Inventories and schedules of condition

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    Inventories and schedules of condition

    Two distinct things have become conflated and confused in the wonderful world of BTL. There is also a widespread belief that (a) a tenant is under an obligation to leave property in no worse condition than it was at the beginning of the (first) tenancy and (b) a landlord cannot require a property to be returned to him in a better condition than it was in at the start of the (first) tenancy.

    What has become conflated and confused is the difference between an inventory of contents and a schedule of condition.

    An inventory of contents is a list of items left in the property. It benefits both landlord and tenant. If it records that there are 6 white dinner plates it stops the landlord from insisting there were 7 and the tenant swearing there were only 5. A well-prepared inventory records any defect in an item e.g. 6 white dinner plates (one cracked). An inventory needs to be referred to in the tenancy agreement specifying that the items are included in the letting and setting out the respective obligations of the parties with respect to them. If an inventory is not referred to in the tenancy agreement its usefulness has to depend on what the tenancy agreement says; at best the inventory will be a record of what was in the property.

    It follows from the above that an inventory is not needed if a property is let unfurnished.

    The proper purpose of a schedule of condition and what it is is best explained by enquiring what a tenant's reparing obligations are. What are a tenant's repairing obligations?

    Where the tenancy agreement is silent the tenant's obligations are very limited. They do not extend beyond using the property in a tenant-like manner, the meaning of which has been explained by Lord Denning:

    "What does 'to use the premises in a tenant-like manner' mean?* The tenant must take proper care of the place.* He must, if he is going away for the winter, turn off the water and empty the boiler. He must clean the chimneys, when necessary and also the windows.* He must mend the electric light when it fuses.* He must unstop the sink when it is blocked by his waste.* In short, he must do those little jobs about the place, which a reasonable tenant would do.* In addition, he must, of course, not damage the house wilfully or negligently; and he must see that his family and guests do not damage it; and if they do, he must repair it.* But apart from such things, if the house falls out of repair owing to fair wear and tear, lapse of time or for any reason not caused by him, then he will not be liable to repair it."

    If there is a tenancy agreement the obligations are as set out in the agreement, subject to the following:

    (i) The tenant cannot be made responsible for anything that statute imposes on a landlord - see for example section 11 L&T Act 1985.

    (ii)*The damages recoverable cannot exceed the diminution in the value of the landlord's reversion - see section 18 L&T Act 1927.

    (iii) Under the general law of landlord and tenant repairing obligations are not interpreted absolutely, but according to the state of the property when the tenant took it, the use to which the tenant puts the property and location. Accordingly, the same words may have different effect in different cases. The overriding principle is that the landlord is not entitled to get back something substantially different to what the tenant took.

    (iv) The Unfair Terms in Consumer Contracts Regulations. If there have been any cases on tenants' repairs under the Regulations they have not come to my attention. The now defunct OFT offered some guidance which is no more than that, though likely to be persuasive. Whilst obligations to have property professionally cleaned at the end of a tenancy may be unfair if the property is left in a lettable state, there cannot be any hard and fast rules about what is reasonable. It has to depend on factors such as the length of the tenancy. Subject to (ii)*and (iii) above, any requirement which involves leaving the property in a better condition than at the start of the tenancy is not intrinsically unfair, particularly if there is a rent concession which takes the condition into account.

    So, if a tenancy agreement says that the tenant must keep the property in good repair and decorative order then that is what the tenant must do irrespective of the condition of the property at the start of the tenancy, subject*nevertheless*(and very much so) to (i) to (iv) above. However, the parties can contract that the tenant's obligations are limited by reference to a schedule of condition.*Strictly, a schedule of condition should be what its name implies: a record of the condtion of the property. In practice it is a record of defects and wants of repair and decoration. For establishing the extent of a tenant's obligations a schedule of condition is entirely for the tenant's benefit. It is a shield not a sword. A perhaps silly example to emphasise this: Suppose (a) the agreement says that the tenant is responsible for internal repairs but is not liable to leave the property in any better condition than that recorded in a schedule of condition and (b)*the schedule says that the cellar door is half rotten. At the end of the tenancy the tenant can hand the property back with a half rotten door, but if the door becomes wholly rotten and falls off its hinges he has to replace it. For the tenant to be properly protected the agreement needs to exclude liability for repair of the cellar door altogether.

    For the tenant to take the benefit of a schedule of condition it needs to be referred to in the agreement and the tenant's obligations set out with reference to it. In the absence of that it is, strictly, no more than evidence of the condition of the property at the time it was drawn up, though all the circumstances may point to its purpose being to limit the tenant's obligations.

    Two things have happened in practice.

    The first is that the inventory of contents and the schedule of condition have tended to merge into one document. I think that what happened is that the “one cracked” observation was extended to the fabric of the property. Whilst the practice is best avoided, there is no reason why there should not be a composite document so long as the two functions are kept apart and each is dealt with separately in the tenancy agreement.

