Tenant broke fixed term agreement. wants bond back; who's right?

So we have renovated our PPOR and split it into 2, completely separate. tenants have 3 bedrooms 1 bathroom.

basic rental agreement was done with a fixed agreement for 1 year. contract is pretty basic and unfortunately does not go into detail about tenants breaking the lease but clearly states the lease is fixed ending on X date.

after 3 months ago the tenants emailed me while i was away at work and gave me less than a weeks notice saying they would be moving out on the weekend ( i was back home on the monday) they had money issues and could no longer afford to pay. i said okay when can we arrange return of the keys, can you keep the place clean etc, i did not want to mention the issue of the bond while i was away as i did not want them to damage the place. i have never said to them okay you can break the lease this is not a problem for me e.g. mutual termination of contract.

monday afternoon i picked up the keys, the same day we discussed via text message the issue of the bond. i said i will be holding onto the bond and use it to cover costs lost in rent while looking for new tenant. i received a reply saying 'no worries' 2 months later we have organized a suitable money but the bond has not covered this loss of rent fully. i have just received a phone call from old tenants 2 months after they have left saying they want there bond back.

there reasons are as follows

-they claimed i agree that it was okay for them to leave early , which is not the case. i basically say in the email ' okay your leaving so when are you leaving and when can you drop the keys off, please keep the place tidy' nothing about bond return was mentioned in this email.

-they are claiming that technically they are not tenants they are lodgers/boarders since they don't have ecslusive rights to the property. because of this they say my contract is void and that there shouldn't have been a bond to start with and that the bond is only used for damages to the property, not for breaking a agreement early.

-i have not lodged the bond officially and have kept it in my personal account.


any advice on this situation and where i stand/what i can do would be much appreciated.

cheers
blair
 
This is what the tenancy agreement looks like, i know its pretty basic and could have been done better but I'm new to this and won't be making the same mistake :(




TERM OF AGREEMENT
*This residential tenancy agreement is fixed ‐ starting on 24/11/14 and ending on 24/11/15

RESIDENTIAL PREMISES
The residential premises are xxxxxx and
Excluding the front section of house and front courtyard area.*

MAXIMUM NUMBER OF OCCUPANTS
No more than 2 persons may ordinarily live at the premises at any one time.

RENT
The rent is $1660 per month
Payable weekly in advance starting on 24/11/14.


SECURITY BOND
A security bond of $1660 and a pet bond of $0 must be paid by the tenant on signing this agreement.
Note: At the end of the tenancy the security bond will be used to fumigate the property and clean the carpets. The quotes for this will be organised by the lessor and agreed upon by the tenant.
Also if any damage is done to the property then the tenants are liable for this. Required quotes are to be organised by the lessor and agreed upon by the tenant.
The remaining bond is to be returned to the tenants within 1 week of the lease ending.

RENT INCREASE/CONDITIONS
The lessor and the tenants have agreed upon renting the back part of the property for $415 per week inclusive of Electricity, Water, and Gas. There will be an option for the lessor to increase rent to cover any excessive consumption of Electricity, Water, and Gas.*

PETS
No Pets unless permission granted from landlord

RIGHT OF TENANT TO AFFIX AND REMOVE FIXTURES
* The tenant may only affix any fixture or make any renovation, alteration or addition to the premises with the lessor?s written permission.

PROPERTY CONDITION REPORTS
Please see attached at back a property condition report completed by the lessor. Both parties need to sign this within 7 days of tenants moving in. The property condition report will be used at the end of lease to determine any damage caused by tenants.

USE OF THE PREMISES BY TENANT
1. The tenant must:
1.1 use the premises as a place of residence; and
1.2 not use or allow the premises to be used for any illegal purpose; and
1.3 not cause or permit a nuisance; and
1.4 not intentionally or negligently cause or permit damage to the residential premises; and
1.5 advise the lessor or property manager as soon as practicable if any damage occurs; and
1.6 keep the premises in a high state of cleanliness; and
1.7 not cause or allow to be caused injury to the lessor, property manager or any person lawfully on adjacent
premises; and
1.8 not allow anyone who is lawfully at the premises to breach the terms of this agreement.
1.9 The tenant is responsible for the conduct or omission of any person lawfully on the premises that results in a breach of the agreement.

