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Break lease problem in Perth - Pls Help!!

Discussion in 'Property Management' started by sanj, 13th Oct, 2015.

  1. sanj

    sanj Well-Known Member

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    Hi guys, need the advice on the brains trust here, in particular @thatbum and anyone else well versed in legalities of the RTA. Scenario below.

    -Relative needs to break lease due to purchasing a house, currently running until Feb 2016. Original lease of 2 years signed in Feb 2013 and 1 year extension granted to take up to current.
    - Notice given in early August about moving out by 10th september or so
    - Market in this area has dropped significantly (luxury property) and landlord is insisting on asking for existing price from 3 years ago.
    - repeat offers pay any difference in rent if asking price reduced, landlord has refused
    - Old photos from 4/5 years ago being used, fully staged for sale etc. Imo not representative of the listing (I believe this contravenes the rules, can anyone confirm?)
    - signboard only went up last week instead of immediately
    - fair few inspections but no one interested which tells me it is overpriced and the photos online arent accurate as people dont like the product in the flesh

    IMO landlord has not mitigated any loss here and is being stubborn, what are the suggestions here?

    Should we stop paying rent and elect to go to tribunal? Can the landlord refuse to lower rent indefinitely and expect us to keep paying?

    Does anyone have a lawyer in mind who can help with specific legal advice here?
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Hiya,

    Refer to http://www.tenanthelp.com.au/wa/TheDutyToMitigateLoss/ for pretty good info, it talks about the duty of mitigating the loss. Doing the best to minimize change over time is very important. Offering to pay out the rest of the lease, or the difference in what rent is achievable are very fair options and is what the tribunal will likely suggest.

    I do not recommend stopping paying the rent. You still have to fulfill your side of the contract while it's still valid / current.

    I'm not certain in WA (check with @thatbum) but in SA, break costs (being re-advertising, re-letting fees) are pro-rated based on the duration of their entire tenancy and not just the current lease duration. In some states you pay the whole let fee / advertise fee.

    You really need to have documented all the time points where things happened as well as all the communications (verbal, written, emails) all documented with a time line too. Lodge it with Tribunal as quick as you can so that you can get your case heard promptly (so that you can stop paying rent). Take along the above evidence and also evidence of market conditions.
     
  3. sanj

    sanj Well-Known Member

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    thanks @D.T.

    would you recommend getting legal advice and someone to represent us at the tribunal? we're talking a $2k/week rental so the sums being talked about are significant.
     
  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    Definitely get advice, but rental tribunal generally prefers people are self represented. Here they'll make you sit in a room and attempt conciliation first anyway.

    Is the rental through agency or owner directly?
     
  5. sanj

    sanj Well-Known Member

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    it's through an agent.

    does anyone have any recommendations for lawyers/advocates to speak to? @thatbum is this something you can help with or know someone who can?
     
  6. thatbum

    thatbum Well-Known Member

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    From the sound of things, its a very tricky legal situation.

    Unfortunately I don't know any private lawyers who are as savvy in this area as I am. But I'm happy to look at it initially at least and give some advice.

    The advice will probably be something along the lines of withholding rent asap, and getting the owner to take more reasonable steps to mitigate - but there's a lot of variables and things to check before that becomes solid advice.

    Perhaps PM me their details (and the landlord's for a conflict check) and I can contact them when I have some time next.
     
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  7. sanj

    sanj Well-Known Member

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    thanks have PM'd you
     
  8. Beelzebub

    Beelzebub Well-Known Member

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    I was in a similar situation when I purchased my first house. I told the agent I would pay in full withholding all the future rent until someone was found. Now, this is probably going to be unpopular here and I would be furious if someone did this to me.

    But, it seemed to work. They found someone pretty quick when they realised I was serious. 10 days in arrears, they realised I was serious and suddenly lots of inspections and someone was found.

    The PM was furious, threatened to take me to VCAT, and said I would never rent again etc (In fact the way she carried on only encouraged me really) But as I said to her: feel free to take me to VCAT, I have the cash for the arrears sitting in my account and I intend to pay every cent I'm obliged to. But only when you show me you have secured a new tenant and that your time would be better spent focusing on that rather than making empty, time consuming and pointless threats.

    It was harsh, but at the end of the day I had to look after my interests and I had a pretty good feeling that the PM wasn't going to be rushing too hard to find the first person they could to take over the lease.

    Anyway, make of that what you will.
     
