Breaking a contract..
- Thread starter Ryan80
- Start date
There is no issue with this, simply advise your PM ASAP that you wish to withdraw the property from rental market and that any monies taken from the tenant be returned promptly. There is no written contract at this stage I gather? Nontheless, as there is no occupancy of the premises normal eviction/termination notice is not required.
I had the reverse happen earlier this year. Tenants signed lease agreement, property taken off rental listing, and a few days prior to moving in, the tenants went to the agent (not to pick up the keys or pay bond monies) but to withdraw their application.
Property readvertised again on realestate.com later that afternoon and new tenants found a few days later!
If there is a lease signed then the answer is NO you cannot cancel a contract under any circumstances.
There is a "hardship" rule in the legislation that states that landlords can cancel a tenancy agreement under hardship but to date I have not seen a single case where someone has been able to cancel an agreement - unless someone here can produce a case.
There is also the issue of "verbal agreement" which can be deemed to be binding. so it can be complicated
I would just ask the PM to negotiate with the tenant and ask if they would be willing to leave, I would even throw in a couple hundred dollars for their understanding.
I'm assuming it's the tenancy agreement you wish to cancel not the management agreement?
There is a "hardship" rule in the legislation that states that landlords can cancel a tenancy agreement under hardship but to date I have not seen a single case where someone has been able to cancel an agreement - unless someone here can produce a case.
There is also the issue of "verbal agreement" which can be deemed to be binding. so it can be complicated
I would just ask the PM to negotiate with the tenant and ask if they would be willing to leave, I would even throw in a couple hundred dollars for their understanding.
I'm assuming it's the tenancy agreement you wish to cancel not the management agreement?
But they haven't occupied the premises yet, or at least so I've understood it.
That shouldn't matter Monopoly unless it is vastly different in Perth and I am prepared to be wrong if you want to correct me on that fact.
By SA legislation verbal is binding and a signed contract is almost impossible to get out of except by mutual consent.
The negotiation skills of the property manager and gift baskets work well
By SA legislation verbal is binding and a signed contract is almost impossible to get out of except by mutual consent.
The negotiation skills of the property manager and gift baskets work well
Xenia, I'm not aiming to prove you wrong and I would likewise be happy to concede my mistake, however albeit the agreement (as any verbal or written contract) has its legal bindings, is not that black and white.That shouldn't matter Monopoly unless it is vastly different in Perth and I am prepared to be wrong if you want to correct me on that fact.
By SA legislation verbal is binding and a signed contract is almost impossible to get out of except by mutual consent.
The negotiation skills of the property manager and gift baskets work well
The landlord is required to sign the agreement, and if this has not occurred, there is no contract IMO and you can save yourself the negotiation and the gift basket, and settle for a civil handshake as you part ways.
I will look into this further of course, not to prove you wrong, or myself right but to make sure I'm up to speed in my understanding of this ruling, which may be outdated!
As always, this can probably solved by good communication. We had a tenant LOVE our IP, signed the lease, got home and realised her furniture was too big, called me crying.
We could have made it difficult, forced her to pay whilst we found a new tenant. Instead, we ripped up the contract, and let her go.
If you (or the agent) tells the tenant (whether a lease has been signed or not) about your change of heart, it is entirely possible that the tenant will be happy to find something else. Of course, that depends on how pressed they are to move, how empathetic they are to your distress, and whether or not they are nice enough to accept the situation and find something else.
If the agent can help them find something else suitable, and quickly, you could solve this quickly. If your change of heart means they have an extra cost, perhaps a week's rent overlap or have to store their stuff for a week, if they have indeed signed a lease and the agent signed on your behalf, you might offer to cover that cost.
Who knows. Perhaps they "settled" for your house and would be happy to find something else if there is no extra cost involved. Communication is the key here, and quickly.
We could have made it difficult, forced her to pay whilst we found a new tenant. Instead, we ripped up the contract, and let her go.
If you (or the agent) tells the tenant (whether a lease has been signed or not) about your change of heart, it is entirely possible that the tenant will be happy to find something else. Of course, that depends on how pressed they are to move, how empathetic they are to your distress, and whether or not they are nice enough to accept the situation and find something else.
If the agent can help them find something else suitable, and quickly, you could solve this quickly. If your change of heart means they have an extra cost, perhaps a week's rent overlap or have to store their stuff for a week, if they have indeed signed a lease and the agent signed on your behalf, you might offer to cover that cost.
Who knows. Perhaps they "settled" for your house and would be happy to find something else if there is no extra cost involved. Communication is the key here, and quickly.
The landlord is required to sign the agreement, and if this has not occurred, there is no contract IMO and you can save yourself the negotiation and the gift basket, and settle for a civil handshake as you part ways.
If the agent has signed the agreement on behalf of the landlord (I have never personally signed any leases made on my behalf by an agent) then it will likely be binding.
As others have said though, be upfront and explain to the tenant that for XYZ reason the property is no longer available. If its going to result in it being sold, the tenant may be glad to not move into a place only to move out again after the initial term if it gets sold to an owner occupier.
Hey Monopoly girl
Yes please look it up, it would be interesting to compare Perth legislation as I have my SA brain on.
also if the LL has not signed the lease you can always use the excuse of "not approved'
we sign all leases on behalf of all our clients so I have my own agency hat on too when answering these questions.
Thanks Wylie.
Yes please look it up, it would be interesting to compare Perth legislation as I have my SA brain on.
also if the LL has not signed the lease you can always use the excuse of "not approved'
we sign all leases on behalf of all our clients so I have my own agency hat on too when answering these questions.
Thanks Wylie.
When we purchased our house a couple of years ago, (5 unit building) there was a tenant (with tenure) in the unit our daughter was to live in. Because of tenure, we had to request permission to have the lease terminated.
