Tenant underpaid due to oversight

This week, the Property Poser experts deal with a situation in which a tenant has been inadvertently underpaying her montly rental for approximately a year.

The reader writes that, upon termination of her lease, the agency used by her landlord to collect the rental discovered that they had been invoicing her incorrectly. The tenant had dutifully paid the monthly amount based on the invoice submitted.

The outstanding sum has subsequently been deducted from the deposit she paid upon entering into the lease agreement. Her question is whether this is correct or whether it should have been written off.

Brian Kinnear - Fresh Lifestyle Properties

Brian Kinnear – Fresh Lifestyle Properties

Although it is not clear whether there was a written agreement in place, it is likely that one did apply due to an agency being involved, says Brian Kinnear, principal of Fresh Lifestyle Properties in East London.

“In many standard lease agreements, a provision is included that any act or omission on the side of the landlord should not be construed as an amendment to the terms of the contract.”

Kinnear says this also relates to the general rule of contract that the terms of an agreement are not amended by the actions of one party only. “Any amendment should be agreed to by the original parties and reduced to writing.”

The rental agency obviously acts on behalf of the landlord and any of their actions can be imputed to him or her, says Kinnear.

“Having said that, should the agent act outside of the scope of that for which they have been appointed, the landlord cannot generally be held liable for those actions.”

Another point to note is that the parties initially agreed upon a fair rental for the occupation of the property, says Grant Berndt from Abdo and Abdo Attorneys in East London.

“If it turns out that the tenant has been ‘underpaying’, it could be argued that she has been unfairly enriched at the expense of the landlord because she didn’t pay the fair value as agreed upon.”

Practically speaking, once determined that the tenant in fact owes the outstanding amount, it is not necessarily an unfair action by the agency to deduct it, says Berndt.

Grant Berndt - Abdo and Abdo Attorneys

Grant Berndt – Abdo and Abdo Attorneys

“Had they not done so and the tenant refused to pay, costly legal action could have followed.”

If the original terms of the agreement stated a specific rental amount to be paid, the fact that the monthly invoice expressed an incorrect figure does not necessarily lead to the conclusion that it should be written off, says Berndt.

“Our reader could easily imagine the converse situation in which she had overpaid for a year and then discovered the error. The fact that she paid more than she should have does not mean that the landlord would be entitled to the excess payment.”

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