Tenant wants to change terms of lease

IP is in a 12 month lease. Lease states that the tenants pay rent 6 months in advance.

Letter was sent to the tenants reminding them that their rent was due to be paid by x december.

Tenant has contacted the owner (owner is managing the property) asking if rent could be paid weekly or monthly instead.

Owner has explained to the tenant that this is in breach of the terms of the lease and it is disappointing news. Owner has offered a compromise of rent being paid quarterly.

Tenant politely and promptly advised that only monthly payments would be manageable. Owner advised that if monthly payments were made, the rent would need to be increased. The tenant has agreed to an increase in rent in return for paying monthly.

What is legally required to reflect that changes to the lease have been made and agreed upon by both the tenant and owner?

Is a letter/contract that simply details the changes and signed by both the owner and tenant sufficient? Or is there a more formal process that changes need to go a lease need to go through?

The IP is in NSW.

Thanks,
Ryan

RazzaDazzla said:

IP is in a 12 month lease. Lease states that the tenants pay rent 6 months in advance.

Letter was sent to the tenants reminding them that their rent was due to be paid by x december.

Tenant has contacted the owner (owner is managing the property) asking if rent could be paid weekly or monthly instead.

Owner has explained to the tenant that this is in breach of the terms of the lease and it is disappointing news. Owner has offered a compromise of rent being paid quarterly.

Tenant politely and promptly advised that only monthly payments would be manageable. Owner advised that if monthly payments were made, the rent would need to be increased. The tenant has agreed to an increase in rent in return for paying monthly.

What is legally required to reflect that changes to the lease have been made and agreed upon by both the tenant and owner?

Is a letter/contract that simply details the changes and signed by both the owner and tenant sufficient? Or is there a more formal process that changes need to go a lease need to go through?

The IP is in NSW.

Thanks,
Ryan

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Ryan, You will find that you will have almost zero chance of upholding that particular term of the lease. Collecting rent 6 months in advance will be in contravention of the RTA in your state. Assuming that this is in fact a resi IP and not commercial.

Consider yourself lucky that you have not been dragged over the coals thus far.

Boods

If this is a resi lease
Change the terms, let it slide, hope your tenant does not complain NSW RTA places large penalties on landlords in breach, and you are in breach

RTA said:

33 Payment of rent by tenant

(1) A tenant must pay the rent under a residential tenancy agreement on or before the day set out in the agreement.
(2) A landlord, or landlord’s agent, must not require a tenant to pay more than 2 weeks rent in advance under a residential tenancy agreement or to pay rent for a period of the tenancy before the end of the previous period for which rent has been paid.

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the RTA, the rules that govern your business (link), had major changes in NSW last year.
<<major change<<,

RazzaDazzla said:

Lease states that the tenants pay rent 6 months in advance.

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....if this property is zoned residential, then it doesn't matter a fig what is stated in the Lease. Whoever wrote it has no clue what they are doing....as it is not legally binding. The Tenants Union via the RTA would wipe their *** with it and then throw it back into the Landlord's face.

Landlord and Tenant can make whatever deal they like, the stipulations in the RTA run roughshod over all of 'em. See section 21.1.(b) of the Act ;

http://www.legislation.nsw.gov.au/maintop/view/inforce/act+42+2010+cd+0+N

Great post Almost Bob.

The lease falls under the previous act not the current 2011 RTA. To effect a rent review you must give 60 days notice in writing. The new RTA requires 90 days notice.

As for changing the requirement for 6 monthly in advance to monthly in advance, confirmation in writing as an amendment to the relevant clause should suffice (in duplicate & signed by all parties).

You're in the game and do this stuff for a living....so you'll know this stuff better than anyone Scott.

I'd be surprised if the old Act allows clauses to be inserted into rental agreements that contradict something in the Act....allowing Landlords to run roughshod over stipulations in the Act.

I have a suspicion you are dead wrong with your comments there Scott.

Happy for you to link to the old Act where it states a Landlord can somehow enforce a residential Tenant to pay 6 monthly in advance. I'm happy to wait and be proved wrong.

You can't request a tenant to pay more than one month in advance, if this ever went to tribunal you would find that the terms written into your lease would be found void and you would possibly be fined as they are outside of the legislation.

Take the monthly payments, get an agreement in writing and I would wait until the end of the lease to increase the rent just to make sure you're covered but that is your call!

Sez said:

You can't request a tenant to pay more than one month in advance

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Sez who? (I can't help myself)
post 3 above quotes the NSW rta 2010, two weeks not 1 month

Scott No Mates said:

The lease falls under the previous act not the current 2011 RTA.

