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Periodic Lease

Discussion in 'Property Management' started by fullylucky, 5th Jul, 2016.

  1. fullylucky

    fullylucky Well-Known Member

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    Question for PMs... when you get the tenants to finally sign renew lease if the lease is already periodic lease do you make the start of the new lease the start date 1 day after the end of the last lease or starting now? So there will be like 3 leases: the last lease, periodic lease for a period, then the new lease?
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Don't need to sign one for the periodic portion, the fixed lease automatically becomes periodic upon its conclusion. Once on a periodic, can sign a fixed lease at any time (assuming all parties agree).

    You typically want to avoid that situation if you can and not let them go on periodic to start with (by renewing the fixed lease within the time frames specified in your state).
     
  3. fullylucky

    fullylucky Well-Known Member

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    Ok. If I tried to avoid that, I can issue tenant with choice to renew lease or move out 2 months before the end of the old lease (lease 1). But I don't sign it so it's just an offer? is this what you would do?

    What if they don't sign?

    and lease 1 (the fixed lease) transforms into periodic lease, if push comes to shove, but you still want to keep the tenants and get them to sign a new lease (lease 2) would you make the start date the lease same day as the end of lease 1. or make the start date now? what benifits is there for doing this? do most people do this?
     
  4. hobo

    hobo Well-Known Member

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    Personally, I would make the start date the day of signing (so that the actual "under lease" period is longer ie no back-dating), BUT if that would mean the end of Lease 2 fell in a bad period (eg right over Xmas) then I would consider back-dating (with tenants' agreement, of course).
     
  5. MyPropertyPro

    MyPropertyPro SE Qld Property Management & Investor Services Business Member

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    I am a PM in QLD so I am am very familiar with the process and time frames and legislation!

    From what I understand you have a tenant who is currently on a periodic agreement and you are wanting to know the best way forward to renew the lease and notice periods etc?

    If this is correct then then basically you can give them a new fixed term lease at any time with an immediate start date and have them sign it. You can also send a Notice to Leave giving 2 months notice to vacate at the same time as a back up if they decide not to sign. It will remain as a periodic agreement until such time a new fixed term is signed.

    Periodic agreements generally don't offer much security for landlords. Most insurance companies that I know of possibly actually wont cover your property if it is on a periodic lease and the main difference obviously is that tenants are only required to give 2 weeks notice to vacate and you have to give them 2 months. Sometimes if you are planning on possibly renovating soon anyway or if you are thinking of selling for example then a periodic agreement could beneficial for landlords.
     
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  6. fullylucky

    fullylucky Well-Known Member

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    But won't there be a period where it's a gap? what about insurance? and if you show the owner you can't stay the property is always under lease.

    if you back date you can stay you are a good PM and never had any "gaps"?
     
  7. hobo

    hobo Well-Known Member

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    If it has gone to a periodic lease, then there has already been a "gap", no? So the affect on insurance is there, regardless (if there is one).

    So I was simply comparing the options available to one as at that time - ie sign as of that day's date, or "backdate" the lease to start from immediately after the last fixed term lease ended.

    I'm not talking about doing this as a PM, I am talking about what I would do as a self-manager.
     
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  8. fullylucky

    fullylucky Well-Known Member

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    Thanks for clarifying. I just would like to know what portion or most smart PMs pefer?

    Backdate or put start date as current date so the lease is longer? Pros and cons of both.

    Is you don't back date is it messy in terms of accounting or other aspects?

    I get periodic the tenant has more power as they can move out within 2 weeks and PM needs 2 months notice so some PMs if the tenant doesn't sign they just issue please vacate 2 months before the end of the lease.
     
  9. fullylucky

    fullylucky Well-Known Member

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    Oh ok I see.

    I thought if you back date it has a fixed lease covering all periods so protects you from insurance.

    But i guess if the lease has date signed and when you issue receipts it also has dates then insurance can still investigate and say yeah nah yah nah.

    It's interesting how you consider and have foresight of end time of lease and take that into account when making a choice. That's very clever, thanks for your insight.
     
