation, mediation, and arbitration.

Read more about Arbitration

  • In negotiation, participation is voluntary and there is no third party who facilitates the resolution process or imposes a resolution.
  • In mediation, there is a third party, a mediator, a neutral and impartial facilitator with no decision making power who assists parties in negotiating a mutually acceptable settlement. In the UK Alternative dispute resolution (ADR) is synonymous with what is generally referred to as mediation.
  • Arbitration is not used as frequently as 'Mediation' but should still be considered by parties even where the differences prove to be irreconcilable.

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The decision of the Arbitrator will be binding and enforceable. It also provides the parties with confidentiality in respect of the evidence that is given and the formal rules of court procedure need not apply.
The Tenancy Deposit Scheme (TDS) introduced by the Housing Act 2004 has introduced Alternative Dispute Resolution (ADR) in cases where a dispute a rises between the landlord and tenant over the amount of deposit that should be returned at the end of the tenancy.

There are two types of scheme available to residential private landlords:

  • a custodial scheme.
  • an insurance backed scheme.

Custodial deposits alternative dispute resolution (ADR)

If there is a dispute over a deposit held using a custodial scheme, such as the Deposit Protection Service (DPS)  both landlords and tenants can take advantage of the Alternative Dispute Resolution (ADR) service attached to the scheme. This is provided by the Chartered Institute of Arbitrators. However, both landlord and tenant must agree to use the service, and be bound by its decision with no recourse to the courts. The use of the Alternative dispute resolution (ADR) service is not compulsory, and if either the landlord or tenant do not agree to use the service, a dispute can progress to court. 

In the event of a dispute between landlord and tenant, what happens to the deposit?

If there is a dispute between the landlord and tenant, the scheme will continue to hold the disputed amount until the Alternative Dspute Resolution (ADR) or court decides what is fair. The scheme administrator will then divide and return the disputed amount based on the outcome of any decision.

Will there be a charge on landlords for the use of Alternative dispute resolution (ADR)?

No, the Alternative Dispute Resolution (ADR) service will be free of charge for landlords and tenants.

What happens if a landlord or tenant cannot be contacted, or is unco-operative?

If either the landlord or tenant cannot contact the other, they can submit a 'single repayment'. However, in the case of the tenant being uncontactable, the landlord must include evidence why the repayment request is not a joint one.
If either landlord or tenant refuses to cooperate, either in agreeing the release of the deposit or agreeing to resolve any dispute, a single repayment can also be made.

Eligibility for Landlords to use the Alternative Dispute Resolution (ADR) Service


a. The ADR procedure can only be used if the Landlord & Tenant have completed repayment of the Deposit and requesting that the Dispute be referred to Adjudication and confirming that the Landlord and Tenant will be bound by the Decision of the Adjudicator.

b. If a landlord has no current address for the Tenant or the Tenant fails to respond to the Landlord’s written notice requiring that the Landlord be paid some or all of the Deposit within 14 days of the end of the Tenancy, the Landlord should follow the Single Claim Process    (as detailed in the Deposit Protection Service (DPS) Terms & Conditions).

c. If a Tenant has no current address for the Landlord or the Landlord fails to respond to the Tenant’s written notice asking whether the Landlord accepts that the Tenant should be paid some or all of the Deposit within 14 days of the end of the Tenancy, the Tenant should follow the Single Claim Process (as detailed in the Deposit Protection Service (DPS) Terms & Conditions).

d. Disputes will only be referred to Adjudication if both the Landlord & Tenant comply with these Terms & Conditions.

e. Putting a Dispute through the Alternative dispute resolution (ADR) Procedure does not remove the duty of the landlord to pay the Tenant any other amounts which are due.

f. Use of the Alternative dispute resolution (ADR) Procedure is free of charge (other than the Parties own costs) to the Landlord and Tenant.

g. The Landlord and Tenant must bear their own costs of participating in the Alternative dispute resolution (ADR) Procedure.  The Adjudicator cannot make any award on costs.

