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Break Lease & Generous Owner?

Discussion in 'Property Management' started by Pumpkin, 28th Sep, 2016.

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  1. Pumpkin

    Pumpkin Well-Known Member

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    Just wonder whether anyone has come across a generous Owner who forgo their rights, and didnt insist on tenant meeting their obligations.
    Generally in a break-lease situation, Tenant pays for Let fee, rent for remaining period etc.
    Dpes anyone have a situation where an Owner let go of this? Especially for longterm tenants. There is no hardship involved, just change of mind....
    Thanks in advance for sharing.
     
  2. Xenia

    Xenia Adelaide Property Manager Business Member

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    Yes private landless do this all the time.
    Drives me nuts.
     
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  3. Pumpkin

    Pumpkin Well-Known Member

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    @Xenia : Thanks for this. But would you mind to elaborate? Did you get paid in the end?
     
  4. thatbum

    thatbum Well-Known Member

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    Yeah all the time - especially because often there is little or no actual loss to the owners.
     
  5. Pumpkin

    Pumpkin Well-Known Member

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    Who will pay for the Let-fee in finding tenants, and the gap between the Exit Date and the original Lease End Date? The rental market is very slow now...
     
  6. thatbum

    thatbum Well-Known Member

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    Well the fixed costs like the letting fee are pro-rata'd anyway, so if its towards the end of the existing fixed term, an owner would only be entitled to a small % of them anyway.

    Plus if there are replacement tenants moving in quickly, then hence a potentially very small loss.

    A slower rental market makes it hard though.
     
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  7. D.T.

    D.T. Adelaide Property Manager Business Member

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    Because they legally have to per section 94 of the Act
     
  8. Xenia

    Xenia Adelaide Property Manager Business Member

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    Pumpkin sorry - black outs in Adelaide getting to my head.

    I have spoken to many self managing landlords - dealing with one right now, where they really get into the "story" behind the break lease.
    "this poor couple is getting divorced and the one left cannot afford the total rent so we are letting him out of the lease" - I normally try to talk them out of just "letting people out", it's a contract and an assurance of cash flow for the investor. A bank would never let you out of the mortgage payments if you no longer can afford it, they would allow you to default and then take legal action.

    We talk landlords out of just letting people out of a contract and talk them into applying break lease charges etc... I feel this is the better business decision to make but it is not up to me and I can only act according to landlords instructions.

    If a landlord does insists on allowing a tenant out of a fixed term lease with no penalties and they are happy with not charging until a new tenant is sourced then they miss out on that rental income and we miss out on commissions associated with that. We don't charge commissions on rent we have not received. I don't bother with it, it would be too petty to even look at.

    Break lease charges in SA include the tenant reimbursing a letting fee to the landlord or part of a letting fee depending on where in the timeline the break lease occurred.
    we charge letting fees according to the management agreement, it just automatically goes through our system. If the landlord has instructed us not to get a reimbursement from the tenant then they wear all of this cost.

    Hoping that makes sense.
    X
     
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  9. Pumpkin

    Pumpkin Well-Known Member

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    @Zenia Sorry about the power failure. Still baffles me how the whole state is affected. Thought we live in first world country...
    Lucky for you if those landlords are your self-managing friends. Not too nice when they are your clients.
    Stay well. Long weekend ahead.