Covid collateral damage

Discussion in 'Legal Issues' started by Francesco, 28th Jul, 2020.

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  1. Francesco

    Francesco Well-Known Member

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    A hypothetical situation of unjust outcome can be developing courtesy of the Commonwealth and the Victorian governments.

    A hotel-student accommodation (commercial tenant) setup in Victoria suffers a downturn of about 25%. It charges for the rent it pays to owners, who may be 200-300 pensioners. The tenant charges at short-term hotel rate and pays to owners at long-stay rate.
    The tenant secures a Jobkeeper from the Commonwealth for one staff member.
    The tenant claims hardship and unilaterally imposes 50% reduction in the agreed rent under the Victorian Covid regulations.
    It further reduces rent to 7.5% with incomplete data and refuses to answer queries or negotiate.
    Owners take it to the Small Business Commissioner for a fee.
    Findings by the Small Business Commissioner that reduction should stick to 50%.
    The commercial tenant refuses to abide by the findings.


    Where is the justice to the small owners?
     
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  2. spludgey

    spludgey Well-Known Member

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    Unfortunately in extraordinary times, there's always someone that's worse off than others.

    I'm not quite sure of the point of this thread though?
     
  3. Francesco

    Francesco Well-Known Member

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    The point of this thread is obvious, that it is instructional for government decision makers to avoid perverse outcomes.

    However, I agree that it depends on the reader's moral compass and compassion toward the plight of small property owners, who bought the investment product to support their retirement. They are being exploited by the situation. A person's plight could also be even another's opportunity for a fee.
     
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  4. MTR

    MTR Well-Known Member

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    I would have thought this being a property forum there would be great empathy for plight of property owner. It royally sucks
     
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  5. thatbum

    thatbum Well-Known Member

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    It doesn't sound like you have pursued your legal remedies though?
     
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  6. Francesco

    Francesco Well-Known Member

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    I will have to because of tenant's intransigence with regards to providing full disclosure as set out in regulations.

    They may not even be qualified to have Jobkeeper as they have not disclosed it.
     
  7. MTR

    MTR Well-Known Member

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    This is such a disaster
     
  8. Simon Hampel

    Simon Hampel Founder Staff Member

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    Kind of by definition - a pandemic is indeed a "disaster".
     
  9. MTR

    MTR Well-Known Member

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    I feel sorry for any landlord whose been royally screwed .......When they are just trying to get ahead in life, and provide for their family

    Sadly, Their financial obligations do not vanish ........pandemic or no pandemic
     
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  10. MTR

    MTR Well-Known Member

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    Does this go to VCAT?

    I believe its backed up till Feb/march 2021:(
     
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  11. MTR

    MTR Well-Known Member

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    I will share my woes

    I have had a non paying tenant living in one of my properties for 8 months

    To add insult to injury I am also paying for their water and electricity.

    I was in the process of evicting this tenant, days away, had a writ.
    this was my First eviction in 8 years

    i am waiting for 12 August to see if I can get them evicted. This is in Atlanta, Georgia currently have evictions on hold And keep extended

    That’s life. I dislike people taking advantage of landlords, sucks
     
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  12. Francesco

    Francesco Well-Known Member

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    I can emphatise with you that small time property owners face this type of difficulties.

    I once had a rent-to-own arrangement with a tenant who refused to pay rent. It costed me $6k in solicitor/barrister fees to get the judicial system to recognise and declare that the tenant should be evicted. It took further political action to get the bailiff enthused to evict the tenant, weeks later. My financial and psychological losses mounted!

    In a different setting, a Tribunal member commented 'why did you do this?' when I expressed a disappointed outcome with her ruling!
     
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  13. MTR

    MTR Well-Known Member

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    Its financial stress and mentally draining

    I arranged for my contractor to visit her and in US they do what’s called...... Keys for Cash

    So i pay her $1000 to handover keys, but she did not go for it. This would be easiest way to get her out

    Maybe some have done this here...... if it works its cheaper than evicting
     
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  14. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Commercial resi accom providers have always been exposed to risks that could flow to property owners. This is not a new thing just due to covid.
    What sort of contract do owners have ? Its usually a bad one. Often owners rush in thinking of the good things (high yield etc) and ignore all the things that can go wrong. Mind you nobody picked a pandemic to wipe out students and short stays and also any hotel use for tourism.

    You could face the financial collapse of the commercial operator before you even get your property back and then what will you all do ? I recall last recession there were three Sydney short stay hotels caught up in such a fiasco. The owners all eventually agreed to pay a mint to have the three towers converted to apartments. They were vacant 18mth with some bankrupties etc....Ended up taking three years.
     
  15. Francesco

    Francesco Well-Known Member

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    The process is to go for mediation before the VSBC. It will issue its finding in the form of a certificate if there is no settlement. It can go to VCAT then.
     
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  16. Francesco

    Francesco Well-Known Member

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    Owners learn the hard way!

    If the operator goes into rental arrears, the terms and conditions allow owners to dismiss the operator upon a 14 day notice. The owners can then take back the apartment and get a real estate agent to rent it out. Most apartments are self contained with kitchen and bath. Some are decent with windows, balconies, aircond, card entry and concierge.
     
  17. Francesco

    Francesco Well-Known Member

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    The other collateral damage is to owner's loss of the use of landlords insurance that owners have bought. Stripped off owner's entitlement to evict the tenant for rental arrears, landlord insurance cannot be claimed and the owners are tied along with the cost of tenant's intransigence and maybe zombie-like existence.
     
  18. Francesco

    Francesco Well-Known Member

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    If I have known such a system exists. However, it was suggested to me that a bikie representation is available. I did not take up the offer!
     
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  19. thatbum

    thatbum Well-Known Member

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    So i want to be sympathetic to your situation, but at the moment it kinda sounds like this is the rundown:

    - Tenant has downturn of around 25% by your estimation (tenants claim higher?)
    - Tenant claims hardship and claims 50% reduction unilaterally.
    - Tenant then claims 92.5% rent reduction? (is that right?)
    - You take it to SBC for... mediation right?
    - Which means you agreed to the 50% reduction in mediation...?
    - Tenant doesn't actually agree to the mediation settlement or outcome?

    ...and then have you pursued your legal options? I would have thought you had quite a few, but its not clear what you've tried.

    So its hard for me to get on board a complaint about the system if you haven't even asserted your rights under that system.
     
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  20. Francesco

    Francesco Well-Known Member

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    Response in red in the quote.
     
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