Demand by the landlord for a bank guarantee from the tenant. Inspection. Time limits.

The parties entered into a lease for a definite period from 15 August 2019 to 15 August 2020. An inspection was carried out at the beginning of the rental period, both parties being present. The tenant advanced a bank guarantee for ISK 990,000. At the end of the rental period the landlord considered that damage to the apartment had occurred, after which, on 28 August 2020, he sent an e-mail listing complaints regarding the condition of the apartment. The tenant replied on the same date, denying having caused any damage except for damage to a table top, for which he declared he was prepared to pay ISK 50,000. Following the tenant’s reply, the landlord had an inspection of the premises made, unilaterally, on 7 September. The tenant was not informed of this inspection or invited to be present when it was made. On 14 September the landlord made a claim for the entire amount of the bank guarantee, i.e. ISK 990,000. On 23 October the tenant reiterated his previous objection and again offered to pay ISK 50,000 for the table top. On 4 November the landlord submitted his complaint to the committee.

The Complaints Committee considered there was no evidence that the landlord had made a written claim against the guarantee within four weeks as he was obliged to do under the Rent Act. However, the tenant made no criticism of the assertion that he had not been informed of the landlord’s claim against the guarantee within the prescribed period. The committee therefore considered that the matter had been referred to it within the prescribed period.

The committee rejected the inspection made by the landlord on the ground that the tenant had not been present and therefore the inspection was unilateral. The inspection was not conducted in conformity with the provisions of the Rent Act,. From this it follows that the committee is unable to approve the landlord’s claim for recognition of the tenants obligation to pay compensation, with the exception of the ISK 50,000 that the tenant had agreed to pay.

Conclusion: The tenant was ordered to pay, from his bank guarantee, ISK 50,000. All the other claims presented by the landlord were rejected.