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Break lease fee NSW include bond or not?

Discussion in 'Property Management' started by drg86, 20th Oct, 2015.

  1. drg86

    drg86 Well-Known Member

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    So have just been given notification of my tenant wishing to break lease.

    Now I understand that I am entitled to 6 weeks rent as a break fee as written in the lease. Tenant has agreed to pay this but I just wanted to confirm if this amount can include the bond.

    Example tenant has a 4 week bond paid, do they just pay me 2 weeks and I retain the 4 weeks bond? (= 6 weeks)

    OR

    Am I entitled to 6 weeks rent AND retain the bond for breaking the lease term? (essentially 10 weeks rent as 6w + 4 bond)

    Cheers,
    Dan
     
  2. thatbum

    thatbum Well-Known Member

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    First example. The bond isn't your money - its the tenant's money, just sitting somewhere else.
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    The bond is there to be recovered from a breach - if the tenant now does a runner with any rent arrears, 4 weeks bond will be insufficient to cover your loss.

    Accept the break, get paid and thwn release the bond upon a satisfactory outgoing inspection.
     
  4. drg86

    drg86 Well-Known Member

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    Thanks guys. I was of the understanding it was just the 6 weeks and am aware the bond isn't my money.

    Was just clarifying the definition of the break fee and that it is completely separate from the bond. Some may interpret it as the 6 week break fee is the fine or penalty. Then re-letting fees etc come out of the bond.

    They are a good tenant and it is only due to a change in circumstances. Have agreed to pay 6 weeks and there is no damage, however I am still at risk of a vacancy period and a few grand out of pocket if not re-let before the 6 weeks is up.
     
  5. thatbum

    thatbum Well-Known Member

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    Yes I should clarify what I meant to. The break lease fee is just another cause of action you have against the tenant - not different to any other causes of action you might have like cleaning, damages, etc.

    They all get lumped together and then the bond can be used to set off against your valid claims.

    Note that I'm pretty sure "re-letting fees" are baked into the break fee amount.
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    You can't have two bites of the cherry - its the break fee or full liability for reletting costs. The lease as marked isopts for the break fee. So 6 weeks is all tou are entitled to under that clause