Issues with Tenant - Investment Property

Discussion in 'Property Management' started by mercthunder, 23rd Jan, 2018.

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  1. mercthunder

    mercthunder Active Member

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    Hi all,

    I have an investment property near Bendigo Vic and it's currently being managed by an agent. During the recent routine inspection the house has been kept in a very messy state. There is actual dirt and mud on the walls, stains all over the carpets like someone had dropped car engine oil on the floor, and clutter all over the yard. They basically have old tyres, engine parts, run down cars etc all heaped up in a pile on the front yard.

    I have spoken to the agent on how i can evict this tenant, and to my frustration it appears i really can't do anything. The options i have been given are:

    1) Send a Fixed End of Lease Notice where the tenant needs to vacate the property at the end of the lease. I was told i can't use this option as the lease expires in March and the tenant needs a certain number of days notice. I was told the only option is try and get the tenant on another lease for 3 months (if they even sign a new lease) and then send the End of Lease Notice once the new lease starts. I was also told if the tenant does not wish to sign a new lease, they can stay at the property on a periodic lease and there is nothing i can do to change that? My worry is with this scenario without any lease, if the tenant damages the property and i need to evict the tenant, the insurance company may not pay me loss of rent until i find a new tenant given there is no lease!

    2) Send an unclean premises notice and if this is sent 4 times, we can take the matter to VCAT and try and evict the tenant. I have been told by the agent, that 99.99% of the time VCAT will not rule in favour of the land lord as they believe the tenant can clean the property and the agent has strongly advised against using this option.

    I feel frustrated, and feel like i have no option as i sit and watch the interior of my investment property get destroyed. Is there anything i can do in this scenario or is the information above correct?

    Thanks.
     
  2. D.T.

    D.T. Specialist Property Manager Business Member

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    Given that your end of lease is coming up soon, or soon enough for that to have been considered an option, how long have the tenants been there? Was the property like that at other inspections?

    Not sure the rules in Vic, but here in Adelaide we do a re-inspection where we have a list of improvements we want to see and return back to the property in 2-4 weeks. If not improved we can breach them for things. I assume Vic has similar.

    Your PM is right that tribunals can be quite tenant sided. But if you sit and do nothing, your insurance may decline claim as they'll say you didn't mitigate the issue. I assume Vic has a malicious damage breach for immediate vacate like other states.

    Samantha (@Lil Skater) is a gun PM in Melbourne, who knows Vic rules better than anyone, I'd see if she's familiar with more options that can be taken there.
     
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  3. Lil Skater

    Lil Skater Well-Known Member

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    Hey Merc, your PM is mostly right.

    Unfortunately if the tenancy is more than 6 months, the End of Lease Notice is 90 days' plus postage - which means you're unable to serve this notice.

    Your options would be to sign a new (shorter) lease and use this notice, however this means you would have this tenant in there until at least June - not ideal.

    The other option would be to issue a 120 day notice to vacate for "no specified reason". If served now, you'd basically be looking around May to have possession back if they don't vacate sooner.

    With either notice the tenant can leave sooner providing 14 days' notice. Technically they can't during a lease, but you wouldn't be able to claim lost rent for them breaking the lease as you terminated it first - plus I'm sure you'd just prefer them gone.

    The risk with either notice (but mainly the 120 day) is the tenant can claim that the notice has been served in retaliation. This doesn't always happen, but the tenants do have between 30 and 60 days to bring the matter to VCAT to have the notice thrown out - so good practice would be to issue this a while after the inspection and any other dealings you've had with the tenant.

    Re unclean premises breach notices, you actually need to issue two breach notices and give the tenants 14 days to rectify each time. On the 3rd consecutive notice for the same thing you can issue a 14 day notice to vacate (not four notices). The PM is right however, if this is taken to VCAT they very rarely will give a possession order based on untidy premises. All said and done this process will likely take about two months as well.

    The other alternative is a 60 notice for renovations, but this depends on whether the property needs it or not and if the tenant challenged this you'd just need to provide quotes of the work that's going to be completed and that it's enough that a tenant wouldn't be able to live in the property during this time.

    Has the PM indicated what the tenants are like to deal with? This should give you some indication on the best notice to issue and whether the tenant will likely be difficult and take the matter to VCAT.
     
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  4. mercthunder

    mercthunder Active Member

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    Hi @Lil Skater thanks so much for your detailed response, that was amazing!