  10. MyPropertyPro

    MyPropertyPro SE Qld Property Management & Investor Services Business Member

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    Personally I would never back date any legal document. I am not sure how this is of any benefit to back date an agreement? If you are concerned about the lease length you can pretty much make the dates to suit you as opposed to back dating. Leases do not have to be 6 or 12 months for example.

    Lease renewal processes generally start 3 months prior to expiry for this reason - to allow for the 2 month notice to be given and for plenty of time for the new agreement to arrive.

    The Residential Tenancies and Rooming Accommodation Act is "silent" on back-dating although they do advise it is not best practice and contract law is fairly clear that any contract cannot be back dated. In saying that however - if all parties mutually agree to signing something that is pre-dated and you have this in writing - then you might be covered.

    Hope that helps a bit!
     
  11. JacM

    JacM VIC Buyer's Agent Business Member

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    If they are already on a periodic lease, the start date of the new fixed term lease would be the date day of signing. That maximises the amount of time they are committed to the tenancy, and sticks to legalities.

    If you are offering a new lease to someone that is still on a fixed-term lease, you'd offer the new lease with a start date being the day after the expiry of the old lease.
     
  12. fullylucky

    fullylucky Well-Known Member

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    What's the different between a "short lease" and "periodic lease"? are they the same?

    What do you call a lease where there's no set end date? non fixed lease? haha
     
  13. pinkboy

    pinkboy Well-Known Member Premium Member

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    If you have to ask these questions, then you have to ask yourself if you are competent to self manage.

    pinkboy
     
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  14. fullylucky

    fullylucky Well-Known Member

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    If not knowing industry jargon terms makes me incompetent so be it. I'm incompetent. ☺

    You are competent.

    Do you feel good about yourself now?
     
  15. pinkboy

    pinkboy Well-Known Member Premium Member

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    Fixed.

    pinkboy
     
  16. Big Will

    Big Will Well-Known Member

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    Sorry @fullylucky I am with @pinkboy on this, if you need this sort of assistance you really shouldn't be doing it privately.

    Most successful investors do not manage their own properties esp if you exclude ones that work in the industry like @D.T.. You need to know all the changes in the law and make sure you have correct notice period plus some insurance company will not insure you for doing it privately or will charge you a premium as you are higher risk.

    Not to gloat but I or @pinkboy have more knowledge and I could even work as a PM legally if I wanted to but I wouldn't consider doing PM even for myself and I think pinkboy is the same.
     
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  17. Big Will

    Big Will Well-Known Member

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    To answer your question 'short lease' is usually 3 or 6 months but can be anything if you agree.

    Periodic lease is where it just keeps rolling over with no end date until either party serves notice.

    Lease we no end date see your periodic lease.

    If you are continually asking really basic questions you really should consider further study or better yet paying someone to manage the property. As I can see issues coming up for you in the future and the civil tribunal do not take incompetence as an excuse for not obeying the law.
     
  18. fullylucky

    fullylucky Well-Known Member

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    Is it possible to enter into a Periodic lease straight up? Say if you are doing student accommodation and students will go overseas within a 6 month period.

    You are happy to do a lease without any end date. So either you evict the tenant or tenant lets the PM know they wish to move out. What would you call this type of lease? or this isn't a lease at all? No such thing?

    I'm trying to map out the process life cycle of a lease and types of leases. Thanks for your assistance.
     
  19. D.T.

    D.T. Adelaide Property Manager Business Member

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    Yes, each state publishes a periodic lease form if that's what you want to do. Why not just do a fixed lease for the duration you think its going to be?

    I've been known to do odd durations like 7 months or 15 months so that it helps the tenancy end during a high letting period, making it easier to relet afterwards.
     
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  20. Big Will

    Big Will Well-Known Member

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    If you are leasing to overseas students I would defiantly get a PM involved, depends how many people you are renting it out to be wary of boarding house regulations.

    Maybe do some reading here;

    Rooming accommodation coverage fact sheet | Residential Tenancies Authority
     
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