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geez Scott No Mates (ScottnoIdea?? sorry, rude, but I had to), Dazz wrote "You're in the game and do this stuff for a living", Hell's bells, then you should know the RTA inside n out
the NSW RTA 2010, & its hoohaa, is retroactive, the prior act is Dead & Buried

rta said:

6 Act applies to existing and future residential tenancy agreements
This Act applies to residential tenancy agreements in respect of residential premises whether made before or after the commencement of this section

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even if the prior act hadnt been killed, per the OP, the six-month payment on a 12 month lease, falls in December, the lease therefore began in approx June 2011, weLL inside the active date of the current NSW RTA

I make similar replies to threads on SS,
"learn the rules that govern the business, it is supposed to be a business, and makes no allowance for 'I Didn't Know'"
in NSW 10 or 20 penalty units per fine ($1100 $2200) wipes out a lot of profitability, at the discretion of the adjudicator, for each payment requested more than 2 weeks in advance
prior posts by daz & me, give links to the RTA in NSW, ignore people (including me), read the law that applies

Not sure about NSW, but in VIC, where Sez is from, you can make tenants make a month in advance; I do.

NSW is 2 weeks unless tenants volunteer to pay more. If they do volunteer to pay more, they can drop back to 2 weeks at any time should they wish.

Sounds like the landlord in the OP is your typical slumlord/private landlord who knows (or cares) nothing about the law and is only interested in squeezing every cent.

DaveMSydney said:

Sounds like the landlord in the OP is your typical slumlord/private landlord who knows (or cares) nothing about the law and is only interested in squeezing every cent.

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I'd like to think not.

Lease was entered into in early July 2011. Tennant VOLUNTEERED in writing to pay 6 months in advance. As such a 12 month lease stipulating repayments 6 months in advance was entered into.

Was this illegal? If so, why so and could someone please reference the relevant section?

Since then, tennant has requested to change payment terms to monthly in advance. Landlord counter offered to receive payments quarterly in advance. Tennant requested monthly again and was happy to pay an increased rent for paying monthly.

There has been no threats of eviction nor any nastyness.

Can this new agreement be formalised with two copies of a letter signed by tennant and landlord?

RazzaDazzla said:

Lease was entered into in early July 2011. Tennant VOLUNTEERED in writing to pay 6 months in advance. As such a 12 month lease stipulating repayments 6 months in advance was entered into.

Was this illegal? If so, why so and could someone please reference the relevant section?

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Its been referenced in earlier posts. You cant override the act, regardless of an agreement you may put in regarding payment.

You can only ask foer 2 weeks in advance, thats the LAW. The tenant can OFFER to pay more, but that is entirely at THEIR discretion, and you CANNOT require them to pay more than the 2 weeks.

Yes the tenant may have agreed to pay 6 months in advance when they signed up, all they have to do is tell a tribunal that they cant afford the (dubious) rent in advance agreement, or that they misunderstood that the 6 months in advance was just initially to secure the property, and the tribunal will highly likely find in their favour, and possibly issue you a fine for breaching the act.

For what reason are you charging the tenant more rent for paying monthly? Going to make them pay more to cover the increased interest you will pay on the loan during the term? Was this increase written into the lease? If not, since you cant increase rent during a fixed term (unless agreed to at commencement) you are also in breach of the act.

NSW tenancies act - fixed term agreements, leases not in the standard form;

(4) Variation of standard form
A residential tenancy agreement for which a standard form is prescribed may include additional terms, but only if:
(a) the terms do not contravene this Act or the regulations or any other Act, and
(b) the terms are not inconsistent with the terms set out in the standard form.

Inconsistant and prohibited terms;

21 Inconsistent and prohibited terms void

(1) A term of a residential tenancy agreement is void to the extent to which it:
(a) is inconsistent with any term included in the agreement by this Act or the regulations, or
(b) is prohibited by this Act or the regulations.
(2) The Tribunal may, on application by a landlord or a tenant, make an order declaring that a term of a residential tenancy agreement is void or partly void if satisfied that the term is inconsistent with any term included in the agreement by this Act or the regulations or is prohibited by this Act or the regulations.

Rent in advance;

33 Payment of rent by tenant

(1) A tenant must pay the rent under a residential tenancy agreement on or before the day set out in the agreement.
(2) A landlord, or landlord’s agent, must not require a tenant to pay more than 2 weeks rent in advance under a residential tenancy agreement or to pay rent for a period of the tenancy before the end of the previous period for which rent has been paid.
Note. A tenant may pay more than 2 weeks rent if the tenant wishes to do so.

Maximum penalty: 10 penalty units.