    So far we have sent a request for a 3 month lease to the tenant but they have not responded. If they don't respond i will end up sitting her twiddling my thumbs i think! Though the 120 day notice might be my last resort if i don't hear back soon from the tenant. I actually also was unaware that a tenant can choose to not re-sign a lease and still stay in the property for as long as they want and there is nothing i can do about that either. As a Land Lord that gives me no rental income protection given the tenant has all the power to stay at the property and choose not to sign a lease. Is there any way around this issue?

    In terms of what the tenants are like to deal with, basically they are playing the system well. They are behind on rent, but the moment they fall 14 days behind they end up making a payment meaning they can be evicted. It really is becoming quite frustrating :-(
     
  5. D.T.

    D.T. Specialist Property Manager Business Member

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    How long have you been aware of this part quoted? If it were me, that would definitely come up in the discussion prior to end of lease when deciding to renew / end / periodic. You'd then be able to continue on with your eyes open on what was happening and why.
     
  6. wylie

    wylie Moderator Staff Member

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    Some agents issue a "notice to leave" with the new lease so that if the tenants don't sign the new lease, the notice to leave has been issued within the correct time period.

    I'm not sure if this works in different states (other than Queensland).

    Good luck with this situation. It is stressful and I hope things turn out.
     
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  7. mercthunder

    mercthunder Active Member

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    They have been behind on rent now for about 2-3 months but each time they fall 14 days behind they make a partial payment so they can avoid being evicted.

    I have discussed this with the Property Managers but it still doesn't seem to change my options with these tenants. They still have the ability to not sign a new lease and continue to fall behind on on rent as long as they don't pass 14 days.
     
  8. Shane1

    Shane1 Well-Known Member

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    I’m not sure how to deal with this one but I just wanted to say what an awful experience. What kind of PM could have selected this kind of tenants and the bureaucracy just makes me mad. All this protection for tenants yet nothing for landlords when stuff like this happens!
     
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  9. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    I'm a little puzzled by this statement but it might be specific to the location/State the issue is in.

    After a fixed term lease a tenant either signs a new fixed term lease or rolls onto periodic lease. On a periodic lease you should still be covered by your Landlord Insurance.

    Under a period lease the number of days notice to leave may change but you still have your rights to rental income and protection under landlord insurance.
     
  10. MyDarlinghurst

    MyDarlinghurst Well-Known Member

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    Last time i had this problem with a tenant,old tyres ,car with no wheels etc in front yard i didnt care but applauded the tenant by coming out with my friends to do the inspection and helping them clean everyday by coming out to see them.
    you must use reverse psychology,and my front yard was cleaned within a month !
    go to see them and bring cleaning gear with you

    i immediately at the next lease increased the rent to up $25 a week.
    they stayed another 6 months but no bond back
     
    Last edited: 23rd Jan, 2018
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  11. Owlet

    Owlet Well-Known Member

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    Unfortunately one of the downsides of PI.

    You say the current lease ends in March - did your PM roughly 60 days ago have a conversation with you in regards to renewal of lease, or notice periods you need to give if asking them to vacate? If this did not happen I would consider a new PM and also educate yourself on the 'rules' so you can make informed decisions and in turn instruct your PM.

    You say they have been behind for 2-3 months and they play the system.
    I may be misinformed with this partial payment aspect and perhaps Skater can clarify this if my understanding is incorrect. Lets use $350pw as an example. Tenant is 14 days late - they are issued breach in the 15th day. On the 17th day they pay $200 (or 4 days rent - as this is what some agencies do - they break it down into days). That covers 15th, 16th, 17th days rent plus one day of the other 14 owing. So they are 13 days behind. Day 18 they are are now 14 days behind - Day 19 another breach notice is issued.Your PM must continue to do this - serve notices, call and text until they are up to date - even if this is every 3 days.
    I don't know why some agencies accept partial payment - I would only accept payment in full. If they can't make it in full then go to VCAT where they can offer up their partial payments and take their chances.

    Moving forward - I would issue the 120day notice to vacate. I would also give 60 days notice of a rent increase. Make the increase significant enough that they would look for cheaper properties and hopefully vacate in 60days. The PM can also issue a notice that X items need to be cleaned, fixed repaired etc and they will reinspect in 2 weeks to make sure it is done. Also put in writing that these things must be rectified when they vacate the property. - Just my 2cents
     
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  12. Lil Skater

    Lil Skater Well-Known Member

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    No worries :)

    No real way to get around the tenant not signing a lease and instead staying on a periodic agreement. Technically there's nothing preventing you from issuing a lease renewal and a notice to vacate at the same time as it's not covered under the legislation - but part of the legislation does say you compel a tenant to vacate the property, therefore I think issuing a NTV at the same time as a lease renewal may fall under this section.

