Rent: How to resolve deposit disputes

Rent: How to resolve deposit disputes

– In line with Article 3-5 of the Rent Act, the deposit or bank guarantee when renting a house in Norway must correspond to a maximum of six months' rent, but the rule is probably three months, says partner Botolf Botolfsen at Langseth Advokatfirma.

The amount must be placed in a frozen account in the name of the tenant, which means that the money cannot be touched unless the parties agree or a ruling is issued.

You have five weeks' notice

According to the Oslo-based lawyer, the agreement concluded with the bank will regulate the deadline for paying the deposit at the end of the lease.

He adds that this is based on the law that states that a landlord can demand documented unpaid rent, if the tenant does not take legal action, usually through a settlement complaint, within five weeks after the tenant is notified of the payment.

– Payment notice must be sent from the landlord and the bank, but there is no deadline for doing so; This can happen during the rental period or after the rental relationship ends.

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He often misses rent

– What are the rules applied to deductions from the deposit? What are the most common deductions??

– This is also regulated under Section 3-5 of the Rent Act, says Botolfsen.

– What the landlord usually asks for is no rent, no maintenance and payment of compensation.

– Is there a “penalty” if the tenant fails to pay rent for three months, for example, and this rent amount is deducted from the deposit at the end of the lease?

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– No, the tenant only has to pay the rent plus interest, which can be considered a penalty, answers Botolfsen.

Partner Botolph Botolphsen at Langseth Advokatfirma. Photo: Langseth Advocatefirma

The contract can be cancelled

– What if the tenant wants to terminate the lease before the lease expires, for example due to an unexpected amount of noise in the neighborhood or sudden defects in the house itself? Can he claim a full refund of the deposit?

– If there are major defects in the home, the tenant can cancel or terminate the agreement, if agreed upon, says the lawyer.

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– The owner must then release the deposit in the usual manner.

– What if the house has been rented for many years and damage has occurred over time, mainly as a result of the age of the house and any furniture? Can the landlord deduct damages or repairs from the deposit?

– Compensation can only be claimed for damage, but not for natural wear and tear, says Botolfsen.

Appeal conciliation is possible

– What can you do if you disagree with the amount the landlord deducts from the deposit?

– For claims other than non-payment of documented rent, it requires either the consent of both parties or a ruling, the lawyer says.

The tenant can demand payment of the security deposit by sending a letter to the bank, and then the bank must notify the landlord of a five-week deadline to issue a summons or settlement complaint. If this is not submitted, the amount will be paid.

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– What disputes do you see most often regarding deposits, and how are they usually resolved?

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Most of them relate to maintenance, damage and possibly late payment for electricity, says Langsett's partner.

Create a protocol

-What is your advice to tenants when the landlord asks for a deposit?

– The landlord should always take a deposit, while the tenant should make sure the amount stays in a deposit account at the bank, says Buttulfsen.

– The costs of this account must be borne by the owner.

The attorney also recommends that the tenant speak to the landlord at the end of the lease, and perhaps file a settlement complaint, if an agreement on the amount paid cannot be reached.

He adds: – The best thing is to establish a takeover protocol at the beginning and end of the lease, where any defects or damages are described.

– It is then possible to agree on the amount of the deposit that must be paid to the landlord and the remainder will be handed over to the tenant. If this protocol is sent to the bank, they will handle it.

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Do not hesitate to hire a lawyer

– How useful is it to use a lawyer regarding deposit-related disputes?

– There will always be an issue of cost, depending on how much is disputed, notes Botolfsen.

At the same time, we notice that the other party often surrenders if it faces resistance.

– What kind of legal fees are we talking about and who pays them?

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– The losing party in the dispute must usually pay the costs to the lawyer, but for claims under NOK 200,000, what must be paid is very limited; “This is so you risk paying your own costs,” says Potolfsen.

– Often it is better to enter into a settlement in order to finish quickly. The problem can often be that the other party, even if the case is bad, is trying to push for a settlement.

This article was previously published in FinanceAffairs.com.

Dalila Awolowo

Dalila Awolowo

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