h. The Landlord and Tenant are free to settle the Dispute between them on an agreed basis at any time and at any stage of the Alternative dispute resolution (ADR) Procedure but the Landlord and Tenant must both then notify the Deposit Protection Service (DPS) of their agreement to do so (by providing an instruction signed by both Parties), so that the Deposit Protection Service can return the Deposit in accordance with that agreement.

i. The Dispute between the Landlord and Tennant cannot involve a claim for an amount of more than the value of the Deposit.

j. If either the Landlord or Tenant fails to comply with any of the steps detailed in these Terms and Conditions the Dispute will be rejected and the Deposit will be dealt with in accordance with these Terms and Conditions.

k. The Deposit Protection Scheme may determine in its absolute discretion whether the Landlord or Tenant has compiled with these Terms and Conditions and is eligible to participate in, or continue to participate in, the Alternative dispute resolution (ADR) Procedure.

l. The Dispute between landlord and tenant must not be the subject of an existing or previous court action.

m. Disputes between landlord and tenant will not be admitted to the Alternative dispute resolution (ADR) Procedure where, in the reasonable opinion or the Deposit Protection Service (DPS) :

 i. They relate to matters other than the return of the Deposit;
 ii. Where either the Landlord or Tenant has indicated their intention to issue legal proceedings; and/or
 iii. The issues involved between landlord and tenant have already been determined by a Court.

n. The Adjudicator may also reject Disputes which, in their reasonable opinion:
 i. Are being pursued in an unreasonable manner;
 ii. Are frivolous;
 iii. Are vexatious; and/or
 iv. Seek to raise matters which have already been decided upon or which were previously decided by a similar dispute process.

Initiating the Alternative dispute resolution (ADR) Procedure – The Joint Repayment Form

a. Where a Dispute arises between the Landlord and Tenant which cannot be resolved by negotiation between them or by the Deposit Protection Service (DPS) , if the Landlord and Tenant wish to use the Alternative dispute resolution (ADR) Procedure they must complete the Joint Repayment Form and submit it to the DPS within 28 calendar days of the end of the Tenancy.

b. If the Joint Repayment Form is not received by the Deposit Protection Service (DPS) within 28 days of the end of the Tenancy of the Joint Repayment Form has not been properly completed (including being signed and dated by both landlord and tenant) and/or strikes out any of the mandatory declarations (such as the Landlord’s or Tenant’s agreement to be bound by the decision of the Adjudicator) then the referral to Adjudication will be invalid and the Landlord and Tenant will be directed by the Deposit Protection Service (DPS) to pursue the Dispute via the Courts.  The Deposit Protection Service (DPS) shall continue to hold the Deposit until instructed to do otherwise by a Court Order or instruction signed by both Landlord and Tenant.

Notification of a Dispute to the Deposit Protection Service (DPS)

a. Upon receipt of a duly completed Joint Repayment Form notifying the Deposit Protection Service (DPS) of a Dispute, the Deposit Protection Service (DPS) will issue a Landlord’s Evidence Form to the Landlord.  The Landlord’s Evidence Form must be fully and properly completed and returned to the Deposit Protection Service (DPS) by the landlord within 14 calendar days of it being issued.

b. The Landlord’s Evidence Form (plus any supporting documents) must fulfil the following conditions:
i. Set out details of the precise issues which are in Dispute and the reasons for the amount of any Deposit claimed by the Landlord:
ii. A landlord must attach the signed check-in inventory and schedule of condition;
iii. A landlord must attach vacating instructions;
iv. A landlord must attach the signed check-out inventory and schedule of condition;
v. A landlord must attach a signed and legally compliant written tenancy agreement
vi. If a letting agent is acting, a landlord must attach a copy of their terms of business/management;
vii. A landlord must attach a schedule of the cost of any works sought from the Deposit together with estimates, invoices and receipts (produced by an independent or third party) and photographs if available;
viii. A landlord must attach a statement of the Landlords’ rent account, if relevant;
ix. Where housing benefit has been paid, a landlord must attach a letter from the Housing Benefit Department stating when it will stop, or that it has stopped;
x. A landlord must attach any other relevant information including photographs, DVDs, correspondence or receipts.  Any photographs or digital evidence must be signed or a statement should be attached signed by the Party providing them and showing the date on which they were taken; and
xi. A landlord must confirm that they have contacted the Tenant and provide a copy of any correspondence between the landlord and tenant or details of their discussions.

