When is a lease binding?

New tenants approved. PM said they were coming in to sign the lease. 4 weeks rent is paid to secure the property. Lease to commence next month. We have received payment of that rent as per cheque issued 4 days after being told the lease was being signed.

3 weeks later - I am advised that the tenants have not signed a lease. Does the fact that they have paid 4 weeks have any weight in terms of a contract being binding?

 

It definitely means something. Legally, the definition of a contract has more components than a signature. Offer, acceptance and consideration (money) are other components.

We've successfully charged break lease fees on similar before.

Being that @thatbum represents tenants, its likely he's seen some go the other way too.

It could depend on which tribunal member you get on the day (like most issues).

Question for you in the meantime though - why is it weeks later? What's happened since then?

 

The PM happened! (Vic issue)
6 days ago I was emailed a pet application. (2 large breed dogs which were being adopted)
We said no and advised that the tenants are welcome to break the lease and pay any associated penalties. I also requested a copy of the lease.
No response.
2 days ago I followed up with a phone call and then an email.
Today I was advised that the PM has spoken to staff involved and that no lease was actually signed and that I need to refund the monies paid.

I have no issue refunding the money. My concern is I was meant to have tenants move in, in 2.5 weeks time. If new tenants are not found, approved and move in as per that date then I will be footing the bill.

 

Yes It’s binding and if this was a property i was managing I would treat it as a break lease.

 

Lease is binding without the lease being signed, but will largely depend on the VCAT member as it's likely to go through to VCAT. It is also possible VCAT will throw it out as the lease was broken before it commenced as well, if they don't throw it out on this basis they will only start charging rent from the day the lease was meant to commence and not loss of advertising time between it being removed from the internet and the lease commencing.

Seems odd that there's been no lease signed for so long, what's the reason for this? It should be signed within 24 hours!!

 

Seems like an unusual situation. I can't actually make much of it because its missing a lot of vital information - mostly from the PM point of view.

I'm curious what they actually told the tenant if they took the money but didn't sign a lease - and also why the tenant applied for dogs to be on the lease even before they moved in.

 

What state? Even without a written lease there could be a lease in place.

 

Vic. The ingoing tenants paid deposit electronically. PM is asserting that they kept calling tenants in to sign but they kept delaying. PM believes that VCAT would throw the case out. I suspect that the PM did not enforce a signing period or deadline but they are not willing to admit it. They have advised they may have potential tenants to move in on said date.
Oh the joys of PI.

 

As a PM in Vic I do believe that VCAT will likely throw it out too, I once had a tenant who broke lease two days after taking possession and they threw it out - because in their eyes the tenant hadn't moved in.

PM should've told you the lease wasn't signed after 24 hours. When I send acceptance I have it in the email that lease, bond and rent are to be paid in 24 hours or the offer may be withdrawn. Sure, it might be a little pushy, but better that than having it drag out. Hopefully they have someone else willing to take it the same day so you're not out of pocket.

 

Update - ingoing tenants money was returned. New tenants found and moved in on the same date. New issue - The agency has decided to charge us 2 x Lease Fees (the old and new) and also management fees on the money we returned.
It has been one saga after another with this PM.
For PMs on this forum - what is the process if the agency comes back next week and says bad luck we are not refunding those monies? Who do I raise a case with?

 

@Owlet Get a new PM.
Not worth dealing with a holes like that.
Seriously, charging you 2x lease fees after that debacle?

 

Definately! Need to sort this first and then I'll move. My argument is - if there was no lease as they declared, then there is no lease fee to pay and no management fees because the tenants did not move in.

 

What does your contract with them say they are entitled to?

 

Thanks Terry - I'll dig it out later and have a read. In a phone conversation, I was told we wouldn't have to pay the lease fee. I am steaming that we have lost $750 becasue of their mismanagement, not including how much of my time this has taken up. The joys of PI!

 

If you couldn't take the tenants to VIC to enforce a lease as there was no lease then why should you have to pay 2x leasing fees.

If they want a second lease fee they can take that up with the 'ex tenants' and just pay one as these tenants broke lease which would make them responsible for the second tenant fees.

Time to get a new PM.

 

I think this is fine, as long as the tenant pays for the first one since they broke the lease. Or if not, then only 1 lease fee.

 

Agreed. But in this case the first tenants money was refunded.

 

No lease and money refunded = no letting fee payable. After all, they didn't lease the place or the money wouldn't have been refunded.

What a mess, find a new PM that doesn't waste your time and patience.

 

One lease fee is being refunded

 

Adding to this thread because it is the same IP and PM agency. Previous tenants had to return to the property to clean and had to pay for damage from their bond. Left this in the PMs hands - received email that they had organised the repair and the cleaning was done.
3mths later we have been charged for the 'repair'. Invoice from handyman is dated the same week as the PMs email but the agency hasn't paid it until now - and they use our rental income to pay for it.
The former PM has moved on. The response from the new PM is - they are not up to date with what went on previously. If you are paying an invoice that is 3mths old - wouldn't you check it out? Confirm that it had not been paid?
Or is it a case of they have stuffed up - forgot to pay the invoice, forgot to deduct from the bond and when chased for payment - thought they'd make us pay. I don't like the seemingly sneaky way they have done it either. We will see how this pans out.
If they did their job which is to manage the IP not just collect rent...