How Bad Is This Inventory?

[Physicsman]

Hello,
I have a general enquiry for those who have experience of deposit dispute arbitration with The Deposit Protection Service.

Some background information:
I’m about to exchange contracts next week to buy a new build fully furnished flat as a rental investment. The flat has already been let to a tenant by the property developer.

My solicitor has received information covering the background, credit checks and references for the tenant, and they are all satisfactory.

However, I have only just seen the inventory that the tenant signed. It is just a listing of contents with no photographs or statement of condition. Some of the lines read as:

1x Washer Dryer
1x Integrated Fridge/Freezer
1x Glass & Chrome Dining Table
4x Dining Chairs
1x Side Lamp
Etc…

There is just the one sentence note at the end stating: Apartment new upon handover without any marks or scratches to floors or walls.

The inventory doesn’t explicitly state that all the inventory contents such as the white goods, sofas, tables are all brand new.

(Apologies, when I try to attach the inventory I get a blank window.)

The question:
If a dispute were to ever arise when the tenant leaves, how bad is the inventory in terms of my actually winning the dispute?

For example: the tenant has damaged the sofa, or has cracked one of the refrigerator internal containers etc. Do I have a chance to win since the inventory doesn’t state the contents are brand new, although they are!

I just want to find out potentially how bad it can get for me *before* I exchange contracts to buy the flat.

Thank you very much for your comments!

[theartfullodger]

Terrible, tenant would win most disputes....

But sounds like these "developers" only know about marketing & signing people up.... & the tenant does not have to allow anyone in (well, it would be difficult..) to do a better inventory....

Plus side, MOST tenants are OK (as are most landlords & some agents... and one or two developers...) and possibly will be fine.

Think I'd ask to see tenant credit-checks & reference checks... I think there will have been little or none... (I could be wrong..).

You could ask for a price reduction...

[jjlandlord]

Developer knew that in all probability he wouldn't have to deal with any such issues as the property would have been sold on.

From the information you have received there is a risk for you, so if you want to proceed you can price that risk and go back to the developer with your lowered offer.

[Physicsman]

Thanks theartfullodger and jjlandlord!

I suspected the inventory was terrible! Fortunately in this case, credit & reference checks were performed (my solicitor requested that the seller confirm this via their solicitors so doubtful they lied!) They will also give me copies upon completion when I am legally the tenants new landlord.

I guess, I'll go with the price reducution route and see what they say. The only other thing I can think of is to ask the developer to give me copies of all original invoices/receipts for the goods (assuming they have them!) I can use this to prove everything is brand new and thus the original condition.

Also, there is always the hope(!!) that this tenant is OK and doesn't damage anything so I won't have a dispute! I'll definitely get a good inventory for the next tenant!!

Thanks again.

[theartfullodger]

That a credit/reference check was performed is interesting but does not tell you the result (eg "His work said they'd never heard of him, he has 7 CCJs, identity chcek failed, Bankrupt 2011, bank reference was unprintable...".. )

That you have an invoice saying developer bought 8 Beko washing machines is interesting but proves nothing as regards to THAT inventory...

Ask to SEE them... the credit/reference checks/....

[jjlandlord]

Fortunately in this case, credit & reference checks were performed (my solicitor requested that the seller confirm this via their solicitors so doubtful they lied!) They will also give me copies upon completion when I am legally the tenants new landlord.

I'm with Artful: They are having a laugh.
You want to see all the references, credit check reports, etc. before making the decision to buy and exchange contracts.

Actually, this would raise red flags for me because it might suggest that they do not want you to see these documents before it's too late, which is not a good sign.

[Physicsman]

I've asked to see the checks. The developer has stated they cannot give them to me until after completion due to data protection issues.

However, the developer has said through the solicitors that the tenant passed all the checks. That's still vague so it is a risk I agree!

What I've asked them for instead (via my solicitor) is a statement from the seller via their solicitor whether there have been any problems with the tenant and include details if any, for example rental payments in arrears, complaints from neighbours etc.

Also, I've asked them to provide rental statements for the last 3 months.

Edited to add: did the developers lie/make a mistake about saying they can't give me the checks before exchange? That is, data protection is not an issue?

[theartfullodger]

re DPA: It depends on what the tenancy says, some permit info to be passed to others. btw I would also want to see (SEE!!) the tenancy agreement...

I suspect hiding behind DPA is a useful excuse, and frankly would worry me... you could point out S35 of the DPA 1998
http://www.legislation.gov.uk/ukpga/1998/29/section/35
allows disclosure in connection with prospective court case and if they don't bleedin' give you the stuff you'll be suing.....