LESSOR?S ACCESS TO THE PREMISES
The lessor is allowed 4 routine inspections of the property per year. The lessor must notify the tenant 3 days in advance. The lessor and tenant must agree to a reasonable time for the inspection. The tenant shall be at the routine inspection.

LOCKS AND SECURITY DEVICES
The Lessor will provide the tenant with 2 sets of House keys and they shall be returned at the end of the teanancy*

ENDING THE RESIDENTIAL TENANCY AGREEMENT
37. This residential tenancy agreement can only be terminated in certain circumstances.
38. The tenant agrees, when this agreement ends, to give vacant possession of the premises to the lessor. Before giving
vacant possession to the lessor the tenant must:
38.1 remove all the tenant?s goods from the residential premises; and
38.2 leave the residential premises as closely as possible in the same condition, fair wear and tear excepted, as at the
commencement of the tenancy; and
38.3 return to the lessor all keys, and other opening devices or similar devices, provided by the lessor.
39. The tenant may be liable for losses incurred by the lessor if the above requirements are not met.

ENDING A FIXED‐TERM AGREEMENT
40. If this agreement is a fixed‐term agreement it may be ended:
40.1 by agreement in writing between the lessor and the tenant; or
40.2 if either the lessor or tenant does not want to renew the agreement, by giving written notice of termination. The
notice must be given to the other party at least 30 days prior to the date on which vacant possession of the
premises is to be delivered to the lessor. The notice may be given at any time up until the end of the fixed term
but cannot take effect until the term ends.
 
Was there a reason you didn't lodge the bond? It is a "must do" in Queensland and to not lodge it with the appropriate authority would put us in a very bad position. I don't know the rules in WA.

Why didn't you use a proper lease?

You could contact "thatbum" by searching for him under the "community" tab in the top area of the screen. He may be able to help you.
 
You're in the wrong on several fronts. Give them their bond back and be glad if that's the only consequence.

If you don't have permission for multiple tenancy (appropriate zoning, firewalls, etc.), you can get huge fines, may have to re-consolidate the dwellings, may have to refund all monies they paid to you under the agreement (because it was an unlawful agreement), have probably invalidated your home insurance, and that would be a violation of your mortgage contract (if you have one).

Are you convinced this is a very bad idea yet?
 
You need to educate yourself about the legal requirements for landlords under the WA Residential Tenancies Act. For example, there is a pro forma lease which everyone renting a property in WA must use - here's the link to the Dept of Commerce page about it, which contains links to the template agreement: http://www.commerce.wa.gov.au/consumer-protection/rental-agreements

It is an offence not to lodge the bond.

Here is the general link to the Commerce dept info on renting in WA, and tenant and landlord obligations: http://www.commerce.wa.gov.au/consumer-protection/renting-home

Please read through all of this carefully.
 
Jump onto the Department of Commerce website and find out your legal responsibilities as a landlord. It sounds like you might have an ancillary accommodation type situation, which is described here:
http://www.commerce.wa.gov.au/consumer-protection/renting-granny-flat-ancillary-dwelling

Some key points are to prepare a property condition report at the start and end of the tenancy. There are standard forms for this on the website here:

http://www.commerce.wa.gov.au/consumer-protection/property-condition-reports

Another really big one is lodging the security bond. It is an offense not to:

?The fine for failing to lodge the tenant?s bond with the Bond Administrator has now been increased to $20,000 so it?s imperative that landlords or their agents become familiar with the changes to the law and take steps to comply.?
http://www.commerce.wa.gov.au/announcements/landlords-reminded-lodge-new-bonds-administrator

It is a good idea to use the standard tenancy form from the commerce web site.

http://www.commerce.wa.gov.au/publications/rent-agreement-form-1aa

However, I am not sure if it applies to you if you do indeed have an ancillary accommodation situation. You could find out from commerce if what you have is ancillary accommodation and if they have a standard agreement for that situation.

My only suggestion for your current is to release the bond, and hope for the best. I would not push things in your situation because if it escalates to the point where your ex tenant reports you to Department of Commerce, there is the risk of a fine if you have breached any provisions of the act.

Sorry that this is probably not what you wanted to hear but you do need to take your responsibilities as a landlord seriously and find out your legal obligations. If not, you run the risk of being fined. That's not a situation that anyone wants to find themselves in.
 
Chill out everyone - it might not be a residential tenancy per se, so not necessarily a big foul.

Anyway I'll look into it and see if I can help.
 
Thanks guys point taken. i figured this was more of a private arrangement, handshake agreement. Guess i was a bit naive too all the tenancy laws i should be following i just didn't think they would apply in this situation.

is it not a good idea then for me to call the dept of commerce and explain the situation so i can get official wording from them. I'm more than happy to return the bond if I'm in the wrong.

cheers that bum if you have any more info that would be great.
 
is it not a good idea then for me to call the dept of commerce and explain the situation so i can get official wording from them. I'm more than happy to return the bond if I'm in the wrong.

cheers that bum if you have any more info that would be great.

Yeah don't do that. Don't do anything yet actually - I'll PM you.
 
As a side note, might want to check on your house insurance, make sure they're OK with you subletting part of it.
 
Just wondering if Thatbum would be willing to share?

Maybe not specifically on the OP's case, but more of a hypothetical one?
Many here, may be in a similar position, and it would be helpful.

What made this case different, as far as requirements for lodging a bond?
 
Update

So i have received an email saying they plan to lodge a form 6 application with the local magistrates court. they say my contract is void and that in the eyes of the law they are considered lodgers and not covered under tenancy law but rather have to go through small claims court through the local magistrate.

I have done a bit more digging and will be challenging this.

firstly i was under the assumption that they were lodgers, not tenants ( did not understand all the laws fully ) but this is okay, i will reply to them with a strong worded email stating my reasons

-they gave less than a weeks notice that they would break the lease
-the lease was fixed for 1 year and they have more than 6months remaining
-i also have a text message on the day they handed over there keys saying i would be using bond money to cover loss of rent. they replied 'no worries'

i think these 3 points give me a strong case

hopefully they realise this and just save me the trouble by not going through the local magistrate.

FYI if it was a case under tenancy law then yes i am at fault for not lodging the bond but given the fact i assumed this was lodging set up i would most likely not be fined and just be asked to lodge the bond immediately. they have broken a fixed term lease and the bond i have kept has not fully cover the costs i have lost sourcing a new tenant so they would potentially be liable for even more costs.


-Insurance company has been made aware we have extra people living at the property. Also i don't believe it is an offense with council to have people lodging at the property and firewalls would not be necessary in this circumstance.

happy to hear some feedback
cheers
blair
 
-Insurance company has been made aware we have extra people living at the property.
It's not the "extra people" but the "splitting into two separate parts" that I think invalidates your insurance. If the insurance company hasn't explicitly been told that they're two separate households, I suspect your insurance is invalid.
Blair007 said:
Also i don't believe it is an offense with council to have people lodging at the property and firewalls would not be necessary in this circumstance.
Have you discussed with your local planning department? In Queensland you'd be in worlds of pain.
 
And don't forget that you will be up for Capital Gains Tax on the part of the house you have been earning income from.
 
Blair, in your own agreement you have this:
ENDING A FIXED‐TERM AGREEMENT
40. If this agreement is a fixed‐term agreement it may be ended:
40.1 by agreement in writing between the lessor and the tenant;

They sent you a text that they were leaving and you replied by text about the keys acknowledging that they were leaving.

I think you will find that they fulfilled 40.1 of your agreement.

This is why you use appropriate legal forms that have already had the kinks ironed out.
 
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