nightmare close to finish

If you follow this propertychat you may hear my story before.


I had bad tenants who don’t pay rent and keep unknown dog in house as well as damage property. Premise are vacant now and my new agent is helping me to claim insurance.


There are some points I am not fully sure, I understand there are some insurance company expert in this forum. Please share your opinion with me. I appreciate!


Frist of all, re-letting fee, since tenant broke lease , will the re-letting fee covered by EBM? Feedback from EBM is they don’t cover Re-letting fee. Is that reasonable?


Secondly, grout cleaning cost. My investment property has full European input tile. Tenants did not clean tile at all, it is very dirty and I can see some yellow stein which I believe is dog urea on it. Normal Mop could not clean it so I need special cleaning machine to complete job. The cost of grout and tile clean is $650. Tenant bond still has $1000 left after throwing rubbish and do a full house clean. My agent advise me tenant remaining bond could not pay the grout and tile clean cost. I would like to know if anyone successfully used bond to do grout and tile clean.


Thirdly, carpet depreciation cost. Since there are so many yellow stein on carpet so the full house carpet needs to replace. EBM ‘s feedback is I need to pay the depreciation cost of 22.5% because carpet is more than 2 year old, which is quite a lot of money. Is it reasonable for EBM to ask so?


Fourthly, insurance access fee. I need to pay access fee of pet damage and accidental damage to EBM, which may be $800 or $1200. Lease contract tenant signed indicates tenant needs to pay LL access fee because of their damage. There are still some bond left after clean and throw rubbish. Can I use that to cover some of access fee?


Fifthly, vacant period. How is that calculated? Since property is not presentable, it has not start adverting. Will this period covered by EBM?


Wish majority of my loss could be covered by insurance I purchased. Investment property is pain sometimes.

 

Only EBMs decision matters here. No one elses. Wishing means nothing. Reasonable means nothing. What you believe means nothing. Its unlikely this is worth a lawsuit.

Bad situation but learn from it. Why would you buy an IP with european tiles? Get it fixed up and rent it out. Or sell and buy shares.

 

Read the PDS and ask EBM ?

Property can be a right pain at times, there is a process to go through, you need to do that with PM and Insurer if making a claim.

 

Maybe take their word for it as they should know their policy better than people on an internet forum?

Wear and tear of a house. The minute somebody walks in, it won't be the same standard as new.

Presentable or habitable? Insurance would possibly kick in if the place couldn't be lived in but in this case it reads as though it can be lived in? Just because it doesn't look a million dollars doesn't mean it can't be rented. While it may not be up to your standards, this doesn't necessarily make it an insurance problem.

 

There's a few things at play, your insurance and the bond on the property.

EBM will tell you what you can and cannot claim, the excess involved for said claims and how much they will cover. The bond, assuming you haven't claimed it yet, will likely need to go through tribunal to claim the funds.

Where is the property based? If it's in Vic I can advise further about the standard process.

 

At the end of the day it is highly likely that EBM will be paying out more than the cost of the annual premium so if you are judging "value" then it's still good value as it has reduced the cost of the losses to you.

All insurers will take depreciation into account when paying out claims - you have charged a tenant for using that carpet for 2yrs and most likely claimed depreciation on that carpet for 2yrs therefore it is no longer worth it's new price.

I do know that some things are better claimed from bond than insurance and a good PM will help with that.

 

Intial purpose is owner occupied but I have a young family living somewhere else, Kid is too young, I need to wait for kid growing up a little bit then move back.

 

A few dog Urea on carpet, will that be livable? Currently it can not open for inspection.

 

Carpet cleaning if done right works wonders......

 

I dont understand what that means.

 

Really? Don't have young children or pets in your properties from now on. Sure to be toileting accidents.

I'm not saying they were great tenants, but a bit of cleaning and it is right to go. You don't get a whole new carpet for that.

 

I know you sent me a PM with the location, however really had to refer back to the thread to review it again. So here goes:

1. You said the tenant didn't pay rent, but then that they broke the lease? Were the tenants evicted? Ie. did you serve them a notice to vacate? If you terminated the lease, then the tenants didn't break their lease and therefore there's no claim for letting fees through VCAT. I don't recall any insurance companies that do cover this either.

2. Tiles - The exact wording in the RTA is "reasonably clean" one could argue that reasonably clean doesn't involve a full professional tile cleaning service. You would be required to prove the condition of the tiles before and after, however I think your chances of claiming this in full at VCAT or through your insurance will be a stretch.

