TAS - Lease break on recently purchased property

Discussion in 'Property Management' started by andresampras, 12th Apr, 2018.

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  1. andresampras

    andresampras Member

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    Hi forum

    I bought a place in Tassie last month. During the purchase process in Feb, the tenant left and the vendor signed a 1-year lease with a new tenant - I was told I had no say in this process since settlement hadn't happened as yet. I've retained the same rental agency used by the vendor (after doing my research, mind).

    Today, less than 2 months into the lease, my PM sent me an email today saying:
    1. the tenant wants to break the lease due to personal matters (relationship breakup)
    2. she'll re-advertise at the same rate as before because it's a lease break and I can't change the rent unless it's well below market rate
    3. I have to pay advertising / re-letting fees, since the tenant had a lease with the previous owner and not me
    4. the tenant needs to pay rent until a new tenant is found

    ~~~

    My question is, is my PM correct? Points 2 & 3 seem illogical to me. The Tenants' Union and CBOS pages (below) don't mention anything about which landlord the tenant signed an agreement with, and in any case don't all the vendor's rights transfer to me after purchase? Also, what happens with the rental bond?

    Links:
    Ending a tenancy/lease
    Tenants' Union of Tasmania Fact Sheet - Breaking the Lease

    Any advice appreciated :)
    ps. I've looked through the forums and couldn't find a similar situation - happy to be corrected.
     
  2. thatbum

    thatbum Well-Known Member

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    You possibly got dud advice about not having a say in the new tenant being signed on - who told you that?

    Its hard to answer your questions because its not clear what contractual links you have with the old vendor and the new tenant - those are probably determined by what exactly is in your contract of sale, and what agreements or paperwork (if any) you have made with the new tenant since settlement.

    To be honest, if you had a lawyer do your conveyancing, they should be able to answer the questions about what issues arise from the (possible) assignment of the lease to you.

    Otherwise we can only guess from here (even though I'm a tenancy lawyer and arguably qualified enough to answer those questions).
     
    hobartchic likes this.
  3. andresampras

    andresampras Member

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    The PM told me that, knowing I was retaining them as PM. Is their advice incorrect?
     
  4. thatbum

    thatbum Well-Known Member

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    I don't know, but I don't see how your PM would have any idea. It sounds like you've relied on your PM for legal advice on what essentially is a conveyancing issue - I'm guessing your PM hasn't even seen your contract of sale.

    EDIT: And I just realised, not only would they not have any idea, or be qualified to give such advice - you were also relying on the vendor's then agent for advice potentially against their client - talk about conflict of interest!

    This is why you should never use the vendor's PM.
     
  5. andresampras

    andresampras Member

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    Thanks for the replies, Lionel...but Argh.

    In that case, for the benefit of future me and anyone else in this situation, could you advise what I should have done instead (besides getting a new PM)? Should changes have been made in the contract of sale, or in the rental agreement after purchase?

    Also, any comment on point 2 - must re-advertise at the same rate as before because it's a lease break and I can't change the rent unless it's well below market rate
     
  6. D.T.

    D.T. Specialist Property Manager Business Member

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    Every state has different rules i don't really Tas's ones but here are my thoughts:

    Quite typical to re-lease at same rent, but here can do higher or lower rent and tenant pays or receives difference.

    Rubbish. Who the lease was with doesn't effect this.

    Correct.

    Bond should be transferred between owners / PMs. In a break lease situation, usually hold onto it til all the obligations have been paid.
     
  7. thatbum

    thatbum Well-Known Member

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    Well it depends a little of the exact circumstances, but some pointers that come to mind:

    - Get your own PM and not the vendor's PM

    - Buy with vacant possession instead of subject to a lease

    - If buying subject to a certain lease being with the property, then that lease terminating arguably breaches the sale contract and you can potentially either ask for compensation, terminate the sale, or use your leverage to instead ask for vacant possession (ie. not let a new tenant be booked in instead)

    - Use a good conveyancing solicitor (not agent) to handle your conveyancing and therefore actually be able to advise you of your legal options above.

    Nah this is BS. It just has to be a reasonable step to mitigate the loss (ie. find a new tenant). That might be re-advertising at the current rent, or a reduced rent or whatever really. Market rent is probably a safe bet in most circumstances though.
     
  8. andresampras

    andresampras Member

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    Thanks gents.

    I'm going to speak to the PM and tell her I want the rent to go up a bit (within market range) and that I want the tenant to pay his share (10 of 12 months) of the advertising & re-letting costs.

    Will post result here. In any case, it's been educational :D