Join Australia's most dynamic and respected property investment community

Subletting

Discussion in 'Property Management' started by Excalibur1, 6th Jan, 2016.

Tags:
  1. Excalibur1

    Excalibur1 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    183
    Location:
    Sydney
    Hi All,

    Just wanted to see from experts if I can claim from the bond in this situation....

    Tenant signed lease for himself and girlfriend and just found out that he is sub-letting a room. I don't have a problem with this, but what I'm annoyed with is that they didn't let us know they are doing this.

    I dont have a problem with the tenant. They pay on time and i would have told them it was fine to sublease it as long as Real Estate agent knows who is residing in the property.

    If things go pear shaped and I tell them to vacate the property because they are subleasing and in breach of their contract can the bond be claimed by me? I was always under impression bond can only be claimed if you suffered a loss? How much of a notice would I need to provide when they are in breach of contract?

    I will let REA know about it and to let them know that it is fine to sublease if they want to but to just let us know and update the contract.
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,596
    Location:
    Adelaide, SA
    You should, it can void your landlords insurance in some instances.

    Bond is only for covering costs, think of it like an insurance payout.

    Better option might be to get their name added to the lease?
     
    Lil Skater, Excalibur1 and wylie like this.
  3. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    I think you've answered the question there.
    The bond is for any repairs required for cleaning/damage. Depends on the state too.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,037
    Location:
    Sydney
    You seem to have given implied permission as you know about it and have accepted it.
     
    legallyblonde likes this.
  5. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    904
    Location:
    Perth, WA
    To claim from the bond, you need to have suffered a loss arising from the breach. Even if you were to terminate the lease for the breach of a sub-letting clause, you wouldn't get any of the bond from what I can see.

    What loss would you have suffered?

    Note that you would also probably have trouble terminating for the breach of a sub-letting clause if there is a spare room in the premises and the sub-lodger doesn't really cause any other separate issues.
     
    Excalibur1 likes this.
  6. Excalibur1

    Excalibur1 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    183
    Location:
    Sydney
    Nobody knows about the extra person. I came across and ad on flatmate.com and found my place. They even used Realestate Agents photos. On top of that my neighbor confirmed that new person moved in. It pays off to be friends with neighbors. I thought of not saying anything to the agent and just let it run but as @D.T. suggsted might just put them on lease.

    @thatbum What about the loss of rental income... in between them leaving and you finding a new tenant? Can you make a claim for that loss?
     
  7. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    904
    Location:
    Perth, WA
    No. In that scenario, you choosing to evict the tenant has caused your loss - not the subletting.

    Presumably, you would be getting your normal rental income if you didn't choose to evict and the subletting was to continue.
     
    Excalibur1 likes this.
  8. Excalibur1

    Excalibur1 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    183
    Location:
    Sydney
    Thanks for clarifying that. I will just tell them I'm ok with them to do it and to add the new person on the lease.
     
    wylie likes this.
  9. Xenia

    Xenia Adelaide Property Manager Business Member

    Joined:
    21st Jun, 2015
    Posts:
    2,347
    Location:
    4/136 The Parade Norwood, South Australia
    When you issue a breach notice it is to tenants and sub tenants so everyone is covered legally.
    Deal with the tenant that you know.

    Yes you can claim from bond and for any claims against any tenant.
    You do need to have a claim though - quantified in a $$ amount and a reason for claiming.
    The fact that a tenant has sublet a property is not a reason, especially if they are still living there.
     
    MTR and Excalibur1 like this.
  10. Nick Valsamis

    Nick Valsamis Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    504
    Location:
    Sydney
    In NSW you should always ensure that the maximum number of occupants stated on the lease agreement is no more than the intended number of occupants.

    If the maximum number was greater, then the tenant can easily get away with sub-letting part of the property without seeking permission.
     
  11. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    904
    Location:
    Perth, WA
    Yeah but its also the same situation if you set the maximum number of occupants unreasonably low. I.e. Less than the amount of bedrooms.
     
  12. Nick Valsamis

    Nick Valsamis Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    504
    Location:
    Sydney
    This is still better for the landlord as they will then be required to obtain the landlord's permission prior to sub-letting.

    I'm sure most landlords would prefer to have more control over what happens.
     
  13. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    904
    Location:
    Perth, WA
    There's separate clauses covering the issue of whether sub-letting allowed in pretty much every state (I think every state). So it doesn't really turn on what the 'maximum occupants' clause says in the agreement either.

    I guess my point is that both clauses are largely unenforceable. The "control" a landlord has is limited to situations where damage or actual detriment is suffered arising from a breach of those terms.
     
  14. Nick Valsamis

    Nick Valsamis Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    504
    Location:
    Sydney
    In the end what is enforceable is a different issue.

    The main difference I am pointing to is that with the maximum occupants exceeded, it is possible to issue a termination notice for a breach of agreement.

    However, if the tenants did sub-let and remained within the maximum number of occupants, then they are within their rights and haven't breached the agreement.
     
  15. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    904
    Location:
    Perth, WA
    No I think you misunderstand. None of what you said is actually technically correct.

    The subletting provisions of the lease or the applicable RTA for the state covers the issue of whether subletting is allowed - not the maximum occupancy clause. For example in NSW I think its clause 32 of the standard agreement.

    Even if clause 32 is breached, there would be difficulties for a landlord if they tried to rely on it to terminate a residential tenancy agreement. It is not normally a breach that justifies termination or gives rise to damages by itself. A tenant could possibly be advised to ignore such a breach notice, or ask a tribunal to throw out an application to terminate. I know this because I have given that exact advice many times.

    As far as I know, all my clients on those issues have been successful.
     
  16. Nick Valsamis

    Nick Valsamis Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    504
    Location:
    Sydney
    I wasn't saying that it justifies termination but more that is does allow for termination. Obviously if it was unreasonable there would be no need to do this unless you wanted a new tenant.

    Anyway it's all explained in the below link if anyone wants to see.

    Factsheet 18: Transfer and sub-letting - Tenants NSW
     
    SeafordSunshine likes this.
  17. Ian Macleod

    Ian Macleod Active Member Premium Member

    Joined:
    17th Dec, 2015
    Posts:
    27
    Location:
    NSW
    Seems to me the only breach is that the tenant has not asked for permission to sub-let and if you are happy to provide your consent, then put it in writing.

    Even though the sub tenant is not on the tenancy agreement the head tenants are still responsible for ensuring they meet all of the obligations under the tenancy agreement, including paying the rent whether the sub tenants pays them or not.

    Making the sub-tenant a party to the tenancy agreement means they become a co tenant and equally responsible under the tenancy agreement.

    It seems reasonable that you would not be able to claim the bond unless you have suffered loss.
     
  18. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    2,964
    Location:
    Brisbane
    I would add that in Brisbane, we had two young men as tenants who asked a third to join them. He was trouble, police were called due to erratic driving, noise issues etc. We were told at the time by the RTA that we had little reason to decline a tenant who asked to sublet, but that the original tenant took on the role of landlord, had to take on the role of landlord, including paperwork, lease etc. They were responsible to us for the whole rent, and if things went bad with their "tenant" they dealt with it as "his" landlord.

    However, they just asked a stranger to share with them to keep costs down. They were nice young men, and we suggested that we would allow them to break the lease without penalty just to get our house back. We didn't want to see them in trouble with the law (nor the other chap - but we knew nothing about him, not even his name).

    The problem was that even if they moved out, he could have stayed and we would effectively have a complete stranger in our house until we legally could get him out. Ultimately, they all left the same day. We were lucky.
     
    Ian Macleod likes this.