Is tenant liable for break lease costs and ongoing rental

Discussion in 'Property Management' started by JK200SX, 10th May, 2020.

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  1. JK200SX

    JK200SX Well-Known Member

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    Hi,

    Just wondering if anyone can give advice/ point me in the right direction on this....

    I have received an email from my property manager that my tenant has requested to break her lease, with her requested end date being 29th of May. The lease isn't due to expire until Mid August. The property manager has stated that I may not be able to claim break of lease fee and ongoing rental (until a new tenant is found or lease expiry in August).

    The property manager has provided an attachment where she believes I cannot claim for these losses from the outgoing tenant. I understand that if a person has been impacted by Covid19 then this may be the case, however the tenant has purchased a property that she will be moving into.

    The property is in Melbourne, and the attachment the PM provided is the same as this link:

    Coronavirus (COVID-19) and your rights

    What do you guys think? Somehow I feel that the PM has the tenants interest in mind rather than my own.

    Thanks for your help.
     
    Last edited: 10th May, 2020
  2. Lil Skater

    Lil Skater Well-Known Member Business Member

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    If the tenant isn’t affected by Covid they are still liable for all costs, however VCAT can always make another determination.

    As far as I see it, the main risk to a tenant who has purchased a property would be a longer vacancy and there may be argument they may not be liable for full rent until a tenant is found beyond what would normally be expected at any other stage. However all other lease break costs would be incurred regardless of covid and therefore should be liable.
     
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  3. Buynow

    Buynow Well-Known Member

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    What does the lease state about break costs?
     
  4. JK200SX

    JK200SX Well-Known Member

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    Covered by the tenant
     
  5. thatbum

    thatbum Well-Known Member

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    I don't think it matters what's in the lease actually.

    Its all governed by common law and legislation.
     
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  6. Buynow

    Buynow Well-Known Member

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    I thought that leases signed before the March NSW legislation could have two options - tenant pays cost of advertising and rent lost or a fixed number of weeks break cost?
     
  7. Lil Skater

    Lil Skater Well-Known Member Business Member

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    NSW is legislated.

    Victoria is common law, for the moment.
     
  8. JK200SX

    JK200SX Well-Known Member

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    Thank you. So what does this mean? Is it as per lease agreement, or the new covid rules?
     
  9. Marg4000

    Marg4000 Well-Known Member

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    The covid rules, if applicable, will over-ride the lease agreement. If doubt exists, you will probably find the advantage rests with the tenant.

    You may be best to agree a break-lease arrangement with the tenant - xx weeks rent payment.

    For you, I can’t see rental prospects being better in August than now. If anything, they may well be worse.
     
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  10. JK200SX

    JK200SX Well-Known Member

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    Thanks Marg. How do we determine if the Covid Rules are applicable in this situation?
     
  11. Marg4000

    Marg4000 Well-Known Member

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    Your PM should be able to advise.
    Depends on leglislation, differs between states.
     
  12. JK200SX

    JK200SX Well-Known Member

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    I don't think my PM knows...... that's why I'm asking the brains trust here :)
     
  13. Marg4000

    Marg4000 Well-Known Member

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    Then get another PM.
    Why employ someone whose advice you don’t trust?
     
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  14. The Gambler

    The Gambler Well-Known Member

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    I'm in the exact same situation. Literally the identical situation! Crazy.
    Not hardship and my renter has paid in full until end of May which is end of lease.
    I'm quite sad to lose my T as she was the perfect renter, but her parents bought her a place close by. My renter has paid rent in full and also paying all the extras that are required.

    Honestly, your PM sounds useless. There is no hardship in this situation. So why wouldn't the normal rules apply?

    I can't imagine why you couldn't claim at least 1 month and break lease fee due to your tenant not breaking for Hardship.

    If your T can break and not pay in this situation then you're just helping her to buy a new apartment because the T doesn't feel like paying... Insanity.
     
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  15. Lil Skater

    Lil Skater Well-Known Member Business Member

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    If there’s no hardship, then normal rules would apply (and your PM should be telling you which ones apply based on the tenants circumstance).

    From what you’ve said, without knowing the situation I would say Covid doesn’t apply.

    Exactly as in my first post though, VCAT can always determine what they feel is fair and proportionate if the tenant disagrees. But this is the same as whether Covid existed or not - I just think people should be aware that sometimes what you should receive doesn’t always mean you will receive it if there’s a dispute. No dispute, no problem.
     
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  16. Mat

    Mat Well-Known Member

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    It's all detailed in https://content.legislation.vic.gov.au/sites/default/files/2020-04/97-109aa092 authorised.pdf for Victoria - COVID measures are in part 16 (page 553).

    However, there is no requirement in Victoria for the tenant to be impacted by COVID for the rules to apply anyway, and under current rules a tenant cannot give a notice to vacate, even under a periodic tenancy, unless it's for one of a very narrow set of criteria. They are required to either a) terminate the lease by mutual assent, or b) have the lease terminated by VCAT. They're looking to change this, but it doesn't apply yet. As such, the tenancy literally cannot terminate unless you and they agree on the terms. Your agent should know this.
     
  17. AlphabetSoup

    AlphabetSoup Active Member

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    Mat, that is not quite true - State Government have advised that tenants in a periodic tenancy absolutely can still provide notice to vacate as they could before - there was an error in the wording of the legislation. CAV have advised that regulations correcting this issue will be released in mid-May.
     
  18. Mat

    Mat Well-Known Member

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    It's definitely true, unfortunately, because the issue is that the law is the law. Until that new regulation is released, it doesn't matter what the state government says in press releases, what matters is the wording. That's what the tribunals and regulators have to abide by - setting a precedent that the government can simply say "whoops, that wasn't meant to happen" and change the application of assented legislation by media is not something that should be even entertained.

    Remember when ScoMo announced a "moratorium on evictions" and everyone decried it because that moratorium meant nothing until the actual states passed actual legislation? This is exactly the same issue.
     
  19. AlphabetSoup

    AlphabetSoup Active Member

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    Tenants union have advised the updated legislation was released yesterday evening. It’s a bit wordy but I suspect it has covered the issue regarding tenants leaving after providing sufficient notice to vacate during a periodic lease.
     
  20. Lil Skater

    Lil Skater Well-Known Member Business Member

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    Well yes, and no.

    VCAT can use other methods of making orders beyond what is expressly written in the RTA. Either by common law principles, or other Acts that may be applicable to a case. I'd say common sense would prevail on this even before it's rewritten.

    A lease break is a breach of the tenancy though, and therefore the tenant does not have to provide 28 days' notice in normal circumstances so long as the owner is compensated for their loss. It also means that the Covid legislation banning an intention of notice to vacate doesn't apply as the tenant hasn't provided intention to vacate until Section 235.

    The new regs have come out, but haven't had a chance to fully divulge them completely just yet.