    The second is that the purpose of a schedule of condition has been turned on its head. Landlords and letting agents, misled by misinformation disseminated by the internet and which started with someone somewhere getting hold of the wrong end of the stick, have come to believe that schedules of condtion are essential to protect landlords. So widespread is the belief that I suspect it has penetrated to the tribunals which have to decide how tenancy deposits are allocated and may, at least in part, explain why their decisions favour landlords far more than tenants. The decisions have reinforced the erroneous belief. We seem to have reached the position where landlords do indeed need a schedule of condition, but only because the law is being misapplied.

    #2
    It's very true that inventory and schedule of condition have become a single blurb...

    There is one important point, though. How does a landlord convince a court (or adjudicator) that he is entitled to make deductions from the tenancy deposit?
    He must have evidence that the tenant directly caused damage.

    Comment


      #3
      Originally posted by jjlandlord View Post
      There is one important point, though. How does a landlord convince a court (or adjudicator) that he is entitled to make deductions from the tenancy deposit?
      He must have evidence that the tenant directly caused damage.
      Not really, no.

      Let's consider a standard tenant's repair clause:

      To keep the interior of the property in good repair and condition thoughout the tenancy [qualified by an exception referring to section 11 L&T Act 1985]

      To determine whether the tenant has breached the obligation the question to be asked is not:

      How does the condition of the property now compare to the condition of the property when the tenant took it?

      but:

      Is the property in good repair and condition?

      In order to answer the question factors such as the age, character and location of the property are taken into account, but what the state of repair was at the start of the tenancy is not. (That may appear to conflict with what I said above where I referred to "the state of the property when the tenant took it". What I intended by that was not so much whether there were particular wants of repair, but rather the condition of the property as a whole considered together with other factors such as age, character and location. If a tenant takes on a dilapidated property he is not required to renovate it. See above where I said that "the landlord is not entitled to get back something substantially different to what the tenant took".)

      To give a practical example, suppose a tenant takes on a property where the skirting board is scuffed, the kitchen door needs repairing, a floorboard is loose and the glass in the lounge door is cracked. If the repair clause is as above, then upon entry he immediately becomes liable to make good the wants of repair and decoration. It is well established that an obligation to keep in repair involves putting in repair that which is not in repair.

      However, the position is not quite as good for the landlord (nor quite as dire for the tenant) as it may appear as the tenant has the protection afforded by section 18 L&T Act 1927.

      Comment


        #4
        Excellent.

        "Professionally cleaned" has no real meaning as a quality standard, it essentially means that the cleaning has been done by someone who charges for cleaning.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          Originally posted by jpkeates View Post
          "Professionally cleaned" has no real meaning as a quality standard, it essentially means that the cleaning has been done by someone who charges for cleaning.
          It does imply a high standard because it is implied that a professional has better equipment and better skills than you and me.
          What is unfair, IMHO, to to hold tenants to hiring someone if they have already cleaned themselves to a similar standard. I.e. it's the standard that should matter.

          Comment


            #6
            In practice the question is not so much whether and to what standard the property is cleaned, but what consequences follow from a failure to comply with the obligation. It being a principle that damages cannot exceed your loss a landlord needs to prove his loss. If the difference between the rent obtainable for a property which has been adequately cleaned and the rent obtainable if it has been professionally cleaned (whatever that may mean) is nil then the damages will be nil. I would say that the relevant standard of cleanliness is what a reasonable prospective tenant would call clean.

            Comment


              #7
              This is very interesting. It hadn't occurred to me that 'keep in good repair' could mean being obliged to fix things that were broken or in poor condition before moving in! I'll watch out for that condition in future. I've been thinking bout this issue because I've found the below condition in the individually negotiated clauses of our AST:

              It is further agreed that the Landlord will have the Property professionally cleaned, including carpets, all coverings, cupboards and windows at their expense prior to the commencement of the Tenancy and the Tenant will do the same at the end or sooner determination of the Tenancy at their own expense


              And wondering whether we have to do this or could simply deep clean ourselves, on the basis the the L has already broken the condition (what's called the inventory but based on this post is the schedule of condition confirms the property had been 'domestically cleaned' when we moved in). Would a deposit scheme uphold any withholding of professional cleaning costs based on this clause if we left it at the same level of cleanliness as it was received?

              Comment


                #8
                The landlord breaking the condition doesn't allow you to do the same.
                Unless what you have undertaken is in some way dependent on the other party doing "their" bit - usually indicated by words like "and, in exchange" or "provided the landlord has done x, the tenant will"

                The landlord was in breach of contract, and you could, in theory, have compelled them to correct the breach, or asked for compensation for having to pay for the professional cleaning yourselves.
                You didn't do anything, which is fair enough - I wouldn't have either.