c. If the Landlord is unable to provide any of the information detailed in Rule 26b above, the landlord must explain to the Deposit Protection Service (DPS) why they are unable to do so and the Deposit Protection Service (DPS) will then exercise its discretion as to whether to allow the Dispute to proceed to Adjudication notwithstanding such failure by the landlord.

d. Following receipt of the Landlord’s Evidence Form, the Deposit Protection Service (DPS) may request additional information or clarification.

e. If the Landlord fails to complete and return the Landlord’s Evidence Form to the Deposit Protection Service (DPS) within 14 calendar days of it being issued, the DPS will pay the Deposit out in accordance with the Tenant’s instructions contained in the Joint Repayment From. 

Notification of a Dispute to the Tenant

a. The Deposit Protection Service (DPS) will provide the Tenant with a summary of Landlord’s submitted evidence and a blank Tenant’s Response Form.  The Tenant’s Response Form must be fully and properly completed and returned to the Deposit Protection Service (DPS) with 14 calendar days of it being issued.

b. The Tenant’s Response Form (plus any supporting documents) must fulfil the following conditions:
i. Set out the reasons why the Tenant denies that the Landlord is entitled to some or all the Deposit; and
ii. Tenants must attach any other relevant information including photographs, DVD’s, correspondence or receipts.  Any digital evidence must be signed or a statement should be attached signed by the party providing them and showing the date on which they were taken.

c. If there is a Lead Tenant they must complete the Tenant’s Response Form on behalf of all Tenants.

d. If the Tenant fails to complete and return the Tenant’s Response Form to the DPS within 14 calendar days of it being issued, the Deposit Protection Service (DPS) will pay the deposit out in accordance with the Landlord’s instructions contained on the Joint Repayment Form.

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The Landlord’s Response

a. The Deposit Protection Service (DPS) will provide the Landlord with a summary of the Tenant’s Response Form.  The Landlord will have 7 calendar days from the issue of the summary of the Tenant’s response to either accept or disagree with the contents of the Tenant’s response and to submit any additional evidence which they wish to be taken into account.  If no response is received from the Landlord within 7 calendar days, the Dispute will be referred to the Adjudicator.

The Adjudication

a. Upon completion of the steps detailed above, the Deposit Protection Service (DPS) will forward to the Adjudicator copies of the:
i. The Landlord’s Evidence Form;
ii. The Tenant’s Response Form;
iii. Any additional evidence submitted by the Landlord;

b. The adjudicator will be fair and unbiased and will make a Decision based on the evidence contained in the Dispute Papers.

c. The Adjudicator may:
i. Contact the landlord and tenants by telephone, fax, letter or e-mail and request any additional information or documentation they consider is necessary in order to settle the Dispute in a fair and reasonable way and in line with the law.  Any such additional information must be provided by the landlord and tenants within the time limits set by the Adjudicator.  If either the Landlord or Tenant does not provide the additional information or documents with the time set by the Adjudicator, the Adjudicator will continue the Adjudication as they consider appropriate, including if they consider it appropriate providing a Decision based only on the information and documents already provided;
ii. Make any necessary enquiries – provided the Adjudicator tells the landlord and tenant about those enquiries and allows them to comment on the findings;
iii. Receive and take account of any spoken or written evidence the Adjudicator thinks is relevant;
iv. Carry on with the Adjudication even if either Party does not act in accordance with these Terms and Conditions or any instruction, or if either Party does not take part in any conference call arranged by the Adjudicator;
v. End the Adjudication if it appears that the Dispute between the landlord and tenant cannot be settled under it, or if the Landlord & Tenant settle their dispute before a decision is made.

d. The Adjudicator will send copies of any additional information or documents received from one Party to the other Party.

e. The Adjudicator will make a Decision within 28 calendar days of receipt of the Dispute Papers.

f. The landlord and tenant will be notified in writing of the Decision by the Adjudicator within 2 Business Days of the Decision.  The Decision will be binding on the Parties.  The Deposit Protection Service (DPS) will make payment in accordance with the Adjudicator’s Decision to include Interest by cheque or electronic transfer in accordance with the details recorded for the relevant Party in its records.

g. The Alternative dispute resolution Alternative Dispute Resolution (ADR) Decision is binding and cannot be appealed via the Alternative dispute resolution (ADR) Procedure.

h. Any payment to either the landlord or tenant must be made by the Deposit Protection Service (DPS) within 10 calendar days of the date of the decision.

