There have been a number of County Court judgments on the issue of using cheques to return a deposit in anticipation of serving a valid Section 21 notice. The judgment in Richworth Ltd v Billingham (2023) EW Misc 8 (CC), which is binding on itself and all lower Courts, is the latest appeal judgment on this point.

The facts of the case concerned whether a deposit was properly returned to a tenant and on this basis, whether a Section 21 notice was valid.

The key findings were as follows:

  • Payment, or repayment of a deposit may be made by cheque if the tenant expressly agrees to accept payment by cheque or impliedly agrees by the absence of rejection within a reasonable time from receipt.
  • If the cheque is honoured, then the date of return of the deposit is the date that the cheque was delivered to the tenant.
  • If the cheque is presented to a bank and not honoured, for example the landlord’s bank account is closed or it lacks sufficient funds, the landlord will be unable to rely on a until the deposit is properly returned before being able to rely upon a Section 21 notice.
  • If the cheque is not presented to a bank, a landlord is not disabled from relying on the Section 21 notice.
  • If the tenant does not expressly accept payment, a reasonable time to imply acceptance will depend on the facts and circumstances of the case.
  • Where the tenant has not expressly accepted payment, and a reasonable time to imply acceptance has not passed before a Section 21 notice is served, the landlord may not be able to rely on the Section 21 notice.
  • If a tenant waits until filing a defence for a possession claim to say that they do not accept the cheque, then they may be taken to have impliedly accepted this by non-communication in the interim.

In order to minimise discrepancies, the simplest solution for landlords is to not repay deposits by cheque. The simplest solution for tenants who receive an unwanted deposit returned to them by cheque is to communicate with the landlord immediately that they do not accept it.

If you have any questions about the above, please contact any member of our Property Litigation team or visit our website here.

Please note that the above does not constitute legal advice.

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