At the hearing, the tenant informed the adjudicator he had secured a place, paid the security deposit, and then the new LL changed their mind, and gave back his deposit. He was upset, because he had no where to go.
We informed the adjudicator we would not throw him out, and offered to give him a couple more weeks. All was good.
The adjudicator thought for a moment, and then turned to the tenant and informed him he did have a contract with his new LL as they had accepted money..if he wanted to take it further.
He found a new place within a week, so all worked out for everyone.
It gave us an insight of where we would stand if this happened to us. A few times a tenant did put down a deposit, only to change their mind. Unless we find another tenant they lose the deposit..and they are legally liable for 2 months rent, but we never go after them for that.
At the hearing, the tenant informed the adjudicator he had secured a place, paid the security deposit, and then the new LL changed their mind, and gave back his deposit. He was upset, because he had no where to go.
We informed the adjudicator we would not throw him out, and offered to give him a couple more weeks. All was good.
The adjudicator thought for a moment, and then turned to the tenant and informed him he did have a contract with his new LL as they had accepted money..if he wanted to take it further.
He found a new place within a week, so all worked out for everyone.
It gave us an insight of where we would stand if this happened to us. A few times a tenant did put down a deposit, only to change their mind. Unless we find another tenant they lose the deposit..and they are legally liable for 2 months rent, but we never go after them for that.
Well Xenia, you are correct in that a lease agreement is a binding contract and cannot be broken under any circumstances (officially speaking) if BOTH parties have signed the contract, and by this of course can be an agent (PM) on the landlords's behalf.
However, having said that...they can still be successfully challenged because of one small, but very important detail....THE START DATE of the lease agreement which usually nominates the first day of occupancy. As they have not moved in, although they can be held liable (if either party really wants to be anal about it) with the assistance of a good solicitor, can easily walk away unscathed. I've seen it too many times to count!!
Furthermore, as far as Victoria is concerned, I won't even bother going into the requirement of a condition report, because I honestly don't believe it (the contract) has gotten very far anyway.
So yes Xenia you're absolutely correct; my bad, I should have reworded my comments.
Very true, often this is the case, most LLs and/or tenants unless absolutely desperate tend not to push it further but release the other party from their legal obligation. Speaking more for myself, I just can't be bothered with the headaches, and would rather they go on their merry way, rather than be dragged into a ****fight unnecessarily.
Your latter sentence suggests that the landlord never sign the leases themselves. Surely if you've signed it as their agent, the lease is binding irrespective of what the landlord says afterwards.
Are you suggesting that until the person moves in, the binding agreement hasn't come into effect? I would have thought the lease became binding from the date that both parties signed, but I'm not sure - that was an angle I was wondering about myself.
Ryan80, you need to contact your PM immediately, and check whether the lease has been signed by both parties.
I'm merely stating that if it is contested in a court of law, it is easier to wiggle out of the deal because the lease agreement (albeit binding) by providing a clear start date can (along with such other factors as the Condition Report revealing the property is less than habitable for instance) provides a loophole for escape. It is not written down anyway, but is something that solicitors will use to get one party or the other out of this legal agreement. Note: I would not recommend travelling down this path, it is messy, time consuming and can be more costly (court fees etc) than merely paying your dues as the party wishing to break the contract.
Agree wholeheartedly Ryan80, talk to your PM immediately and explain your decision to pull the property from the rental market. Bear in mind, that you are not only likely to p*** the potential tenant but also your PM who is going to be out of pocket, so excuses such as "I just changed my mind" may not cut the mustard, and you may like to give a more concrete excuse.
Best of luck with it; you should be okay (more often than not, LL or tenants won't hold the other to this contract because it's easier to just find something or someone else) but desparation may dictate otherwise on occasion.
Thanks for your advice all! Maybe a bit more info is needed:
We went in on Thursday signed up with Ray White to manage the property. They were doing checks on the tenants, and said that it all looked fine. We said to go ahead (we did not sign anything) As it's Easter they have been closed since then and don't reopen until Weds. We have been looking for the tenants ourselves and a guy came around Saturday and said that the tenants that put the application in have found somewhere else now. It's a pretty small town where the property is located and this guy works at the same place as the tenants. We can't contact the agent (until Weds) so need to wait until then to find out whether they have found somewhere else or still want the place. In the meantime we can't say yes to anyone else as I don't know where we stand after giving the go ahead last Thursday!
We went in on Thursday signed up with Ray White to manage the property. They were doing checks on the tenants, and said that it all looked fine. We said to go ahead (we did not sign anything) As it's Easter they have been closed since then and don't reopen until Weds. We have been looking for the tenants ourselves and a guy came around Saturday and said that the tenants that put the application in have found somewhere else now. It's a pretty small town where the property is located and this guy works at the same place as the tenants. We can't contact the agent (until Weds) so need to wait until then to find out whether they have found somewhere else or still want the place. In the meantime we can't say yes to anyone else as I don't know where we stand after giving the go ahead last Thursday!
Chances are the PM probably hasn't even told the tenants, which (from what this other person is telling you) may well prove that the tenants will want to back down from the agreement.
So you STILL want to rent it out? Your first post sounded as though you wanted to remove it from the market (completely). Sorry maybe I read it incorrectly.
Nevertheless....
Ring your PM first thing tomorrow, tell him of your visitor and his revelation about your potential tenants. It may well be that they have found somewhere else and if so and you're happy to release them, just do it. Then if you still want to go ahead with the PM agreement do so, if not, take your business elsewhere too. You don't seem confident with your PM; once you engage one to act on your behalf, let them deal with the property being on or off the market, and politely tell people like that visitor (thanks but) to deal with the PM directly.
Sounds like you won't have a drama.
