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Tenant break lease - What happens next

Discussion in 'Property Management' started by Mr T, 21st Sep, 2015.

  1. Mr T

    Mr T Member

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    Hi all,

    Overview
    The PM (Property mamanger) e-mailed me to say that the tenant has decided to break the 6 month lease.
    Its for a propoerty in Logan,Brisbane.
    My PM mentioned that since the tenat is breaking the lease, i will not be out of $$..
    The propoerty has been advertised since end of last month (August) - Still vacant
    Vacant for 4 weeks.

    Should i be worried??

    Thanks for your input.
     
  2. Kangaroo

    Kangaroo Well-Known Member

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    Is your rent reasonable ? I think it is better to lower the rent and attract a relatively large pool of applications so that you and PM can choose one with better history and monetary position. Vacating 4 weeks plus 1 week or more letting fee is equivalent of reducing rents anyway. Do this in one step instead of bit by bit.
     
  3. thatbum

    thatbum Well-Known Member

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    Well you might actually be out some money. Firstly, does your lease have a break lease fee clause?
     
  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    Generally in a break lease situation the priority is to find a new tenant. Previous tenant is supposed to pay for:
    1) Advertising and letting fees (can be pro rated depending on remainder of lease),
    2) Rent until new tenant is found,
    3) Difference in rent if new tenant needs to be lower. It really depends on which state you're in and the quality of your lease as to whether this will fly.

    If the outgoing tenant leaves the place damaged or as a mess, it's best to use the bond for cleaning as insurance doesn't usually cover that. Use the insurance for the things they do cover, eg damage and the 3 items above.

    EBM is the only insurer I'm aware of that covers 52 weeks rent for some situations and also nil excess for loss of rent claims.
     
    DaveM likes this.
  5. DiligentPM

    DiligentPM Well-Known Member Business Member

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    All the comments are valid. When our last tenant was offered a role in Sydney we worked in partnership with her to achieve mutually beneficial outcomes...the tenant covered the marketing and we initiated two Open Homes that week in addition to private viewings and most importantly as other members shared the right market price securing a lease within the week - you will know it the property is priced at market value through multiple inquiries...priced too high...silence
     
  6. Richard Williams

    Richard Williams Buyers Agent - Southeast QLD Business Member

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    What if in NSW the tenant breaking the lease has found what they think are suitable replacement tenants? Can you reject them and continue to look for new tenants, and the old tenants that are breaking the lease how long can you ask them to keep paying the rent until a suitable new tenant it found?
     
  7. JacM

    JacM VIC Buyer's Agent Business Member

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    Check your insurance policy for excess hikes after property has been vacant for a while. A lot of policies will deem that after 60 or 90 days of the property being vacant, the excess on a claim will be higher because an empty property is a risk. (It is a target for break-ins, there is nobody there to notice early on if there is a burst pipe that causes a flood, etc etc).
     
  8. D.T.

    D.T. Adelaide Property Manager Business Member

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    You'd assess them as you would any other applicant and they'd get a brand new lease.
     
  9. Richard Williams

    Richard Williams Buyers Agent - Southeast QLD Business Member

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    I think you missed the point, the tenants breaking the lease found the new proposed tenants who they believe were suitable, I did not agree after seeing the applications however the agent said I couldn't reasonably refuse them. Am I within my rights to refuse them and wait for more suitable tenants and have the tenants who are breaking the lease cover the rent until new people are found??
     
  10. bob shovel

    bob shovel Well-Known Member

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    I would think it's the same as you putting any tenants in the there,it's your choice and you review applications.
    Original tenants pay rent until new tenants are in. So you should advertise etc as if the place was vacant and choose someone that you want in there
     
  11. D.T.

    D.T. Adelaide Property Manager Business Member

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    That doesn't change my answer.

    Just as I said before, assess them as you would any other applicant and they get a brand new lease if found suitable.

    So yes, of course refuse if not found suitable and exiting tenant still pays break costs (letting fee, advertising and rent til new tenant found)
     
    bob shovel likes this.
  12. Kael

    Kael Well-Known Member

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    If the existing tenants find new tenants to fill the property, but you don't think those tenants are suitable, wouldn't there be some existing tenants that would go to the tribunal and argue "We found them new tenants that were suitable for the property but they refused to accept them. Because of this, we shouldn't be paying the rent"?
     
  13. Richard Williams

    Richard Williams Buyers Agent - Southeast QLD Business Member

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    I dont know, the exiting tenants aren't licenced agents/property managers, so should they get to say who is suitable or not, isn't that up to the PM and owner? I think the PM rolled over too quick. I now have tenants who work casual jobs (with low income for the property they are renting) and regularly party and have the whole building upset with them and me for the disturbance caused on a reg basis.
     
  14. Richard Williams

    Richard Williams Buyers Agent - Southeast QLD Business Member

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    The PM didnt give me the opp to assess them, just said I couldn't reasonably refuse them (after he had given them the keys and signed up). So basically I can refuse if not suitable and ask the exiting to keep paying until suitable ones found (In NSW).
     
  15. D.T.

    D.T. Adelaide Property Manager Business Member

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    Yup, should be assessed like any other applicant. PM was lazy
     
    bob shovel likes this.