Rental arrears - should I follow through

I was wondering what all the more experienced investors would do.

Good tenants in place. They sign a new lease for a further 12 months. A week later the relationship ends and they want out. They can't afford property individually. They have since left the property. Left in good condition.

Bad time of year for renting out the property. It stays on the empty for a while despite price drop and extra marketing.

They claim they should only have to pay until the original lease ended. And I certainly have sympathy for them.

How hard nosed should I be here? I imagine to claim on insurance I have to go to the tribunal and the like first. Which I imagine I will lose despite doing the technically "right" things. It really seems sort of pointless.

Follow it through or cut losses? Thanks

 

What was your loss
Waht did your solcicitor say ? Are they liable for 12 months unpaid rent ?

 

Hi,
Loss is under $3k. About 2-3 months. My initial instinct was to write it off as I am not confident of a tribunal ruling in my favour if the claim hardship.

I am now looking at whether it is worth the insurance claim. And debating whether it is mean spirited.

I have not spoken to a solicitor. Just the property manager and insurance company.

 

I would try to claim on insurance.

Out of interest where is the house located?

 

Insurance claim - they'll want to see you mitigated your losses best as possible though.

 

It's a clear lease break - one week into the lease.

Have I missed something????

 

I am not a lawyer or an insurance expert. I am not convinced that a relationship breakup is classified as 'hardship', no matter how difficult it was for them.

An example of hardship is when one becomes unemployed. In this case, you haven't stated this.

No, they don't. They signed an lease renewal for 12 months. They have broken this lease.

I understand where you are coming from. Earlier this year, I had a tenant who signed a 12 month renewal and, then they wanted out. The reason was that they had bought a property. Bit hard for them to claim hardship .

We had to drop the rent a couple of times but, luckily for us, the ex-tenant continued to pay rent as the old rate. We got a new tenant when the ex-tenant offered to pay two weeks rent if a new tenant signed up before the end of February. We got a new tenant immediately.

I would get the PM do everything practical in order to get the ex-tenants to pay the rent they committed to. This would include the risk of legal action, the risk of them being taken to the tribunal, the risk of their names being added to the bad tenants' database, ...

If all that fails, then I would claim on insurance. It annoys me when people go to insurance claim as their first option (this is one reason why premiums go up); IMHO, an insurance claim should be the last of the practical options.

 

Never ever allow a tenant out of a lease or get involved in their personal circumstances.
Property investing is a business - mitigate losses, claim all lease break charges.

The tenants personal circumstances are not for you to consider or effect your calculations. Hell Not even tribunals do that.