(3) A landlord, or landlord’s agent, must not knowingly appropriate rent paid by the tenant for the purpose of any amount payable by the tenant other than rent.

Maximum penalty: 10 penalty units.


(4) This section is a term of every residential tenancy agreement.


I'm sorry, I was wrong with regards to NSW law - I'm afraid that I specialise in VIC and I don't always get it right in other states (which I have said before, I err like everyone else )

But reading the above would suggest to me that a penalty can apply for trying to make the tenant continue paying more than 2 weeks at a time, the 6 monthly payments in the lease are void and the lease should include details that rent in advance is only 2 weeks???

Let us know how this one pans out .

RazzaDazzla said:

I'd like to think not.

Lease was entered into in early July 2011. Tennant VOLUNTEERED in writing to pay 6 months in advance. As such a 12 month lease stipulating repayments 6 months in advance was entered into.

Was this illegal? If so, why so and could someone please reference the relevant section?

Since then, tennant has requested to change payment terms to monthly in advance. Landlord counter offered to receive payments quarterly in advance. Tennant requested monthly again and was happy to pay an increased rent for paying monthly.

There has been no threats of eviction nor any nastyness.

Can this new agreement be formalised with two copies of a letter signed by tennant and landlord?

Click to expand...

posts above give links to the RTA as it applies

RTA Par33 bolding -by-Bob said:

33 Payment of rent by tenant

(1) A tenant must pay the rent under a residential tenancy agreement on or before the day set out in the agreement.
(2) A landlord, or landlord’s agent, must not require a tenant to pay more than 2 weeks rent in advance under a residential tenancy agreement or to pay rent for a period of the tenancy before the end of the previous period for which rent has been paid.

Note. A tenant may pay more than 2 weeks rent if the tenant wishes to do so.

Maximum penalty: 10 penalty units.


(3) A landlord, or landlord’s agent, must not knowingly appropriate rent paid by the tenant for the purpose of any amount payable by the tenant other than rent.

Maximum penalty: 10 penalty units.

(4) This section is a term of every residential tenancy agreement.

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$1100 penalty, a tenant may pay more but cannot be compelled to, and it cannot be written as a term of lease,as that would be requiring the tenant to pay more than 2 weeks in advance

RTFRTA (read the fine RTA << humor ), all humor aside the LL has left themselves open to problems

AlmostBob said:

RTFRTA (read the fine RTA << humor )

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I wonder if these same adults used to just pick up a Monopoly set as a kid and start playing....making stuff up as they went, without ever sitting down quietly and reading what the rules of the game allow and disallo ??

It must get very frustrating assuming stuff all the time and constantly finding out what you thought or made up is completely wrong. Other than feeling like a goose constantly, surely it must get expensive too ??

RTFFPDS....

RazzaDazzla ...... Dazz are you two related?

So the long and the short of it is that the land lord is in breach of the RTA by stipulating that the lease is payable 6 months in advance.

Therefore the tenants request to alter the terms of the lease payments is not in breach of the lease, as the lease is I assume void due to the 6 month in advance terms.

So what's the landlords best option? Start a new lease (if the tenant agrees) which would stipulate rent is payable no more than 2 weeks in advance.

What is the process for terminating a lease that is in breach due to the 6 monthly payments in advance?

Or if the landlord and tenants relationship is quite cordial, should it just continue with a verbal agreement for rent to be fortnightly until the lease expires and then start a new lease.

If you have a cordial relationship with the tenant congrats, thats good,
A simple amendment note signed by both parties stipulating the payment period, revised to suit as much as possible LL, a bit less the tenant(of course I'm biased) & definitely RTA
(that happens to mention that the prior arrangement was at the tenant request to cover the landlord's a$$ should things go south later)
sh/w-ould satisfy the RTA.
I agree with ladylove, as little in writing that mentions the LL error as possible, thats our discussion here, not online yet
The NSW RTA is written to benefit tenants, another reason to avoid Labor, were it biased as much the other way the stink would reverberate from every media outlet
but in NSW it is the rule of the game, its a long read, but neccessary.
In our jurisdiction we are required to give a copy of the RTA with every lease. more over-reaction, have not had a tenant read it ever, and they still screw up.

Do not put it in writing, and have the tenant volunteer to pay more upfront.

If I remember correctly..if your lease is under 60 days or more than 5 years, you no longer fall under the RTA

kathryn d said:

Do not put it in writing, and have the tenant volunteer to pay more upfront.

If I remember correctly..if your lease is under 60 days or more than 5 years, you no longer fall under the RTA

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Not 100% sure about the minimum timeframe but the longer timeframe in NSW is 3 years, not 5 however not everything is negotiable eg tenant can't be made to pay council rates.