Lease Break – 6 months into 12 mnth lease. Landlord cops 50%

This is in Victoria. A tenant has broken a lease after 6 months into a 12 month lease. The property manager has found a new tenant and charged me, the landlord, half the letting fee. The PM tells me that is how it should be done under the residential tenancy Act. In the past I have not incurred any fees when a tenant has left the lease early.

As the landlord, should I have been charged?
 
I'm not certain, but my understanding is that you pay a pro-rata of the letting fee. I think the tenant is only obliged to pay what is remaining on the lease so in your case half the lease was remaining so the tenant pays half the letting fee. Seems quite fair, because if they were to leave in 6 months time when their lease ended, you'd be up for a letting fee anyhow.
 
Why are you getting your information from the PM ?? As a Landlord in the Landlording game, why don't you know the rules of the game, or at the very least have a copy of the rule book close at hand. To get their licence, the PM studied a wee little book of about 60 pages. Surely you aren't relying on them are you ??

As the landlord, you should know the rules of the game.

1. If you really cared, you'd - Go and buy yourself a copy of the RTA for about $ 14.00 from the Govt printers.

2. Or, if you are like some people and buying a copy is too much effort and too expensive, download it for free and print it out for future reference.

3. Or, if you are like most people, don't place any burden on your own shoulders and be guided by what the PM tells you, still not knowing whether it is HS or not. Then by all means, come and post it up here and ask anon. folk who cannot and will not warrant anything to you.

How long have you played this game for....and when were you thinking of reading the rules of the game ??

Geez I love your tone. Thnks for taking time out of your mega millions commercial property world to help me along.

I do rely on my PM. I just wanted to use the collective knowledge of this residential property forum to confirm the approach of my PM. I am not interested in reading any legislation for the sakes of $150. In the past, for a lease break my other PM charged the full amount to the renter.

Incidentally, I have been doing this now for about 13 years.
 
I am not interested in reading any legislation for the sakes of $150. In the past, for a lease break my other PM charged the full amount to the renter.

Incidentally, I have been doing this now for about 13 years.
13 years and you dont care enough to find out?
let the pm do whatever they want, they are anyway

You drive a car, you learn the road rules.
how about, if you or your agent breaches the RTA
(how, I dunno, and by your post neither do you)
and leaves you liable for very significant fines and penalties


postscript:

I thought Dazz was very kind,
Hi Dazz, congrats on the self restraint
I would express similar thoughts in less polite language, if it had not already been said
 
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Good to see Dazz has a fan. You must be really home sick living in Canada and surfing an aussie web site.

So is the policy on this forum to bag people who ask a question that can be found in reading a tonne of legislation.

I would have thought it would have been a reasonably easy answer and we do have PM's on this site. I think its more business practice than legislated. I have asked another PM i use to see what they do.

Just out of interest do you use a tax accountant or are you smart enough to do it yourself in both Canada and Australia?
 
I'm not certain, but my understanding is that you pay a pro-rata of the letting fee. I think the tenant is only obliged to pay what is remaining on the lease so in your case half the lease was remaining so the tenant pays half the letting fee. Seems quite fair, because if they were to leave in 6 months time when their lease ended, you'd be up for a letting fee anyhow.

Yes, this is correct. The tenant needs to pay pro-rata of the letting fee.

Regards Jason.
 
Tony

Please read atleast for your sake this part of the lanlords act. It is up to the existing tenants to pay for all rent, advertising, fees and any letting fees the agent may incur until a new tenant at the same rate is found. You can even right into the advertisement that you are putting it up 10% after 6 months and the existing tenant still pays until a new one is found ( or until there term would have ended). If you do not want to read it atleast give another real estate agent in the area a call and here there answer.

Ultimatley if the existing tenant doesn't like to hear this then maybe they can stick to the contract they signed 6 months ago.

Jezza
 
Well I certainly have conflicting opinions now.

I emailed another agent I use in Victoria who also reckons they pro rata.

So now I have two property managers I have alot of respect for, now saying they pro rata. But i am not so sure.

Maybe i need to take Dazz's advice and do some research. I joined these forums to have access to the collective wisdom of investors here.

Jezz - what section of the Act are you referring?
 
Hi Toony, I am a PM (and investment property owner) in WA. I am very familiar with the rules over here, that is my job, not sure of your rules in east but fairly sure they would be pretty similar.
If a tenant breaks a fixed term lease, then they are responsible forrent until re-let, advertising, all the normal charges that we charge the owner eg database checking fee, final bond inspection, and REIMBURSEMENT OF PORTION OF LETTING FEE. So I think your PM is correct.
So if the tenant is in place for three quarters of a twleve month lease, they reimburse you one quarter of the letting fee you have been charged, so for the new tenant you effectively pay three quarters of the letting fee.
I would suggest that maybe just maybe, you have been charged like this in the past and not read your statement correctly as you did not understand the law? Maybe your statement said something like "reimburse letting fee" and it refers to the reimbursement of the portion of the letting fee, to knowif this is so you would go back to the origianlstatement where you were charged a letting fee and see if the amount you were originally charged is the same as the portion you have been reimbursed ... does that make sense? If you don't go check you may just read it think to yourself oh yeah that is right, the tenant has reimbursed the letting fee, not realise it is a portion (as it should be) rather than the whole thing (as you were assuming it was?). Especially if it is spread over two statements (fees charged one month, reimbursement arrives the following month, due to bond finalisation timing.
Don't worry about Dazz, I think it is his time of the month.:) (But he is right, you need to be aware of the rules!)
 
