Why Settlement Agreements Matter
For tenancies where a landlord or letting agent hasn’t opted for a Rent Protection product, then it isn’t unusual for a legal team to be instructed to recover a debt from a tenant who has defaulted on their rent.
It is quite usual for a debt-recovery team to receive payment offers, and it’s important that settlement offers are never overlooked. One of the considerable benefits is that such negotiations can deliver a swift resolution for landlords.
Some advantages of agreeing to a settlement are:
- They can provide financial relief for both parties involved.
- Landlords can get money in their pockets rather than having to go through the court process and incur fees with no guarantee of recovering any money.
- It encourages the parties to remain amicable with each other and is less adversarial than the court process.
- Tenants can avoid the long-term consequences of bankruptcy, and enjoy relief from overwhelming debts.
- Court costs are avoided.
A recent instruction encountered by our legal partners was when they were instructed by a business to recover a large debt that was owed to them by one of their clients. Upon receiving this instruction, Woodstock sent out a letter before action to the debtor, stating that they must pay within 14 days in order to avoid court proceedings.
They also attempted to call the debtor to establish if a settlement agreement could be reached; without such negotiations, it could take years for clients to even start to begin to receive any payments towards the debt that they are owed.
Thankfully, this call resulted in a £58k settlement offer that the debtor agreed to pay over a six-month period. Shortly after this settlement was made, the first payment of £10,000 was received.
Had the matter proceeded to court then even the judgement may not have resulted in a repayment. This is because sadly, even where there is a judgement, it doesn’t always equal money in the pocket as an enforcement order is still needed for the money to be recovered. Therefore, we often encourage a proactive approach to reaching a settlement.
Indeed, as we look towards the proposed Rental Reform Bill which may become law next year, we could expect to see more defended claims resulting in lengthy waiting times at the courts. As a result we would encourage all parties to keep the lines of communication open and consider the benefit of a settlement agreement.
If you have any money that is owed to you, whether from a company or an ex-tenant, please get in touch with Woodstock Legal Services and we will be happy to help.