Tenancy Deposits Solutions (insurance backed scheme) Alternative Dispute Resolution ADR in brief.

www.mydeposits.co.uk
The following outline how a dispute is handled between the tenant and landlord should a disagreement a rise at the point that the tenancy deposit should be handed back by the landlord to the tenant.

1. What happens if there is a dispute over the return of the deposit?

If there is a dispute about how the money is to be divided at the end of a tenancy agreement, both landlords/agents and tenant can take advantage of the Alternative Dispute Resolution (ADR) service attached to the Scheme. This is an impartial and evidence based service provided, in the main, by an independent resolution company. Both landlord and tenant must agree to use the service and be bound by its decision. The use of the service is not compulsory. Should either landlord or tenant not agree to use the service then a dispute can progress to court.

2. In the event of a dispute, what happens to the deposit?

If there is a dispute between landlord and tenant, the scheme will require the landlord/agent to lodge with them the disputed amount. The disputed amount will be held by the Scheme until the Alternative Dispute Resolution or court decides on what is a fair distribution. Once a court or Alternative Dispute Resolution decision is made, the Scheme will distribute the disputed amount in accordance with that decision.

3. Will there be a charge for the use of Alternative Dispute Resolution?

No, the Alternative Dispute Resolution service will be free of charge for both landlord/agent members and the tenant.

4. What happens if the landlord/agent refuses to lodge the disputed amount with the Scheme when requested to do so?

In this scenario, the dispute cannot be dealt with by the Alternative Dispute Resolution service. Therefore in order for the tenant to get back his rightful deposit he/she must obtain a court order. The Scheme will support the tenant in obtaining this court order and once successful the Scheme will repay the tenant the disputed amount. The landlord/agent member of the scheme will be immediately expelled from the scheme and all tenants advised of the expulsion. The insurers of the scheme will pursue the landlord for the disputed amount. The landlord/agent will not be able to rejoin the Scheme and it is unlikely that he will be able to join any other insurance scheme. The landlord will therefore either have to lodge all new deposits with the custodial scheme or stop taking deposits from tenants altogether.

5. What constitutes agreement or dispute between the landlord or agent member and the tenant?

There is agreement when both landlord and tenant decide how the deposit shall be allocated between them. There is a dispute when the landlord and tenant cannot agree.

6. Does the landlord or agent member have to send the whole deposit to scheme when there is a dispute?

No, only the amount in dispute.

7. What are the time scales for the landlord returning the deposit to the tenant?

Within 10 days from the end of a tenancy the deposit must be returned to the tenant less any agreed deductions by the landlord/agent. After 10 calendar days has elapsed the tenant may complain to the Scheme. The Scheme will only request that the disputed amount be transferred to the Scheme once the Scheme is satisfied that a genuine dispute exists between the landlord and tenant. However, once a genuine dispute is identified the landlord/agent will be given 10 calendar days to lodge the disputed amount with the Scheme or face expulsion of the scheme. If both landlords and tenant agree to Alternative Dispute Resolution (ADR) then it is envisaged that a decision will be reached and communicated to all parties within 28 days.

8. Are property inventories compulsory?

No. However, as dispute arbitration will be evidence based, inventories and schedules of condition will play a far greater role at the end of tenancy periods. It is strongly suggested that landlords introduce an inventory and get their tenant to agree it at the start of the tenancy period. Photographic and video evidence is now much easier to obtain by landlords due to the advent of mobile phone cameras and other cheap digital storage devices.

Read more on How to Prepare a Property Inventory?

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