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Tenant Breaking Lease - Advice

Discussion in 'Property Management' started by GapPhantom, 15th Aug, 2016.

  1. GapPhantom

    GapPhantom Member

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    Guys, First time posting, but always been a "viewer" of the forums!!

    I'm now after a bit of advice, and wondering if I'm on the right path!

    So I have an IP...
    And lets call this Day 0... 2 months into a 12 month lease the tenant approached the PM inquiring about breaking lease as her and her partner have split...
    Day 1... The paperwork was issued to the tenant, and clarified that they are responsible for the property till the end of lease, or when a new tenant is found... They also have the standard break lease fees to pay...
    Day 2... I have the property relisted at the PM confirmed appropriate market rent...
    Day 5... First Open Home (Few groups through, but no application)
    Day 7... A re inspection of the property by the PM for Notice to Remedy Breach, issued 4 days before the break lease was requested due to smoke alarms removed and cleaning throughout the property, was conducted with some but not all items actioned...
    Day 12... Second Open Home (One group through)
    Day 14... Application received, so PM processing
    Day 15... Current Tenant has indicated they have been approved for a new property, picking up keys by end of the week, and moving out!
    Day 16... Application deemed unsuitable due to family, finance, pet, children situation
    Day 17... PM has received email from the old Tenant asking if I would let her out of her lease on "compassionate" grounds as she is not able to afford two rents! I have said NO!!
    Day 18... PM now calls me, and asks if I can come to some sort of agreement as the old Tenant is moving out tomorrow/next day and cannot afford to pay two rents.. She has said she will take me to QCAT/Tribunal on hardship issues...

    Here are my thoughts..
    • I agreed to a break lease... No problem...
    • I listed the property ASAP, despite the house being an aboslute mess, and with a Notice to Remedy Breach being active...
    • I had an open house under these conditions...
    • The tenant has been made aware she is responsible for the lease through to the end, or until tenants are inplace..
    • She has gone and signed another rental agreement prior to any application being put forward for my property...
    • And now I am supposed to "Mitigate the Tenants Losses"???

    I'd love to hear peoples experiences, suggestions, thoughts on simliar situations...
     
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  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Are both tenants on the lease?

    Do you have LL insurance?
     
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  3. thatbum

    thatbum Well-Known Member

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    Yes you need to understand the legal issues at play here - I'm not sure you 100% do yet.

    There is the normal break lease process and liabilities, which include the issues around reasonable steps to mitigate loss. This may or may not be an issue from what you've said so far - although refusing an application could have been a risky thing to do.

    However, there is also the issue of a potential hardship termination by the tenants to terminate, which is a separate legal issue from the break lease. So far, you've only said it has to do with "paying two rents" which is financial hardship. Financial hardship alone is generally not enough to succeed on such an application, but there might be more to situation that may give the tenants better grounds - for example the circumstances around the break up.

    Lastly, you keep talking about a singular tenant, but also mention a break up. Was there another party to this lease? That can also vastly change the situation with a hardship termination.
     
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  4. GapPhantom

    GapPhantom Member

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    Yes, both tenants are on the lease.. He can't be contacted as he seems to have up and left and dissappeared...

    Yes, I have LL insurance..
     
  5. GapPhantom

    GapPhantom Member

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    I knocked back the application after reviewing the facts at hand present by the PM because of a number of very valid reasons... 1 party, self employed handyman/renovator without an accountant qualified income statement, has quote "no real rental reference" who'd been living with his sister for 2.5 years, the other moving from interstate to a new job with a probationary period! Associated with that, 6 people (4 kids) living in a 3 bedroom 1 bathroom house, with a cat, and no lease term specified... The facts at hand determine this application would more than likely not provide a suitable tenancy!!

    Yes, there was another party to the lease.. He has up and left, and is not contactable by the PM or the other tenant...

    I do understand that the PM should be assisting the tenant to mitigate their losses, and through doing so their obligation is to guide the tenant during that early phase and ensured she has understood her obligations to the existing contract and not to sign another rental agreement before a suitable application, and replacement tenancy, has been approved...
     
  6. thatbum

    thatbum Well-Known Member

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    So you've knocked back more than 1 new applicant? The overcrowding issue is perhaps valid, but every other reason you listed seems pretty average to be honest. A break lease situation isn't a great time to be picky about these things.

    The mitigation of loss issue is actually the reasonable mitigation of your own losses, not the tenants FYI. I'm not sure why you're complaining the tenant signed a new lease - it doesn't make any difference to the legal issues here, and presumably the tenant needs somewhere to live anyway?
     
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  7. D.T.

    D.T. Adelaide Property Manager Business Member

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    You certainly don't have to. They can apply for that and may win / lose. Proceed as per normal for now.

