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Break lease

Discussion in 'Property Management' started by Allgood, 13th May, 2016.

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  1. Allgood

    Allgood Well-Known Member

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    We have a tenant who is breaking an 18 month lease about 9 months in because she's moving for work. She is liable to pay the rent until a new suitable tenant is found who pays the same amount each week. The thing is, she's paying top dollar and as we're heading into winter im not sure we'll find some one to pay the $365 she's paying so she might be footing the bill for a while.

    Would we be within our rights to go and do a few odd jobs, new blinds etc once she moves out but is still paying rent?

    Similarly, what if we kept advertising and actively looked for tenants, but decided to put it on the market. Would she still pay rent or would that be seem as interfering with the process of finding a tenant? It would be a great way to avoid having vacancies leading up to a sale, not that we're considering selling at this point.

    Interested to hear your thoughts.
     
  2. thatbum

    thatbum Well-Known Member

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    Generally anything that interferes with finding a new tenant is risking limiting your claim for break lease losses - so you have to be careful.

    Is this in NSW? Is there a break lease set fee in the lease?

    If you're worried about the rent being too much, you can potentially lower it (especially with the consent of the outgoing tenants) and seek the difference from the outgoing tenants.
     
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  3. D.T.

    D.T. Adelaide Property Manager Business Member

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    Act actually specifies mitigating your (and your tenant's) loss to the best of your ability.
     
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  4. MyPropertyPro

    MyPropertyPro SE Qld Property Management & Investor Services Business Member

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    If your investment property is in QLD as stated above also, putting the property on the market For Sale would be seen as not mitigating loss for the tenant as it would reduce the chances of renting it in most cases.

    Yes you can do odd jobs if the tenant has moved out however you would still need to serve entry notices or get the tenants approval over the phone/email. These improvements would possibly increase the chances of reletting also.

    Again, yes it is a common scenario where the rent is reduced however the current tenant would be liable to pay the balance for the remainder of the original lease term as this would be a loss incurred by yourself.

    Jodi
     
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  5. Allgood

    Allgood Well-Known Member

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    Thanks for the great replies.
    The property is in NSW and the lease says that there are some additional fees for the tenant, but mainly about re-advertising etc.

    In terms of work carried out it would be nothing I wouldn't ask a handyman to do as general upkeep so I'd just have organise it through the PM. As I said, not considering selling, I was just curious.

    Thanks again guys.
     
  6. Zepth

    Zepth Member

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    Out of curiosity why would you need to keep serving notice for entry?

    Once the tenant returns the keys the lease is over and the landlord regains possession.
     
  7. thatbum

    thatbum Well-Known Member

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    You don't need to keep serving notices for entry - the lease is terminated by 'abandonment' provisions of most state's legislation.

    You do need to keep the property available for rent while doing any "odd jobs", and they shouldn't get in the way whatsoever of any prospective tenant that might be able to move in asap.
     
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  8. Allgood

    Allgood Well-Known Member

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    Hi again,
    So following on in this thread....
    I decided not to do any work on the house, but had a maintenance man do an odd job to help with the releasing. The tenant moved out about a month ago and is still paying rent while we search for a new tenant. We agreed to drop the rent by $15 with her paying the difference but still no joy.

    The pm rang today to say the tenant is taking us to the tribunal so she can break the lease. According to the pm we can avoid the tribunal by negotiating a 4 week payment and ending the lease or go to the tribunal and let them decide the outcome where they may:
    1. Make her continue paying until a new tenant is found.
    2. Continue to make her pay at a reduced rate
    3. Terminate the rent immediately with no compensation to us.
    4. Terminate the lease with 4 weeks rent to us as compo.

    Our landlord insurance has tenancy protection for loss of rent, but only if the tenant disappears, not if it is decided that the lease can be terminated.

    Other than making the tenant disappear (I know a guy!) does anyone have advice?

    Thanks in anticipation.
     
  9. thatbum

    thatbum Well-Known Member

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    So what orders are the tenants seeking at tribunal exactly? And what grounds are they arguing towards those orders?
     
  10. Allgood

    Allgood Well-Known Member

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    Umm, not sure about the orders, simply that they believe that we've had long enough to find a new tenant and that it is unfair to ask them to continue to pay the rent if they're not living there?
     
  11. thatbum

    thatbum Well-Known Member

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    Yeah so that's not a real legal basis for what they're asking for.

    At a stretch, maybe they're angling for termination based on hardship, but since its purely financial hardship, its pretty awful grounds since its just equally matched by your financial hardship if they were to be let off.
     
  12. Allgood

    Allgood Well-Known Member

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    I agree. I'm thinking of asking 4 weeks rent plus bond and moving on, but she probably won't agree so we'll go to tribunal.