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February 17

2015
by mydeposits
The Adjudicator’s Glossary #8: Unfair Contract Terms

This is the eighth instalment in our ‘adjudicator’s glossary’ blog series. The last seven instalments have been to clarify some key legal terms commonly used by an adjudicator when they make a depositdispute decision and this next blog carries on to that effect. You can read the previous blogs right here.

We advise starting at the beginning of this series but if you just want to know about unfair contract terms then beginning here won’t do you any harm.

To quickly refresh, here are the commonly used terms that we’re attempting to unravel…

1)Balance of probabilities(we’ve already covered this)

2)Burden of proof(we’ve already covered this)

3)Weighting(we’ve already covered this)

4)Fair wear and tear and betterment(we’ve already covered this)

5)Mitigating losses(we’ve already covered this)

6)Proportionate(we’ve already covered this)

7)Reasonableness(we’ve already covered this)

8)Unfair contract terms

…but what does this term actually mean and how is it relevant to a dispute?

After all, if this helps you to prepare dispute evidence or even avoid an adjudication in the first place, then it’s worth familiarising yourself with the jargon.

So, what are unfair contract terms and how do they relate to a deposit dispute?

Unfair contract terms

As a landlord it’s important to provide tenants with fair terms in their tenancy agreements which are written in plain English and easy to understand.  Any confusion on either side should be communicated and amended before signing the contract and, even then, regulations are in place to ensure that consumers are not put at a disadvantage.

To prevent any injustice to the tenant, landlords should not include clauses that impose any charges or penalties which are unreasonable or take away any legal rights or prohibit an act outright unless it is just stating the law. Where a landlord prohibits the tenant from doing something, like redecorating the property, it should be followed by ‘without the landlord’s permission, in writing, which will not be unreasonably withheld’.

The adjudication process

Just like in a normal court of law the adjudication process in the event of a dispute is independent and evidence-based. An adjudicator will not ‘assume’ and can only make a decision based on the evidence provided. It goes without saying, the more evidence you provide along with being more transparent with your tenant means a higher chance of success at the dispute stage.

Note: We provide guidance on our website about the adjudication process and how adjudicators view dispute evidence. We cannot advise parties on evidence provided for specific cases or review any decision made by the adjudicator.

Case study

One of the issues in dispute was an administration fee of £125.00 for five late rent payment reminder letters.

The Tenant believed the deduction was unjustified and excessive

The Tenant said rent was only paid late on two occasions and not five

The Agentsought to rely on the clause written into the tenancy agreement on the basis that the tenant had signed it.

So what happened?

The adjudicator looked at the tenancy agreement which had been provided by both parties and found the relevant clause stating £25.00 would be deducted for all reminder letters that needed to be sent to the tenant.

The landlord had provided the tenant’s rent ledger and all five reminder letters;

The adjudicator was able to establish from the rent ledger that the Tenant had paid rent late on five occasions as claimed. However the landlord had not provided any evidence on how a charge of £25.00 per letter had been calculated or could be justified.

The adjudicator:

Acknowledged the tenant had signed the tenancy agreement and was in breach of the agreement for paying rent late on five occasions.

Referred to the Office of Fair Trading Guidance on Unfair Terms in Tenancy Agreements which recommends that a term applying an excessive charge is unfair even if written into the signed contract; it must be reasonable and reflect the actual cost to the landlord or agent.

Decided that without any evidence justifying a £25.00 charge for each letter, this clause was unenforceable in the circumstances and a £5.00 fee for each letter was proportionate so made an award of £25.00.

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