Such scenarios are quite common. So what happens when a tenant pays an excess amount by way of rent? It is logical to conclude that the tenant is entitled to be reimbursed the excess amount paid. However, it is not as easy as it seems, and here’s why.
All lease agreements for commercial and residential premises will include a clause that indicates that it is the obligation of the tenant to make payments towards the costs for maintenance of the building and towards other costs like insurance etc. But, as it is the landlord dealing with the company or individuals carrying out the maintenance tasks and the insurance companies, the tenant never really gets to know the actual figures.
Hence, disputes can easily arise, and whenever a tenant feels that he or she has overpaid rent. The landlord on his part will make demands for payments and there is no other go than to negotiate and arrive at a settlement or go in for litigation. On many occasions the tenant would have already made an excess payment without realizing it at that time.
In such cases, the tenant can opt to have the excess amount paid to be set off against the dues to be paid towards service charges for the coming year. However, if there is a specific clause with a provision for anti-set off, or if the tenant is in dire financial straits, the tenant may want the excess payment to be reimbursed immediately.
The following will be taken into account to decide the circumstances under which an overpayment was made:
- Overpayment made due to oversight or due to an administrative error on the tenant’s part, by either reading the figure incorrectly (decimal point etc) or any error occurring during an electronic funds transfer.
- Where an approximate sum is paid towards the estimated costs for the year, which, when worked out is found to be in excess of the actual amount.
- Sometimes the landlords demand payments that have not been agreed upon, nor are such sums mentioned in the lease agreement. Or if it comes under the Limitation Act of 1980 or the Landlord and Tenant Act of 1985 (for residential leases).
In all above cases, the tenant is liable to get a reimbursement although in the case where an approximate sum was paid, it is difficult for the tenant to get a reimbursement as the landlord will try to justify the payment in one way or the other.