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Owners cannot have periodic lease due to insurance?

Discussion in 'General Property Chat' started by emza, 13th May, 2016.

  1. emza

    emza Well-Known Member

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    So... we rent and are moving away near the end of the year to Geelong where we'll buy a PPOR within the next year or so.

    The lease is up in September and so we've requested to go on periodic lease for the final two-three months.

    The agent has written "The owners cannot have periodic due to insurance", requested a new six-month lease and has since gone silent when I've requested clarification.

    My feeling is this move is ... b.s. frankly. I've never heard of such a thing but perhaps some owners can advise. We're in QLD if that helps.
     
  2. SK Investments

    SK Investments Well-Known Member

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    My understanding is that the tenant cannot be forced to sign a new lease once it becomes periodic. ( I had a tenant not sign) but periodic rules will apply for notice periods etc. So even if the landlord wants you out it'll be 60 days notice.
     
  3. JacM

    JacM VIC Buyer's Agent Business Member

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    This will certainly be at least partially correct.

    It is absolutely the case that many insurers will cover very little in the way of rental default where a periodic lease is in place, and as such the owner will not approve periodic leases due to risk exposure.

    There will no doubt be some insurers that will not cover any claims at all where a periodic lease is in place.
     
  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    Depends on insurer, but yea there's definitely a couple that don't like periodic leases.
     
  5. BennEznElle

    BennEznElle Well-Known Member

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    Can you do a short term fixed lease. To get you say 2 or 3 months?
     
  6. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    No not BS. Some LL insurance policies will not cover loss of rent if the lease is periodic.
    Ask for a 2 or 3 month lease will be the solution to the problem.
     
    Leo2413 likes this.
  7. wylie

    wylie Moderator Staff Member

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    We have some houses in periodic leases. Just informed insurer of the situation and they are happy.
     
  8. emza

    emza Well-Known Member

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    Thanks everyone!
     
  9. D.T.

    D.T. Adelaide Property Manager Business Member

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    Instead of telling you to get lost like the PM did, I'd probably try to get a win win situation out of it.

    E.g. just do a 3mth extension addendum. Tenant is happy, insurance is happy, LL is happy, PM is happy. Start advertising for next tenant during that term and it all clicks together.
     
  10. brettc

    brettc Well-Known Member Business Plus Member

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    From an owners' viewpoint this can definitely be the situation with some Insurer's, they require the tenant to be on a fixed term lease to respond to claims, or at least respond to some claims. This is more often the case with some of the major direct insurer's including those via the banks, not the specialist landlord insurance policies. We've heard of plenty of landlords getting caught out with this.
     
  11. emza

    emza Well-Known Member

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    Thanks for the advice. This is what we're probably doing.

    This PM unfortunately got caught out lying to both us and the owner (and for some stupid reason thought we'd never speak) in the past so it was easy to believe on this occasion that she was lying again.
     
  12. dabbler

    dabbler Well-Known Member

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    This is real, I had a few policies that were like this, no LL cover if on periodic, but a short lease would be ok, just offer to pay for the cost of making the lease if you need it so short.
     
  13. beachgurl

    beachgurl Well-Known Member

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    I just lost a loss of rent claim with an insurer as they were out of a fixed term lease when they were evicted. The fact that they were in arrears when the fixed term lease ended was irrelevant in their eyes.

    So yes, the landlord's comments have merit. If you are still within the fixed term, advise the PM that perhaps the landlord needs to move to a different insurer that covers them on the condition that the tenants on the original lease are the same as currently living there.
     
  14. Wall Street

    Wall Street Well-Known Member

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    Beyond refusing a loss of rental claim arising from a periodic lease, would an insurer still cover property damage, public liability, etc?

    I know that I could read the PDS for this - but its early and I'm drunk
     
  15. brettc

    brettc Well-Known Member Business Plus Member

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    There is no easy answer. You would need to look at the PDS of each policy carefully as the exact way it is worded will determine that. If it simply states that there needs to be a current written lease in place at the time of the loss, without specifically saying that it only affects certain sections of the policy, then that would certainly leave it open to applying to the whole policy. For mine, I would just use a policy that doesn't have that restriction.
     
  16. emza

    emza Well-Known Member

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    Funny that this has turned out to be a legitimate question.

    Discovered yesterday that the PM had been lying again when I talked with the owner. They want six months because difficult to re-lease near end of year (which is true where I live). Insurance had nothing to do with it. Owner had no idea what PM was spinning (and wasn't too happy about it either).

    When I asked the PM about that, she blustered off into "Our agency doesn't do periodic leases!" or some such thing.

    Ah, lying PMs, never change...
     
  17. Wall Street

    Wall Street Well-Known Member

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    Thanks Brett - looks like I have some bedtime reading to do