    What you could also do is issue a NTV when they hit the 15th day, the notice is deemed "served" after 5 business days - if they pay after the notice is served (ie. day 21) you can still continue to VCAT for rent arrears as they were in arrears at the time of making the VCAT application (in this case, you applied for VCAT on day 20). Even if they pay up to date, your PM can show history of poor payment and see if they can get an order that says the tenant MUST pay the full rent and if the tenant falls even a day behind you can take the tenant straight back to VCAT without having to wait the additional time. You're unlikely to get a possession order the first hearing, but if you can display that the tenant has breached the first VCAT order you may have better luck the second time around. Hope that all makes sense.

    You can also double up notices. Just because you issue a NTV for rent arrears doesn't mean you cannot issue a 120 day notice and vice versa. If you were going down this path though I would issue the 120 day first (so as it's not in retaliation to their rent arrears or condition of the property and therefore more likely to stick if they challenge it - PM just needs to play dumb and say they have no idea why you told them to issue the notice) and then issue for rent arrears so hopefully you get them out one way or another.

    Side note I see above Owlet has suggested a large rent increase, also an option. The tenant can call in CAV who will do a rent assessment and tell you to drop the rent if it's excessive, but to enforce this the tenant needs to take you to VCAT. So you're effectively flipping it around.
     
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  13. Owlet

    Owlet Well-Known Member

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    I meant to write 'lilSkater' instead of Skater- you know the PM expert person ;).
     
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  14. mercthunder

    mercthunder Active Member

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    Thanks for the advice and assistance. This forum is bloody brilliant! I now understand what my options are and at this stage i think the best course of action would be to issue a 120 day notice and also a 60 day notice of a rental increase. Given they are struggling to make repayments and are behind, the increase in rent should hopefully drive them out sooner. If it doesn't, then they will likely be more than 14 days behind in rent and i can then go to VCAT.

    My only concern here is that by using the 120 day notice, and 60 day notice of rental increase is that Terri Scheer won't pay out for any damages or fixes i need to make to the property before getting in a new tenant since there is no real history of going to VCAT on this issue. However i do have a routine condition report from the PM which shows the house being in disgusting condition.
     
  15. Lil Skater

    Lil Skater Well-Known Member

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    ** Not insurance advice **

    Typically insurance will pay out for damages that the tenants have caused. If it's deemed malicious damage though you will require a police report. The main issue here is that insurance won't typically cover vacancy on this basis and from time to time they will charge multiple excesses if they deem different damages as different events.
     
  16. mercthunder

    mercthunder Active Member

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    Hi all. After the advice from this forum i spoke to the PM today and they have advised to go with the 120 days notice option. They felt that given this tenant is quite savvy in understanding how to get around the laws, they will likely take this to VCAT if they get both the 60 day notice for rent increase and 120 days and in their experience VCAT will likely make the 120 days void because it's clear i am trying to force the tenant out. They suggested one or the other, and in this case I've gone with the 120 days. Lets hope for a brighter looking future once i replace all the carpets and fix all the damage! Thanks for all the help everyone, this forum has been a wealth of knowledge.
     
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  17. thatbum

    thatbum Well-Known Member

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    Wow I didn't realise the "end of fixed term" notice in Victoria required it to only be effective on the end of the term, and not extend out the fixed term by the notice period.

    In WA, the notice can be given anytime before the end of the fixed term, is 28 days, and giving it out during the last 28 days of a fixed term tenancy just stretches out the end date to the 28 days minimum. Pretty common sense stuff.

    Maybe LLs in Vic should push for that in the new round of amendments to the RTA.
     
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  18. D.T.

    D.T. Specialist Property Manager Business Member

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    That doesn't happen here. Need to give >28 days to end fixed term, if given <28 days it's too late. Have to wait for it to roll to periodic then give appropriate notice accordingly.
     
  19. thatbum

    thatbum Well-Known Member

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    WA being the most progressive on RT legislation - who would have thought.

    So does this mean in Vic its kinda worth having a 5.99 month lease rather than a 6 month lease as standard?
     
  20. D.T.

    D.T. Specialist Property Manager Business Member

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    WA also has the best arrears legislation with being able to send after 1 day rather than 14-15 days in most states. Vic has better handling of water bills, SA has silent bond claims. It all comes out in the wash.
     
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