3. Carpets - General rule of thumb for VCAT and some insurance companies is they will depreciate the items in the company over a set period of time. Carpets are 10 years, so if they're already two years old and say it cost $1,000 to replace the damaged carpet you would get ~$800. Some VCAT members will take this a step further, not only will they depreciate it but they will also only pay a percentage based on the damaged section of carpet. For instance the carpet is now "worth" $800 as it's been depreciated, but VCAT deems that the tenant is only responsible for 50% of that damage - which means you now get $400 for this.

4. Insurance excess fee - I find most VCAT members will not award excess fees. The way they view it is the insurance contract is between the owner of the property and the insurance company, the tenant isn't part of that. You pay insurance to limit your out of pocket expenses, if a claim needs to be made you need to pay the excess and they insurance company (should) chase the tenant to recover the costs - but you are still liable for the excess. You can try to get the tenant to pay this and take it to VCAT, worst case they say no - but this would rely on you doing the claim first.

5. Vacancy - How much they pay or if they will pay at all for vacancy periods will depend on the exact policy and reason for vacancy. Ie. is it because the tenant broke lease? Or because they were in breach and you issued a notice to vacate? How reasonable is it that the property should still be vacant?

The PM only has 10 business days to claim on the bond, I would make this your priority. Get the PM to get quotes together, the property fixed up as soon as possible and make an application to VCAT for bond and compensation if necessary. PM needs to put all costs on this, it's up to VCAT what they will pay and if the PM needs an extension to claim the bond they will need to submit this as well.

Assuming the PM can prove damages, loss of rent etc. you will then be awarded the bond plus any compensation if the cost is above the bond. From this you will be able to find out exactly how much $$ you're out of pocket and assess whether it's worth putting a claim through based on the excess you would need to pay. No point putting in a claim to claim back money if you're at a loss because of the excess costs, if the tenant doesn't pay the amount over the bond the PM can put them on NTD & TICA (if they follow the correct procedure), you can also take it through to a debt collector if you wish to do so.

You also need to make sure what you're spending money on is reasonable based on the condition of the property before it was tenanted. You need to prove the amount you're out of pocket is the minimum required to get the property back to a state in which it could be re-let and any repairs carried out are bringing it back to the standard of the condition report - not improving the property.

 

We're blessed to have such knowledgeable people on these forums.

Interestingly only a couple of differences noted for our SA rules. We can claim break lease costs at evictions and we dont have a 10 day limit on bond refunds. All the rest looks the same

 

Flattery will get you everywhere

We can only claim rent until the eviction took place, can't claim costs for the property if the tenant damaged to such an extent that it can't be leased again and can't claim agency fees (i.e lease break costs) as the owner has terminated the lease - not the tenant. Despite the tenant still being in breach.

I think if we took pieces from legislation throughout Australia we could come up with a fairly decent set of regs nationwide. That's all too hard though

 

Thanks for your professional feedback! I appreciate it.
1. Sent 90 days notice to vacate letter. It is most likely re-letting fee could not be covered.

5. Yes, they breach duty and my side serviced notice to vacate letter. when they left, they still have not finished lease.

Just want my property back to original condition, based on what I know, depreciation cost plus access fee plus re-letting fee, that is thousands dollars. Big money to make it back to original and find new tenant.

 

A 90 day notice to vacate implies you terminated their lease on the lease end date. There’s no broken agreement there on either side - this is just the same as if a tenant vacated at the end of the lease on their own accord.

Your second point contradicts the first. The only 90 day end of lease in Victoria is a 90 day end of fixed term lease of more than 6 months, which must end of the exact same day the lease agreement ends.

Ie. if the lease was due to finish on the 1st June this 90 day notice can be served for the tenants to vacate on the 1st June - not any other day before or after. They can vacate at any stage within this 90 day lease by giving 14 days reciprocal notice - so in this sense there is (technically) a lease break - but as you’ve chose to end the lease and the tenant has complied VCAT will not award you costs for rent beyond that 14 days.

They may have breached their agreement by not paying their rent on time - but if the notice to vacate was served legally there’s no claim through the tenant or your insurance for this as noted above.

From what you’ve said there’s no “lease break fees” payable - you have no claim to this.

The costs for cleaning up the property and any damages should be claimable from the bond. If the costs exceed the bond then you need to make a bond and compensation claim.

Personally I don’t believe VCAT should depreciate items and should award full out of pocket expenses - however their feelings are that as the property owner you have already claimed depreciation on these items and therefore are not out of pocket. Basically VCAT is saying that you cannot double dip, rightly or wrongly.

 

This is just what you want, not what the law says.