                That doesn't stop the landlord claiming against your non-performance or the deposit scheme agreeing to the claim.

                It does seem a stupid clause, as, it means that the departing tenant and the landlord both have to pay for cleaning the same property within a few days or weeks of each other.
                It would be better for the landlord to remove the words "at their own expense".
                And I have no idea why the phrase "or sooner determination" is meant to add - the landlord wants the cleaning done at the end of the final tenancy.
                When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                Comment


                  #9
                  Originally posted by jpkeates View Post
                  And I have no idea why the phrase "or sooner determination" is meant to add - the landlord wants the cleaning done at the end of the final tenancy.
                  Standard stuff even if perhaps not needed. The justification for it goes something like this:

                  Say in the tenancy agreement "the Term" is defined as "the period beginning on 1st January 2015 and ending on 30th June 2015" and a tenancy is granted for the Term. The end of the Term is 30th June 2015. Accordingly something which is to be be done "at the end of the Term" is to be done on 30th June 2015. If you say "at the end or sooner determination of the Term" then, if the tenancy ends early, the obligation is to be performed when the tenancy actually ends and not on 30th June 2015.

                  Comment


                    #10
                    Some people must get paid by the word.
                    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                    Comment


                      #11
                      Originally posted by jpkeates View Post
                      Some people must get paid by the word.
                      They used to certainly used. Not the lawyers who dealt with clients but the self-employed copyists who drafted documents. It goes some way to explain some of the standard phrases still current and what appears as unnecessary verbiage.

                      In the above case there is at least some justification - the extra words do at least remove doubt.

                      Comment


                        #12
                        Just to take this on a slight tangent -- it is all very well having this illuminating and erudite discussion about legal obligations -- but the fact of the matter is that in large parts of the country there is no longer any practical or meaningful access to the law at all.

                        I say this after having spent nearly three days trying and failing to get hold of the worst county court in the world on the telephone and having failed to get responses to letters about filings and other critical matters to do with cases which simply go into limbo with lost paperwork, massive delays and a legal system that is not worthy of a first world country, and makes a mockery of the law itself.

                        So yes, landlords and tenants have obligations. But if enforcing them becomes a soul destroying, time destroying, money destroying exercise, then it's just so much fluff.

                        And things will become worse with Cameron and Milliband Man wanting to convert every interaction between L and T into a formal legal battle where there is no plausible structure to deal with the battles.

                        Comment


                          #13
                          I have said and more than once that it is one thing having rights and quite another enforcing them. Even if the situation has got worse over the last few years, it was ever thus everywhere and will undoubtedly aways will be.

                          The internet is a great resource and never has so much information been easily available at no cost. Unfortunately much misinformation, not to mention disinformation, is about and it can be difficult for people to assess how reliable anything is. In the area of law people have come to believe things which in some cases are plain wrong and in others dubious. Misinformation is circulated until it becomes so common that somtimes even lawyers begin to entertain doubts. Once that happens you have a devil of a job to persuade people that the law is not or may not be what a lot of people think it is. A classic case was the bank charges fiasco. My purpose with threads like this is to hopefully correct erroneous opinion! It is no good me just saying: "Sorry, but I think you're wrong" because then it becomes an oh-yes-you-are-oh-no-I'm--not pantomime exchange. Obviously it is not appropriate for every post I make, but if I back up an assertion with (as a late and missed colleague used to put it) closely reasoned argument and/or quote some authority hopefully it will help to persuade people that, even if I am not right, I at least have an arguable case for my opinion.

                          Whilst a forum like this cannot hope to replace legal representation, it can hopefully give people what they need to help them in their dealings with others. An agent or solicitor is more likely to back off if he gets a letter which indicates that the correspondent has done some research or taken legal advice.

                          Comment


                            #14
                            Thanks for the thread Lawcruncher.

                            Having just paid for an all-in-one inventory and schedule of condition for a dated property i can attest to the notion that a schedule of condition, if compiled by a professional and independent inventory clerk, is most certainly for the tenant's benefit!

                            Comment


                              #15
                              I said in another thread:

                              Best practice has to be to agree the inventory before the tenant takes up occupation. It avoids argument about whether any damage was caused after the tenant took up occupation.

                              If the inventory is not going to be agreed before the tenant takes up occupation you need to be careful that you do not have an agreement to agree which is void unless backed by reference to a third party if there is no agreement.

                              *

                              Another point: On a renewal either (a) agree the wants of repair, settle up and draw up a new inventory/schedule, or (b) make sure you get the wording right in the new agreement so that any breaches during the previous tenancy are not inadvertenty waived. So, if using an old schedule you need a provision deeming that the condition of the property and the contents at the start of the new tenancy are as they were at the start of the previous/first tenancy.

                              Comment

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