    Good.
    This plays in with the last part - should be reminding her that the longer it takes to rent the more she'll be responsible for and house presentation helps with that.
    Thats completely fine. She needs somewhere to live.
    No, legislation says to mitigate your losses, not the tenants. You do this by getting it rented quickly. Do this by making sure you've got it advertised, showing people through, listed at the right amount, telling tenant have property tidy etc. If tenant blocks or disrupts any of this process, they reduce their own odds of being able to dispute costs claimed by you.

    The part I was unclear on from your description was what was happening with the other tenant, you said there was a break up there? Have they already gone? They're both liable if both on the lease.
     
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  8. Xenia

    Xenia Adelaide Property Manager Business Member

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    It gets me really upset to hear that a property manager is asking a landlord that they are working for to "allow" someone out of a contract that has value.

    We get asked that question all the time by tenants, we DO NOT ever ask the labdlord if they would do it. Request denied immediately. We work for landlords and protect their return in a property. That is the job of a pm.

    Yes things go wrong all the time, lots of bushfires to put out and learning curves along the way for all of us, but just to ask a landlord to take a financial loss is pathetic.

    Sorry
     
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  9. GapPhantom

    GapPhantom Member

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    Yes, a breakup has occurred, and he has up and left and is un-contactable.. I would suggest although being listed on the lease and "liable" he won't front anything...
     
  10. Xenia

    Xenia Adelaide Property Manager Business Member

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    This is not your problem and you should not make it your problem.

    Your problem is maintains cash flow for your investment property.

    Where is your property?
     
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  11. GapPhantom

    GapPhantom Member

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    Brisbane..

    Quite frankly, the PM of this property has been an issue... A learning experience for myself on that front that the closest (less than 800m from the office) and most visible agency doesn't necessarily make the best management!
     
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  12. Xenia

    Xenia Adelaide Property Manager Business Member

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    I feel your frustration my friend.
    Wish I could help but my license is only for SA.

    Have a chat to @DiligentPM and see if they can step in and kick some butts.
     
  13. JDM

    JDM Well-Known Member

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    The standard to terminate a tenancy for excessive hardship in Queensland is quite high. From the facts you've provided I would be surprised if the tenant has grounds to terminate unless there is something more to the picture (the tenant lost their job or the tenant has a doctor that will certify the breakup has triggered a mental condition perhaps).

    If the tenant does not successfully argue termination of the tenancy agreement due to excessive hardship then the tenant is liable for the costs associated with the break of the lease (re-letting fees, rent etc). As has been mentioned, you must mitigate your losses but it sounds like you are already doing this.

    I have been through a QCAT application previously where it was argued the landlord failed to mitigate their losses and this was a high standard to prove. The end result was the lease was deemed to have ended on the date of the QCAT hearing and the tenant was responsible for rent until this date only despite the landlord not having a new tenant.
     
  14. thatbum

    thatbum Well-Known Member

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    As in it was hard to argue that the landlord was failing to mitigate their loss, or the opposite?
     
  15. JDM

    JDM Well-Known Member

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    It was hard to convince the tribunal member that the landlord had failed to mitigate their loss despite some clear evidence to the contrary. I find the Tribunals in tenancy disputes sometimes go more on their gut/what they think is fair rather than the law at times.
     
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  16. JacM

    JacM VIC Buyer's Agent Business Member

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    Well said. I wonder if it comes out of lack of knowledge, or laziness on the part of the PM... not wanting to do the work associated with getting things under control, and if necessary going to tribunal.
     
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  17. D.T.

    D.T. Adelaide Property Manager Business Member

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    Yep, got similar at the moment who wants to complain about all sorts of things. Just protect landlords ass, he's the one we as PMs are representing and not the tenants.
     
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  18. Xenia

    Xenia Adelaide Property Manager Business Member

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    It's lack of experience in investing and it's a mindset - a bad one..

    Unfortunately that mindset is the norm for the industry, that is why the landlord is so frustrated trying to communicate with them. They have a set of false beliefs and no experience in seeing the other side.
     
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  19. JacM

    JacM VIC Buyer's Agent Business Member

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    It's a real McDonalds mindset on the tenant's part. People have become too accustomed to buying a product, and then whinging it isn't something different/better/whatever. The trouble being, as a society, we have pandered to this mindset for quite some time now. My meal took a nanosecond longer than it should have, I should get free stuff to compensate me. I should be able to buy a pizza at a burger restaurant even though pizzas are not advertised and they don't have pizza ovens. Poor me. The cheapy rental I signed a lease on isn't a mansion. Evil landlord must upgrade it for me accordingly.
     
  20. Ed Barton

    Ed Barton Well-Known Member

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    Very poor practice. What if the LL wanted the lease ended - moving in themselves, selling, renovating etc.
     
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