VIC Tenants want clause removed from contract before re-signing

Discussion in 'Property Management' started by Traveller99, 24th Oct, 2019.

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  1. Traveller99

    Traveller99 Well-Known Member

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    Seeking additional advice from PC community.

    Tenant wants to remove a clause from the standard rental contract to continue tenancy.

    Clause:
    10. The TENANT shall not do or allow anything to be done which would invalidate any insurance policy on the premises or increase the premium and the TENANT shall pay the LANDLORD all increased premiums and all other expenses incurred as a consequence of any breach of this term.

    Your thoughts on this situation before I proceed.
     
  2. thatbum

    thatbum Well-Known Member

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    Probably a void clause anyway, so I wouldn't hesitate to ditch it.

    You call it a standard rental contract, but its certainly not a standard clause I've heard of?
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    @Traveller99 - I take it this is in a commercial Lease. Before agreeing to the deletion of this clause, I would be contacting my broker to confirm that the usage will not trigger an increased premium.

    I have often had the insurer query the usage and on occasion come and undertake a site inspection. The usage which was queried was a cleaning products company which mixed its own ingredients on site to an industrial chemist's design. When they were satisfied that there was no or little risk of explosions from overheated chemicals or mix-mixed batching (all water based products), then the broker confirmed the appropriate changes.

    Alternatively, you could show the tenant the current cost of the policy and say barring an industry wide escalation in rates the tenant would be expected to pick up x% of this increase (this year the average increase across various portfolios which I have seen has been around 10-11% but the previous 3-4 years we saw significant savings year on year). Part of the savings were attributed to the removal of the FSL but this has now been redesigned and now included again in the policy.

    I woud also assume that you are working on a gross lease otherwise the tenant would be paying the entire cost (or the increase above a base year).
     
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  4. thatbum

    thatbum Well-Known Member

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    Oh I didn't think of that - assumed residential.
     
  5. Traveller99

    Traveller99 Well-Known Member

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    Thanks. I did use 'standard' in an assumption it was, but maybe it's not.
     
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  6. Traveller99

    Traveller99 Well-Known Member

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    Many thanks for your reply. It's a standard residential tenancy so it appears the clause may not be needed for such a situation.
     
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  7. Scott No Mates

    Scott No Mates Well-Known Member

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    I can't say that it would be applicable to a residential lease, they lease it as a house. If they wish to use it as a family day care or meth lab, they are in breach of their lease.

    I didn't think of residential at all for that matter.
     
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  8. Michael Mitchell

    Michael Mitchell Property Manager Business Member

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    Is it a good thing or bad thing you have a potential tenant who's actually read the lease? Maybe it's an omen you need to ditch them and find another tenant, hahaha :)~
     
  9. Lil Skater

    Lil Skater Well-Known Member Business Member

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    Actually, depending on what lease the agent is using, it could be a standard term.

    A tenant cannot invalidate your insurance, whether you can actually get them to pay any increased premiums is another thing...

    If you wanted to meet in the middle you could leave the first half, but remove the payment portion of it.
     
  10. Stoffo

    Stoffo Well-Known Member

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    This clause is an insurance policy in itself.
    It is reminding the tenant that they are only able to use your property in the manner and purposes considered acceptable.
    So the tenant is cold, drags the back yard fire pit i to the lounge area the WOOF no more house........... But is was an accidental fire !
    Or did they breach their due care (and clause 10) ?
    Let them remove it, but up the bond 10X and have them sign a guarantee :p
     
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  11. thatbum

    thatbum Well-Known Member

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    I'd say the clause is useless or void in 99.99% of cases.

    Even if there was some bizarro scenario where it might have had some operative use - I bet no landlords actually thought to provide their tenants with a copy of their relevant policies.

    So good luck enforcing a contractual term where you didn't even give the other party a copy of the relevant contract!
     
  12. Dan Wood

    Dan Wood Well-Known Member

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    I thought the same, like those portable gas canisters stove's, they're not technically for indoors but people still do it.
     
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  13. TheRayTracer

    TheRayTracer Well-Known Member

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    I would question why the tenant wants to remove this clause.

    We have this clause in our leases in Vic. As an owner, I have actually used this clause as one of many reasons to end a lease. I will post a detailed thread on the narrative in the near future. In short, a tenant could invalidate an insurance policy by simply removing smoke alarms, or in our case, flooding the laundry on many occasions and only reporting a sudden and unexpected mold growth.
     
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  14. thatbum

    thatbum Well-Known Member

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    But all those things are already breaches of the lease agreement already, so I'm not convinced the insurance clause does anything on top.
     
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