Tenancy Deposit Schemes A Guide - Part Two
There will be two types of tenancy deposit scheme. First, there will be a “custodial scheme” where a third party will hold the deposit and pay out at the end of the tenancy on the terms agreed between landlord and tenant.
The second type of scheme is called "the insurance scheme" and it's this one that will probably be more attractive to landlords
Under this type of scheme, the landlord gets to keep the deposit.
Then, if at the end of the tenancy there is a dispute, the landlord will have to pay the deposit amount into the insurance scheme. where it is then held until both parties come to an agreement - with the amounts agreed being paid out by the administrator of the scheme.
The scheme will have a dispute resolution procedure which will be free to use but if the landlord and tenants can't agree, then a court could decide how the money should be split, with the administrator having to follow the courts decision.
The insurance kicks in and will pay out if the landlord fails to pay the deposit into the account - in which case the scheme and the insurer would then puruse the landlord for recovery of the money and the landlords' membership of the scheme would be terminated.
More on this later this week.
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Labels: TDS, tenancy bonds, Tenancy Deposit Schemes, tenancy deposits
This entry was posted by lettingfocus, on
Monday, February 19, 2007.
