Lease is coming to an end... what next? (Qld)

Discussion in 'Property Management' started by Sheldrick, 28th Jul, 2019.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Tom Rivera

    Tom Rivera Property Manager Business Member

    Joined:
    1st Jul, 2015
    Posts:
    2,718
    Location:
    South East Queensland
    Hi Luke, poor terminology on my behalf and I'm glad you asked me to clarify. Like many things we deal with, there's no legislation that exactly defines this point.

    The REIQ's standpoint is that Form 12's should not be issued with lease renewals. Their most recent advice received from a representative of QCAT, Senior Member Peta Stilgoe, is that the practice is not advised and that she would personally dismiss any application made by an agent for termination without grounds in this particular situation.
    Although individual Adjudicators are able to make any decision they see fit, public advice like this from senior members tends to set the guidelines for what sort of result you would expect to receive in a QCAT situation.
    Further, tenants are able to apply to QCAT under Section 291(3) of the RTRA Act to have such F12's dismissed on the grounds that the F12 was retaliatory (i.e. sign the lease or you're out)

    That being said, under Section 62 of the same act, the tenant must (well, is supposed to) return the tenancy agreement within 5 days of issue. The implication is that we can withdraw the offer at that time and proceed with another course of action- though of course the ultimate result is dependent on all the individual circumstances and how your local Adjudicator is feeling on the day...!
     
  2. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

    Joined:
    1st Jul, 2015
    Posts:
    1,874
    Location:
    Australia
    I remember reading a report from the tenants union where they suggested that the practice may contravene the REIQ code of conduct, but I would be very interested to know if any agency has been sanctioned for it. I suspect not.

    Would be interested to know when that advice was given, as this scenario - not exactly as the notice was issued after the tenant advised they wouldn't sign the lease and wanted to continue periodic (which is arguably worse) - was tested in Donovan vs Inkster with Senior Member Endicott in 2015. StackPath link to the law library if anyone is interested, but summary below: (Sorry this is a long one)

    - Tenant was on a fixed term tenancy
    - Tenant did not want to sign a new agreement and wanted to continue periodic
    - Agent advised tenant if he didn't sign new agreement he would be issued a notice to leave
    - Tenant pursued periodic lease on the basis of clause 6 of the residential tenancies agreement
    - Agent issued notice to leave without grounds
    - Tenant commenced QCAT proceeding to restrain the operation of the notice on the basis of a retaliatory action
    - Application was dismissed
    - Tenant appealed against decision
    - Application for leave to appeal also refused

    Some of the key findings:

    - "The adjudicator stated that it was correct that an agent could require Mr Donovan to sign a further fixed term lease and could serve a notice to leave if Mr Donovan would only consider a periodic tenancy.
    - The adjudicator referred to Du Preez v Linda’s Homes Pty Ltd, a decision of the Appeals Tribunal which involved retaliatory action.5 The adjudicator explained how the Appeals Tribunal had concluded that retaliatory action is not to be given too broad a construction.
    - Under 291(3), a lessor may not give a notice to leave if giving the notice constitutes taking retaliatory action against the tenant. There are other circumstances which prevent a lessor from giving a notice to leave in addition to disentitlement due to retaliatory action. The adjudicator considered those other circumstances set out in section 291(2)(b)(i) and (ii) and concluded that they did not apply in this case.
    - The adjudicator also expressly considered whether there was retaliatory action in terms of section 291(3). In doing so, he set out by way of explanation a hypothetical example of retaliatory action when a tenant asked for repairs to be carried out, a lessor refuses to conduct repairs and then issues a notice to leave without grounds. By using this example, the adjudicator endeavoured to explain that the current case involving the negotiation of a fresh term did not come within the category of retaliatory action involving a tenant’s rights being breached.
    - Mr Donovan did not establish any right to continue to reside in the premises on a periodic basis. If he had held over after the expiry of the fixed term and if no prior notice to leave had been issued, then and only then would he have had a right to remain in the premises as a tenant on a periodic basis based on clause 6 of the standard residential tenancy agreement. Given the fact that the notice to leave was given prior to the expiry of the fixed term, that right did not arise on the facts of this case. The notice to leave was not a retaliation against Mr Donovan endeavouring to enforce a relevant right against the lessor.
    - The lessor had a right to refuse to renew the tenancy on terms that the lessor did not find palatable. If Mr Donovan would not agree to a fixed term, then the lessor had every right to seek out a new tenant who would agree to a fixed term. In the absence of an agreement by Mr Donovan to leave the premises at the end of his tenancy, a notice to leave had to be issued in order for the lessor to be legally able to install a new tenant in the premises. The adjudicator was correct to say that this was just commerce and not a breach of the lessor’s legal obligations to Mr Donovan."


    Each to their own of course but I have still not seen anything that precludes this course of action, and in fact the above gives a strong indication that it is acceptable.

    - Luke
     
    Last edited: 3rd Aug, 2019
  3. Michael Mitchell

    Michael Mitchell Well-Known Member

    Joined:
    17th Sep, 2018
    Posts:
    1,379
    Location:
    Brisbane (Nundah)
    ^ Very good to know, thank you for posting. Key points:

     
    Tom Rivera likes this.
  4. D.T.

    D.T. Specialist Property Manager Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    9,189
    Location:
    Adelaide and Gold Coast
    Good write up luke.

    This is why we always negotiate our renewals a fair way out, so theres still time to send a notice to leave if desired.
     
    Michael Mitchell likes this.

Build Passive Income WITHOUT Dropping $15K On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia