Penalty Rent

[Chomp]

Is it possible to draw up your rental agreement in the same manner as the way parking or speeding fines are issued (if you pay on time or early the amount is cheaper).

They (local governments etc..) do it this way as only a court can issue punative damages, that is how they get around it.

What I mean is, you say you will rent the property for $500 week, but if the tenant pays on time It will only be $350 per week (your true rental value).

If the tenant defaults then it reverts back to the $500 a week, for the duration of the contract, or even back dated.

I have a tenant who is behind a month now and it is really getting to me, I know I have followed the procedures but I will still be out of pocket through no fault of my own, other than bad judgement of character.

So has anybody thought of or tried this before ?

Chomp

 

[Propertunity]

Is it possible to draw up your rental agreement in the same manner as the way parking or speeding fines are issued (if you pay on time or early the amount is cheaper).

No, it isn't. Resi rents come under the RTA of the state you're in. You cannot contract outside of the Act's rules and regs.

 

[Chomp]

Why is that contracting outside of the RTA, I am giving the tenant a discount ?

Chomp

 

[Aaron_C]

I can't speak for WA or NSW, but in Victoria a Tribunal can set aside a residential tenancy contract term that is deemed harsh: http://www.austlii.edu.au/au/legis/vic/consol_act/rta1997207/s28.html

Good luck trying to enforce a $500 penalty for late rent with VCAT.

 

[jaycee]

Why is that contracting outside of the RTA, I am giving the tenant a discount ?

Chomp

Ring & ask and see what they say !

Sorry I can't see it being allowed based on my litmited experience witgh the RTA - IU sent a Notice to Vacate (due to non payent of rent)(.. according to DOCEP (VCAT equivalent for WA), I was told I could not even go to the property to see if the tetant had moved out without first applying to the magistrate's court for permission.. I said are you serious and the lady ansewred an affirmnative "Yes" making it soudn like I was askinfg ros something criminal

 

[Chomp]

ok so I repeat, its not a penalty, I am giving the tenant a discount on the rent.

Chomp

 

[jaycee]

ok so I repeat, its not a penalty, I am giving the tenant a discount on the rent.

Chomp

If you know you're right Chomp..... then you don't need our advice or view.

We can only tell you what we think / know, even if you repeat yourself

Ringing DOCEP / VCAT / the equivalent for your state etc will tell you for sure.

Sorry

 

[Chomp]

ok Jaycee,

I dont know I'm right and I do value people's input and comments.



Chomp

 

[jaycee]

ok Jaycee,

I dont know I'm right and I do value people's input and comments.



Chomp

our understanding( (for those of us who've answered that is), is "no bloody chance !!!!"

sorry, it's not what we'd like to hear either.....

 

[marg4000]

ok so I repeat, its not a penalty, I am giving the tenant a discount on the rent.

Chomp

You are NOT giving a discount unless the rent is fair in the first place. You state the fair rent is $350 per week. Charging $500 per week is clearly unreasonable - therefore by "reducing" the inflated rent to fair value is NOT a discount.
Marg

 

[Chomp]

Try arguing that when you have to pay a parking, speeding fine or even your rates ?

The $500 is an example I agree probably too high but you get what I mean. What if it was $20 extra a week, this would help cover losses.

Chomp

 

[Peter_Tersteeg]

It's an interesting idea and I have no idea if it can be implemented or not. I fear however that if the tenant was late and you increased the rent to $500, it would be seen as various tribunals as an unreasonable increase and you'd be stuck at $350.

You're probably financially better off to charge at market rent (or just below if you want to be generous) and pay a good property manager to find good tenants and manage them effectively.

 

[jaycee]

Try arguing that when you have to pay a parking, speeding fine or even your rates ?

The $500 is an example I agree probably too high but you get what I mean. What if it was $20 extra a week, this would help cover losses.

Chomp

Sounds like you are tyring to argue with us after we gave you our opinons you asked for.


We're not arguing that councils can't do it, you asked if we think mit mcan be done in residentail property rental and our answer has been noppe don't think you can


Besides,, ,if the peoperty nextdoor is dientical... why woudl I sign up to rent your palce for $50/week or $500 when I'm late ... when I could rent any other equivalanet valued property for $350 .. why woudl I bother signing something tha tcomplicates the lease & implicates pssible penatlites for me when I know that I don't have to ?

anyway, be interesting to find out if someone bohters to rign the authority

 

[kathryn d]

Tenants will be late with their rent.
The sooner you can accept that, the easier it will be for you.

No amount of incentives will change a tenant.
We know we have tried.

It comes down to, do they pay their rent with only being a little late, or is it getting worse.

Then you make the decision whether to proceed to evict.


We are lucky where we have rentals.
The tenancy board tells us it is at our discretion, when we declare a place abandoned.
We have done it at least three times this year already

 

[Chomp]

Jaycee

Im not arguing for the sake of it, I believe I have a point and I think it is worthy of discussion.

My point is I think as landlord's we get the raw end of the deal when a tenant defaults, the government doesnt seem to mind and is not changing anything, so may be there is something we can do to even it up a bit.

If the property owner next door charged rent the same way then you would have no choice as a tenant.

Chomp

 

[jaycee]

Jaycee

Im not arguing for the sake of it, I believe I have a point and I think it is worthy of discussion.

My point is I think as landlord's we get the raw end of the deal when a tenant defaults, the government doesnt seem to mind and is not changing anything, so may be there is something we can do to even it up a bit.

If the property owner next door charged rent the same way then you would have no choice as a tenant.

Chomp

As I suggested mate, ring & find out cause you're the one that's intersdted, then you won't have to argue with us,

We only shared our opionons with you cause you asked for our opinions.

I know it's not what you wanted to hear, but it is what ourt life experience (very little in my case, more in other peoples) has shownn us to date, this is all anyone can offer you

Good luck

 

[kathryn d]

Jaycee

Im not arguing for the sake of it, I believe I have a point and I think it is worthy of discussion.

My point is I think as landlord's we get the raw end of the deal when a tenant defaults, the government doesnt seem to mind and is not changing anything, so may be there is something we can do to even it up a bit.

If the property owner next door charged rent the same way then you would have no choice as a tenant.

Chomp

None of us will disagree with you.
It's just that we all must abide by the rules.
We can charge a penalty of 1% of the monthly rent..whoopie..usually a $7.50
We have offered tenants a free month of rent if they pay the first 11 months on time.NOt one tenant took us up on that offer.

 

[jaycee]

None of us will disagree with you.
It's just that we all must abide by the rules.
We can charge a penalty of 1% of the monthly rent..whoopie..usually a $7.50
We have offered tenants a free month of rent if they pay the first 11 months on time.NOt one tenant took us up on that offer.

Exactly..

Our "opinions" have been our best iontyerpretaitions of the rules, not our own wishes

 

[AlmostBob]

You are in WA, READ THE ACT
you have no point
it is not worthy of discussion
the opinions given previously comply with law
the Residential Tenancies Act WA is the only rule book
the RTA says no

57 Accelerated rent and liquidated damages prohibited
(1) Where an agreement provides that, upon breach by the tenant of the agreement to pay rent or any other term of the agreement or breach of this Act or any other written law, the tenant is liable to pay:
(a) all or any part of the rent remaining payable under the agreement;
(b) rent of an increased amount;
(c) any amount by way of a penalty; or
(d) any amount by way of liquidated damages;
the provision is to that extent void and of no effect.
(2) Where an agreement provides that, if the tenant does not breach the agreement to pay rent or any other term of the agreement or any provision of this Act or any other written law, the rent shall or may be decreased or the tenant shall or may be granted or paid a rebate, refund or other benefit, the agreement shall be deemed to have been varied from the commencement of the tenancy so that the tenant is entitled to the reduction, rebate, refund or other benefit in any event.

penalties are excluded
any concession amount applies "in any event",

in any event you lose

Read The F-luffy -arnarking -iangled etc Legislation​

how many times will this thread be started,

"I want to do something,
Help me,
I dont care if its illegal,
I think it isnt,
it shouldnt be,
Of course I didnt read the law"​

headslap moment
edit: bolding the rta quote

 

[Dazz]

Is it possible to draw up your rental agreement in the same manner as the way parking or speeding fines are issued (if you pay on time or early the amount is cheaper).

What I mean is, you say you will rent the property for $500 week, but if the tenant pays on time It will only be $350 per week (your true rental value).

If the tenant defaults then it reverts back to the $500 a week, for the duration of the contract, or even back dated.

Most definitely not. No way Hose A. Most unlawful.

So has anybody thought of or tried this before ?

That malarkey was thought of and stomped out decades ago by the Tenant's Union in your state. See section 57 (1) of the Act.

http://www.austlii.edu.au/au/legis/wa/consol_act/rta1987207/s57.html

I have a tenant who is behind a month now and it is really getting to me, I know I have followed the procedures but I will still be out of pocket through no fault of my own, other than bad judgement of character.

If you are going to continue being a residential Landlord, you need to start learning the rules of the game you are already playing. "Through no fault of your own" is absolutely no reason why you are not liable to pay out alot of money. Welcome to the game of your choice.