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  9. Scott No Mates

    Scott No Mates Well-Known Member

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    @Beelzebub - best way to put pressure on the agent. Once you tell them that you're going to continue to pay until they find someone they have little incentive to find a replacement especially if the market has dropped.

    How hard is it for the agent not to inform the building owner that the tenant is going to honour their commitments until a replacement tenant is found but at a lower weekly rate? vs being found out as the tenant has stopped paying until a tenant is found? (this will of course be a breach of the lease and create work for the PM).
     
    Last edited: 13th Oct, 2015
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  10. Jackson

    Jackson Member

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    The RTA in most cases will be treated as a minor case claim. Under the magistrates court (civil proceedings) act it states that you cannot have a solicitor for minor case claim. However there is usually a tenant's advocate on the day that may be able to assist/represent the tenant.

    @sanj can you clarify what you mean by extension. Did the agent sign them up for another 12 months fixed term lease?

    I agree with D.T. there are other ways to resolve the issue besides not paying rent. If you believe that the landlord has not taken proper steps under the RTA to mitigate their loss, apply to the Magistrates Court (court closest to the where the property is located) by lodging a Form 12 to terminate the tenancy agreement.

    It does sound like the owner/agent in this case has not taken reasonable steps to mitigate their loss, however this will still need to be demonstrated in court. Some materials that will support your application:
    Emails exchanged between agent/owner and your relative, written proposal of paying the difference in rent to when lease expires, print out of similar properties in current market, timeline of when notification was sent to owner/agent, how many home opens conducted to date, when was the sign first erected, when was it listed on re.com.au

    The parties will most likely go before a Registrar to see if the matter can be resolved. The discussion before the registrar is on a without prejudice basis, in other words whatever said/proposal in the conference room will not be used as evidence in the courtroom. In the event if the matter cannot be resolved it will go before a magistrate for trial hearing, and from experience I don't think that it will be heard on the same day, however check with the registrar.

    My advice is to sell your side of the story convincingly to the registrar. Show that you have been reasonable with your dealings and that there is a lack of effort from their side. Hopefully the registrar will get them to come to the table. This way the matter could be resolved, otherwise your relative may have to come back to court again and that may be a 1-2 month wait.
     
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  11. thatbum

    thatbum Well-Known Member

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    I don't agree with this. You can't just apply to court to terminate the agreement - you need grounds.

    This is why it is quite a technical legal issue that needs very specific legal advice - especially when we're talking an expensive rental. For example, its not even a minor case claim once it goes over a $10k dispute.
     
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  12. sanj

    sanj Well-Known Member

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    Thanks @thatbum that was certainly my next question as we could end up disputing yo to 30/40k or so if no tenant is found up til end of lease.

    I also dont know how a magistrate could quantify it until a new tenant is found as the total loss woulf surely need to be determined before the magistrate could decide how much of that loss is the tenants responsibility and how much is due to landlords inattention
     
  13. SeafordSunshine

    SeafordSunshine Well-Known Member

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    Dear Sanj,
    could I suggest that you get/keep copies of All the luxury houses in your relatives area available for rent? This may help with your claim,
     
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  14. Jackson

    Jackson Member

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    That is why I suggest you continue to pay your rent and keep the claim within the minor case jurisdiction. You don't want it to exceed 30/40k. When a solicitor gets involved it will be expensive and the issue is no longer the property in question, it is the legal costs. Further, a solicitor will need to lodge your pleadings, discovery etc so it all equals to one expensive exercise.

    The grounds to terminate will be that the owner/lessor has not taken reasonable steps to mitigate the parties loss such as looking for new tenants etc. From experience tenants break their lease all the time for various reasons and it is quite common in court.

    @sanj there has been previous cases where magistrate has terminated the agreement for the reason the lessor/agent has not taken reasonable steps to mitigate the parties loss.
     
  15. sash

    sash Well-Known Member

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    Have a look at hardship...ask him to say that if he has to pay a mortgage and rent it would put in hardship. :)

     
  16. sash

    sash Well-Known Member

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  17. D.T.

    D.T. Adelaide Property Manager Business Member

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  18. sash

    sash Well-Known Member

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    Hardship of course! ;):p

    Paying a mortgage and rent...
     
  19. thatbum

    thatbum Well-Known Member

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    There's only two real grounds there - undue hardship and breach by landlord.

    At common law, tenant hardship termination provisions around the country generally need something more than pure financial hardship. Like medical grounds or something else.

    This makes sense because a termination order will adversely affect the landlord financially as well.
     
  20. Perthguy

    Perthguy Well-Known Member

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    Any updates on this @sanj?