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Break lease fee: Profit off tenant leaving

Discussion in 'Property Management' started by Landlord19, 15th Dec, 2015.

  1. Landlord19

    Landlord19 Member

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    my tenant gave me 8 weeks notice that they intended to break the lease early because they purchased their own home. This was great for me because they signed the break lease fee into the contract, so they have to pay me 4 weeks rent which is almost $4k.

    I also re-listed the property on the market at $210 more a week, and then got a new tenant to move in 2 days after they left. The new tenant is paying $60 a week more than the old tenant, so this is good news for me because I get the break lease fee of almost $4k and I get more rent each week.

    From the beginning the tenant asked me to negotiate their break lease fee because they can't afford to pay it, but they signed the lease so my understanding is I have no legal obligation to reduce it for them, it's just a bonus for me. They did also offer to pay all my out of pocket expenses but this would only be about $1k so I said no.

    They have not paid the break lease fee and since they claimed the bond I've had to put in a counter claim to get the break lease fee off them. But they are still trying to negotiate because they say they can't afford it, and so it has to go to NCAT for a hearing. I just want to confirm they won't rule against me as I have chosen to pay the Real Estate Agent to go to the tribunal for me, so it's costing me to go to the tribunal to get my money. But as far as I know the tenant has no legal point to stand on because the lease included the break lease fee?
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    There is a break fee, providing they have given written notice they are going to break in accordance with the lease provisions, paid rent up to the vacate date then they will owe the break fee. Make sure that you have the documentation.
     
  3. Landlord19

    Landlord19 Member

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    Yes they already paid all the rent, they also paid the cleaners fee, but I am claiming in addition to the break lease because they didn't return 2 keys and the agency I use didn't have any copies so I had to get a locksmith to change one lock. I haven't told them this yet though. And I also intent to charge them for garden maintanence - they did actually mow and weed around the garden but they left grass clippings in a garden bed which weren't there when they moved in. I haven't requested they pay the garden maintainenece yet but I will put that in the claim, it was over $100 so I don't want to pay it
     
  4. Landlord19

    Landlord19 Member

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    Sorry I should have said, their claim is that they were only 10 weeks away from ending the lease at the time they left, but they still broke the lease so it's a good opportunity for me to make some extra $
     
  5. neK

    neK Well-Known Member

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    Seriously why be so greedy for?
    Claim what is required so that you're not in a position of loss.... leave it at that.
    People like you are the reason society is f-ed up.
     
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  6. neK

    neK Well-Known Member

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    I really hope the tribunal rules in the tenants favour.
     
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  7. Landlord19

    Landlord19 Member

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    But legally that money is mine?? If you give away your money you will never be rich. the managing agent did say the family are so stressed about the break lease fee that their kids will have no Christmas presents this year and they have to cancel their family holiday. But I think that's a load of bull- they must be able to afford it because they could afford to buy a house, so I only want what's mine. And I only asked in this thread to check they can't claim anything legally, not for your opinion
     
  8. Bullion Baron

    Bullion Baron Well-Known Member

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    Account registered today to ask this question, have to wonder if this is an existing PC'er who knows it would be a dick move to fight for the additional funds...
     
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  9. HUGH72

    HUGH72 Well-Known Member

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    Sorry but you sound like a LL from hell. A new tenant signed within 2 days at a higher rent what's the Problem?
    Claim your costs and move on, that's the reasonable thing to do.
     
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  10. Glorion

    Glorion Well-Known Member

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    Lol guys it's just a troll. It didn't get the outrage it initially expected, so it had to try harder. Don't bother feeding it, just let it die.
     
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  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Is this a commercial lease? The Residential Tenancy Act may prevent such penalties - have you had a read>?
     
  12. Xenia

    Xenia Adelaide Property Manager Business Member

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    The $210 per week extra needs to be reimbursed to the tenant until their end of their lease agreement. Legally they are able to claim this from you as they have a lease.

    You are entitled to break lease costs but tribunal will make you reimburse the extra rent back to the tenant.
     
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  13. Scott No Mates

    Scott No Mates Well-Known Member

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    @Landlord19

    upload_2015-12-15_21-40-37.png

    You will only be entitled to 4 weeks on the break fee (assuming that it is NSW)
     
  14. Xenia

    Xenia Adelaide Property Manager Business Member

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    The break lease fee on vacancy costs will by only 2 days - that is all he will get.

    It was rented in 2 days - there are no vacancy costs to be charged to the tenant.

    A portion of the advertising costs and letting fees will be due back to the landlord - since lease was broken in the last 10 weeks, the portion due back will be a small fraction of the entire costs charged by the agency to re-let.

    There will be $210 x 10 = $2100 due back to the tenant in reimbursement of rent above what their lease agreement was (the 2 days will be apportioned and removed from this calculation by a tribunal member, as will any half weeks at the end of the tenancy period)
     
  15. Scott No Mates

    Scott No Mates Well-Known Member

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    @Xenia - it's a break fee, get out of gaol card. If the property could not be leased for 3 months or below the previous rent, @Landlord19 would be wearing it.

    Conversely, if the tenant just sought to break (if there was not break fee), they could pay the unexpired term of the lease, advertising, % agent comms/letting fee etc.
     
  16. Xenia

    Xenia Adelaide Property Manager Business Member

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    OK - some difference in legislation then because in SA you can only charge vacancies.
    If the property was vacant for 3 months, it would be a tenant expense or insurance claim, either way, the landlord will get the 3 months.

    I would be interested to hear how it works out and how the charges are calculated at a tribunal hearing.
     
  17. Landlord19

    Landlord19 Member

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    Why will they get the $210 per week if they break their lease, because now I have a new lease with the new tenant????
     
  18. Xenia

    Xenia Adelaide Property Manager Business Member

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    Disclaimer: I am an agent licensed only in South Australia.

    Please check legislation in NSW or seek advice from NCAT or the property manager. In SA there are laws that make it fair to both sides. If a property was rented for $500 per week for 12 months, there was a lease break at say 9 months and it took 3 weeks to fill but only with a rent reduction of $450, then the tenant will owe - agency leasing costs apportioned to the lease break time line, 3 weeks of rent at $500 and then $50 per week (to make up the $500 that was on the lease) for the extra 3 months of the lease (minus the 3 weeks).

    If in the same scenario, the property was rented at $550 per week, then the extra $50 would need to be paid back to the tenant - for the remaining 3 months of the lease.

    It's great that you had it rented in 2 days but it is never advisable to offer a property for rent during a lease break situation, at an amount higher than the amount specified in the lease, in SA, not only does the extra amount belong to the tenant but if it is not leased for several weeks, the tenant can argue that it was due to the higher amount and therefore the vacancy charges will not apply to the tenant.
     
  19. thatbum

    thatbum Well-Known Member

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    The 'break lease' clauses in NSW change the general position for break lease situations that apply in every other state.

    I'm not an expert on how the NSW provisions operate, but I have heard that it is not as simple as just being able to charge the applicable 4/6 week fee in every situation - it may be simply a cap on the liability of the tenant.
     
  20. Chilliblue

    Chilliblue Well-Known Member

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    Thats how I read it