Supreme Court Victoria: Tenants Airbnb-ing = breach of lease

Discussion in 'Airbnb & Short Term Letting' started by KateAshmor, 10th Jun, 2016.

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  1. larrylarry

    larrylarry Well-Known Member

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    It depends if there is an error of law and willingness of would be appellant to spend on legals.
     
  2. Xenia

    Xenia Well-Known Member

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    I couldn't care less who is making money, as long as my landlord clients are not losing money because a tenant has decided to be dishonest and sublease a property behind everyone's back.

    I would not accept "sorry it's just void due to subleasing" if one of my clients got caught up in this, I would challenge it.

    Ridiculous!

    insurance policies are meant to protect landlords against tenant dishonest conduct not put them totally at the effect of it. Makes no sense!
     
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  3. Phantom

    Phantom Well-Known Member

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    But the tenant doesn't hold the policy. The landlord does. So I think the view of the insurance company would be that the onus is on the landlord to ensure that only the person/s on the lease is/are the same person/s actually living there. That's just my understanding of it.
     
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  4. Xenia

    Xenia Well-Known Member

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    OI RE Yorko

    A landlord or an agent for the landlord can only deny a request to sublease but cannot ensure that a tenant does not breach their lease by subleasing anyway. In the same way, a landlord or an agent for the landlord cannot ensure that a tenant does not breach their lease contract by falling into arrears or absconding or damaging the property. No one can ensure that the tenant is going to do the right thing. THAT is the purpose of landlord insurance.

    Therefore, a landlord insurance policy being void as a result of the tenant doing the wrong thing does not make sense.

    That's my understanding of it, den do catalaveno
     
  5. dabbler

    dabbler Well-Known Member

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    The other problem is, a landlord is or can be dragged in when a tenant or whomever they have at the property is being disruptive, breaking laws or building rules, or just plain obnoxious, landlord cannot just wipe hands and say not my problem.
     
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  6. Xenia

    Xenia Well-Known Member

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    Absolutely, mitigate losses, take immediate action that's all part of it.
    But they can't stop the initiation of it.
     
  7. hobo

    hobo Well-Known Member

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    @Xenia - Going back to your post about "inspections showed everything was fine"..... I'd be concerned if an agent's inspection didn't reveal that a property was being Airbnb'ed, given that there would likely be no clothes in the cupboards and everything styled immaculately?? (OR, suitcases in the bedroom and barely any clothes in the cupboards.... surely?)

    Not to mention the relatively empty refrigerator, pantry, etc.... again, surely these would raise suspicions??
     
  8. dabbler

    dabbler Well-Known Member

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    There are people here who know their tenants are sub leasing, some to AirBNB, they feel AirBNB will bail them out as they offer protection if it is done through the site, but I think this voids most insurance policies right there anyway, problems or none.

    If a tenant is being sneaky and the PM is doing checks and nothing revealed, then that would have to fall on the tenant, if a LL has a slack PM or has been told........
     
  9. dabbler

    dabbler Well-Known Member

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    No, lot of people will just rent out a spare room, house looks like normal and I assume most PMs advise of inspection.
     
  10. Xenia

    Xenia Well-Known Member

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    that was a hypothetical situation that I used as an example to clarify a point and it is not the question I'm asking here.

    I don't know if there were clothes in the cupboard, I didn't visualize it that accurately when I totally made that up hypothetically. Geez. lol
     
  11. D.T.

    D.T. Specialist Property Manager Business Member

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    I think a few people didn't understand the original post, let me spell it out :

    1) Subletting has always been against the rules (though as property managers we can't unreasonably refuse) and insurance has always been void in these situations. This hasn't changed with this ruling. The reason why insurance is void is because it increases the risk profile from the insurer's point of view.

    2) A situation in Victoria happened where a tenant was offering out their property on Air BNB. The landlord tried to evict them for subletting and failed. Tribunal ruled that AirBNB was a license to occupy rather than a sublease and so allowed it to continue.

    3) It was escalated to Supreme Court who today allowed the aforementioned landlord to evict their tenant, providing new ruling that now defines this AirBNB scenario as subletting, which wasn't allowed under the terms of their (and most peoples) residential lease. This is great news for landlords / property managers as we don't want to put our properties at risk (ie uninsured) in a situation that Tribunal was happy with allowing to occur.
     
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  12. hobo

    hobo Well-Known Member

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    Oh yeah, I assumed you were referring to a hypothetical inspection rather than one of your current tenants.... I guess I was just imagining walking in to a place and thinking about things I check... in my mind I was thinking it'd be easy to at least see indications that would make me very suspicious. I thought you were saying that "we can't know".
     
  13. Xenia

    Xenia Well-Known Member

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    No I was saying - what if you don't know.

    Also, assuming a PM does picks up on clues and terminates a lease as this supreme court precedence now allows (hopefully), that STILL does not solve the problem that a landlord will now be exposed to vacancies and re-letting costs because their insurance is now void.

    As a PM I would argue this point profusely with a landlord insurance company.
     
  14. D.T.

    D.T. Specialist Property Manager Business Member

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    But this has always been the case?
     
  15. Excalibur1

    Excalibur1 Well-Known Member

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    There are insurers out there that will cover AirBnB now... I think its around $4 a night. So if the only issue is the insurance and the tenant has sufficient insurance in place (that $4 a night) then there would be no problem?
     
  16. dabbler

    dabbler Well-Known Member

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    There are insurers that allow sublet prior to AirBNB.

    The issue is controlling your property, no so much the AirBNB.
     
  17. Skilled_Migrant

    Skilled_Migrant Well-Known Member

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    Para 80 of judgement:

    Finally, by way of conclusion, having regard to the public interest in these proceedings, it may be helpful to set out part of my concluding remarks at the hearing of this appeal:

    First, this is not a case on the merits of AirBnB arrangements. Neither is it a case on whether or not AirBnB arrangements might be said to be “illegal”—either in some particular or some general, non-legal, sense. Rather it is a case, on appeal, which raises for determination—directly or indirectly—the legal character of this particular AirBnB arrangement and any consequences this characterisation may have in the context of the terms of the lease of the apartment concerned.


    Secondly, the context provided by the terms of the particular apartment lease are important. Although this apartment lease is a residential lease, many commercial leases restrict the tenant from sub-leasing, assigning the lease, granting any licence to occupy all or part of the leased premises or otherwise parting with possession without the landlord’s prior consent. Broad terms such as this would prevent, for example, sub-letting or licensing without the landlord’s consent and would avoid the need—as in the present case—to characterise the nature of the same arrangement like the AirBnB arrangement for occupation of the whole of the leased premises as a sub-lease or a licence.
     
  18. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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  19. Greyghost

    Greyghost Well-Known Member

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    Now many body corporates are looking at amending their body corporate terms to state that leases less than 21 days are forbidden.
    I have a client who challenged them and obtained legal advice from a owners Corp solicitor, my client won.
    It might prevent the mum and dad investor from partaking in such an enterprise, but for a proper business it is just another inconvenience to deal with.
     
  20. charpj

    charpj Well-Known Member

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    For the PsM , could you not simply add a Google Search on your checklist when reviewing client properties . You will get a quick airbnb answer. That way, no nasty surprises for land lords.

    I remember seeing one profile, male, had 7 apartments on air bnb , same building in south yarra . Tell me the PM didn't know about that ...
     

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