What is an inventory?
An inventory, in real estate terms, is a complete snapshot of the condition of a property at a particular point in time.
As a rule, it takes the form of a document in two parts – one written, one photographic – drawn up once before taking up occupancy (an entry inventory), once on leaving it (an exit inventory). It is attached to the tenancy agreement between the parties.
Does there have to be an inventory? How useful is it?
Luxembourg law requires a joint inventory to be agreed between the parties, in one form or another, whenever the tenant lodges a deposit with the landlord.
It can take a number of forms, though some provide greater security to the parties than others.
One possibility is to include a clause in the tenancy agreement setting out the state of the property. In that case, the tenant is presumed to have accepted the premises in good order.
The real application of a descriptive of the state of a rented property is to protect both parties by eradicating the possibility of future interpretation. Any interpretation opens the door to conflicts given the subjectivity of interpretation.
In the absence of a jointly agreed inventory, the parties are liable to find themselves in dispute at some time during the course of the rental agreement.
Landlords may find damage which tenants deny having caused. Tenants may be accused of having caused damage which they noticed on taking up occupancy. In the absence of an inventory drawn up by an impartial professional, such disputes all too often end up in the courts.
Lawyers consider that nearly 90% of all real estate cases they deal with in Luxembourg relate to handing back the premises or returning the deposit, following vague inventories.
The principal aim of a properly drawn up inventory is to have an objective written document, with photographic evidence, signed by both parties to rule out any present or future dispute. Also, without an inventory, the landlord cannot deduct repair costs for any damage found.
What form should an inventory take to offer parties the best protection?
No particular form is laid down by law for an inventory. It can take the form of a clause in the tenancy agreement certifying that the tenant takes over occupancy of the premises in good present order or can be drawn up in full detail by an impartial professional.
A jointly agreed inventory drawn up in the fullest possible detail is the most suitable to enable either party to assert their legal rights.
In summary, an inventory drawn up in the presence of both parties, comprising both a written section and photographic evidence, is always the best way of ensuring peace of mind.
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