Portion of the letting fee would be fair and logical, at the end of the lease they owe nothing and the landlord pays the reletting fees
If of course, the RTA ( any RTA or other kneejerk Act of parliament ) were written in a fair or logical manner.
I thought it common sense, that a person involved in any regulated trade or business kept one eye on the rules of that trade, sparkies watch the Electrical Code, Chippies and property managers watch the building code, property managers and Landlords watch the RTA, transport drivers learn to fake logbooks
the corner of my desk has a poorly organised stack of file folders and about five of these

no bigger than a magazine, but much duller
 

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Portion of the letting fee would be fair and logical, at the end of the lease they owe nothing and the landlord pays the reletting fees
If of course, the RTA ( any RTA or other kneejerk Act of parliament ) were written in a fair or logical manner.
I thought it common sense, that a person involved in any regulated trade or business kept one eye on the rules of that trade, sparkies watch the Electrical Code, Chippies and property managers watch the building code, property managers and Landlords watch the RTA, transport drivers learn to fake logbooks
the corner of my desk has a poorly organised stack of file folders and about five of these no bigger than a magazine, but much duller

Thanks for that. So i read on a previous post your tax accountant claimed $100k as a repair instead of as a Capital item. Maybe you should have spent more time reading the Income Tax Assessment Act instead of the Residential Tenancy Act. Can you scan the Income Tax Assessement Act for me too?

So my $170 v your $100,000 mistake. I can see why you like to now read the legislation. Good luck my friend.
 
Thanks for that. So i read on a previous post your tax accountant claimed $100k as a repair instead of as a Capital item. Maybe you should have spent more time reading the Income Tax Assessment Act instead of the Residential Tenancy Act. Can you scan the Income Tax Assessement Act for me too?

LOL! :D

I thought they were a bit harsh on you. If you were self managing yes, then you deserve the criticism but that's what you pay professionals (i.e. property manager) for. Sure, it might be in your best interest to know everything, but not everyone has time to know everything, which is why they hire people to do it for them.
 
I thought this thread was very entertaining!!!!

I agree 100% with Dazz and AlmostBob, for something as simple as the RTA, you should read and at least have a cursory familiarity with it. Same goes with tax legislation. IMHO professionals are there to help you navigate the complexities and act as a sounding board for you to confirm your understanding. You'll get far more bang for buck if you know a little bit and work with your professionals in this way.

I also don't think Dazz was having too big of a go at you, I think his original post was pretty tongue in cheek.........at least that's how I read it.

Even though you outsource the day to day drudgery to a PM, you need to know the act, not all PM's measure up, not all are experienced and not all are good.

Ultimately YOU are responsible for your success or failure, not the PM.
 
I used to teach years ago. I liked the students who would come to me and say: "I'm not sure of the answer but from my research I think it is x... can you tell me if I am right or wrong?"

Always much more well received then blandly asking for an answer without giving it a go yourself.

As for relying on your PM I agree you should only choose suppliers you can rely on but it is a good idea to be able to verify what they say.
 
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Thanks for that. So i read on a previous post your tax accountant claimed $100k as a repair instead of as a Capital item. Maybe you should have spent more time reading the Income Tax Assessment Act instead of the Residential Tenancy Act. Can you scan the Income Tax Assessement Act for me too?

So my $170 v your $100,000 mistake. I can see why you like to now read the legislation. Good luck my friend.

We found the mistake ourselves, because we do know the Canada Revenue Act.
Our accountant just didn't do what he was instructed to do. We had it listed as a renovation, and he changed it.
We are trying to rectify it.
We just "assumed" he knew what he was doing. You know what happens when you assume.

If you are asking advice from a forum, you will receive all types. The way the message was delivered to you may have been harsh. Would you have taken notice if it was sugar coated?
 
So my $170 v your $100,000 mistake. I can see why you like to now read the legislation. Good luck my friend.
Thank you for the wishes,

its never the $170, there's always a $100K coming behind
we learned very much the hard way not to trust 'professional' standard of care, checked the return and found the error before audit, but after the accountant had submitted it.

in your case the pm's interest won't always align with yours
on a scale of 1 -> totally paranoid, about a four is good.

its the Canada Revenue Act, here

what you expect.
Income Tax Act 1986, and,
Income Tax Assessment Act 1997
I do have a tyro's of, company structure in Aus requires it, the family business has been around forever, all the cousins got raised in it.

You can learn by making a mistake or from somebody who made the mistake, the second way is easier
 
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