£5 says this developer may have only been in business for a short time & possibly never filed accounts: Often a particular company is set up for just that development... if so don't expect any come-back in a years time...

Clip clop, clip clop, hi-ho-silver...!!! My that herd of beef look fine don't they...

[jjlandlord]

Not sure if this is covered by DPA, but if it were it would prevent due diligence in many such commercial transactions, which does not seem very good...

Any case, should there be a concern there it can be easily resolved by requesting the tenant to agree to this information being disclosed to you.
If the developer refuses, or even if the tenant refuses, it may still provide you with useful information.

[Physicsman]

They did give me a copy of the tenancy agreement. That looks fine and standard, similar to the ones you can download here or on other sites like landlord law, NLA/RLA etc.

The developer have been around for awhile, since 94 I think. Probably not a fly by night cowboy outfit - but you never know! It is a risk but haven't found any insurance for it!

JJlandlord: I'll try what you suggest and see what the developer and tenant say. Good suggestion - thanks!

[theartfullodger]

Remove names - against LLZ rules: you are sure it isn't "Big Developers Inc: Luton 2012 Ltd"???

Odd that DPA did not stop them giving you personal details about tenant in the tenancy agreement, yet they seem hesitant about checks: Funny that eh??

[Lawcruncher]

It is of course not simply a question of how good the inventory is, but how good the tenancy agreement is.

An "inventory" is often a combination of a list of contents and a description of the state of the property. These are two separate things and both need to be dealt with in the agreement setting out the tenant's obligations and the extent to which those obligations are limited. In other words the precise purpose of the inventory needs to spelled out, otherwise it is no more than evidence of what the position was when the tenancy started.

[ram]

one thing in your favour is "new upon handover" and hoping it will
be read as all items were new. ( You would have to swear that this
was the case, even if you can't prove it )

One option is to tell the tenants, when you inform them that you are
the new landlord, ( rent is not payable until you do ) is that as the
property and all items supplied in it now belong to you, and you need
to
1) Do an inspection ( as is the right of any landlord of your assets,
against original specification, ) and to do a normal 3 monthly inspection
but an inspection on completion, as a new landlord, and thereafter
at 3 / 6 monthly as per normal conditions of the A.S.T.
2) while there, you can do an inventory with photos etc.
( State that fact when you request number 1 )

Data protection.
Tell the developer that any future people that are interested in
renting your property, you will have full access to all information, all
the checks will be available to you, and if you can't see the checks
and references, then you will not offer the prospective tenant
the flat.
You are in the same position now, in that before you can allow
any tenant to rent from you, you need to see all the checks and
references before you will allow them to say in your recently
purchased property.
tell them if checks and references are not supplied, you will have
no option but to inform the tenants that information is being withheld
by the developer, and the Developer, via their none actions, will
leave you with no alternative but to evict the tenants.
Stating that the name and address of the developer will be given
to the tenants, and they may decide to take the matter further, for
loss of their home.

Might work ?

[Physicsman]

theartfullodger: I've removed the names - appreciate you letting me know it is against the rules. Saved me from getting my knuckles rapped!

The tenancy agreement only has the name of the tenant and not any other of her personal details. I'm guessing that is why they let me have a copy - assuming the property developer is legit and not trying to hide a bad tenant of course!!

Lawcruncher:
The AST defines the Property as "with the furniture fixtures and effects in the property including all matters specified in the inventory".

Then there are a couple of clauses in the AST such as "keep the Property in good repair and well decorated (except for repairs which the Landlord agrees to carry out). There are some other clauses about not removing Contents, keep the contents in good repair and condition except reasonable wear and tear etc.

My trepidation is that if any dispute were to arise, the inventory doesn't specify the condition of the Contents (brand new). Or even the make/model of the Contents.

This exposes me to some risk if the tenant wanted to take any of the contents with them and replace with a poorer/cheaper quality item. Or if they damage the contents, e.g. dent the fridge door or something, they could argue that was already there when they moved in.

[Physicsman]

ram:

Thanks for your input.

I'm definitely planning to do an inspection upon completion (assuming I go ahead with contract exchange and completion!).

Will also take photos then, although that will just cover the conditions as they are when I take the pictures, but not when the tenant moved in a few months ago. So if they have scratched or dented something already, then I'm out of luck!

For future tenants, I'll be handling references/checks for the prospective tenants and not the developer. They only handled it this time because the let the flat out before they sold it.

Supposedly one of the bonus points in that the rental investor (me) starts earning as soon as I complete. Double edged bonus there!