Terminanting Lease before due date

Discussion in 'Property Management' started by Sammyk, 21st Sep, 2012.

  1. Sammyk

    Sammyk Member

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    Hi everyone,

    Been reading this Forum for the last 6 months and it's opened my eyes to property investing, thanks so much for everyone thats helped make this happen! I'm currently 23 and saving up for my first IP but that can wait for later...

    At the moment I'm renting a townhouse by myself in Leederville, Western Australia. I've been offered a share house for about a third of the price so am looking to move in there ASAP. I contacted the property manager who looks after the property and she told me that I'd be liable for:
    - rent up until the tenant moves in
    - advertising ($33 per week)
    - Final inspection ($88), and
    - final report ($88)

    I was under the impression that all I had to do was give 28 days notice, then after this if no-one had moved in, would have to pay rent up until that time, but doesn't the owner of the property have to pay advertising, final report etc. Is she trying to rip me off becauseI'm breaking the lease early?

    Any help you guys could give on this would be much appreciated.

    Sam
     
  2. thatbum

    thatbum law talking guy

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    You should give reasonable notice (probably 2 to 3 weeks) of your intention to vacate, and then clean up etc like a normal conclusion of the lease.

    At that stage, you should stop paying rent and see what the owner/agent does next.

    If they do some reasonable advertising for a new tenant, at the same rental rate or lower, then you would be liable for rent until they find someone new, as well as pro-rata apportionment of advertising, letting and possibly final inspection fees (only if the owner actually has to pay these amounts)

    If the owner/agent is properly mitigating their loss, then you can settle your account and bond at the point that they get a new tenant.
     
  3. goonandtell

    goonandtell Member

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    it depends are you under a fixed term lease or month to month.

    If its month to month then thank them for their offer but inform them you will be up for rent until your termination date in 28 days and nothing else.

    If its a fixed lease then i would read your lease. Generally speaking you will be up for resnoable costs of replacing you (advertising and admin) and cover rent until a replacement is found. However they can't up the rent/make it hard to get a new tenant/etc.. they have to try and replace you.

    All those fees seem about right, maybe a little bit of double dipping on the 'final fee' and the 'inspection fee' and having a 'weekly advertising fee' rather than a flat fee is a bit high but this should be spelt out in your lease.
     
  4. thatbum

    thatbum law talking guy

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    Sorry I did assume you were leaving in the middle of a fixed term. If you are on a periodic lease, then you just have to give 21 days written notice of a vacate date.

    If it is a fixed term though, you should probably actually ignore what it says in your lease or what their "break lease" agreement for that agency is.

    Any terms that do not align with what the contract law is for break leases are probably unlawful. Any liquidated damages, (ie. specific penalty payments) are 100% unlawful.

    Generally real estate agencies have a very poor understanding of what is allowable as break lease fees in WA, so just be careful in going with whatever it is they say. Get some specific legal advice if you are unsure how to proceed.
     
  5. zepth

    zepth Member

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    Final inspection fee and final report should not be your cost as they would have been payable by the landlord when you left regardless. You should only be liable for costs incurred by the landlord as a result of you terminating early which as Thatbum said would be prorata portions of the advertising and letting fees (i.e. 50% if you are halfway through your lease) and rent until a new tenant is found (provided the agent takes all steps to mitigate your loss)
     
  6. thatbum

    thatbum law talking guy

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    There might be an argument to be made that they should be pro-rata'd as well since the owner would have had to pay them earlier than they would have as a result of an early vacate date.

    Depends what the actual PM agreement with the landlord is, both old and new.
     
  7. Sammyk

    Sammyk Member

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    Thanks for all the replies everyone, I'm on a fixed term lease (12 months) but will be breaking it less than a month before it's due to expire. I checked the contract and it doesn't say anything about breaking the lease other than 21 days notice have to be given, I did ring REIWA and they said all the charges were above board however...
     
  8. thatbum

    thatbum law talking guy

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    Ignore REIWA. Not only are they not qualified to give legal advice, but they are simply the professional body that represents real estate agents and their interests.

    21 days notice in your lease is an arbitrary figure, if you wanted to you could probably get away with 14. (But the more the better)
     
  9. Lil Skater

    Lil Skater Member

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    How long do you have left on your lease?

    You say less than a month, unless you have a really low vacancy rate in the area I'd allow two weeks to let the property. Would it be cheaper just to pay up til your lease expiry, and forget the extra fees?

    If you only have 3 weeks left on your lease, and a new tenant doesn't move in before then you're out of pocket an extra $275 for no reason.

    Also, the charges that you're responsible for should be covered in the tenancy act for WA.
     
  10. Sammyk

    Sammyk Member

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    Skater I have about 8 weeks left, so technically if the property can be leased within a month (which it should) I'd have about a month to pay, which is within the $1600 mark, as opposed to about $300 in proposed fees, see where I'm coming from?
     
  11. Lil Skater

    Lil Skater Member

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    Oh right, sorry I read that wrong.. For some reason I thought you were breaking it with less than a month left in the full lease, rather than less than a month between leaving and lease expiry.
     
  12. Mr. Fabulous

    Mr. Fabulous Thought Criminal

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    Sammyk keep in mind, you want to be a landlord one day. Treat your landlord as you would expect to be treated by your tenants. Figure out a way that is mutually beneficial to you both.
     
  13. Scott No Mates

    Scott No Mates ...and people wonder why?

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    I may not be up to speed on wa regs so contact fair Trading, they can advise. If there is a break clause payment the clause will state your liability, ie x weeks rent, if there is no break clause you will be liable for whatever you can agree with the agent. Mind you if there is only 8 weeks left on the lease a new lease longer than your expiry date is favourable to the owner so you should not be liable for the cost in getting a lease beyond the expiry date .
     
  14. Dazz

    Dazz Banned

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    What a sad and sorry set of circumstances....

    A self-proclaimed residential tenancy lawyer advising Tenants that they should completely ignore the wording of the Lease, and all that it contains. So much for having a signed Lease in this debacle of a game. The rules of the game are stuffed when this applies....and it does.



    Fantastic advice - how much do you charge per 6 minute block for pearls of wisdom like that ?? Of course, according to the RTA you are correct....and the Landlord shall have to fork out any extra cash necessary to cover the Tenant's decision to leave early. Joy.

    Let's hope when young Sammyk finally takes the huge step and buys her own IP, she doesn't get lumbered with a Tenant who takes your advice.....she'll be forced to the wall and bankrupted by the Bank in no time flat.


    What a system. What a mugs game if you are an Owner.....



    Kudos to you Mark, a very sensible approach.


    As can be seen from above, if you follow the lawyer's advice, everybody loses. If you are reasonable and employ common sense, everybody benefits.

    I shake my head in astonishment and disgust at what typical lawyers do, how they manipulated the RTA to the point that they can get away with ignoring a Lease, and how they approach matters. It's a very sad state of affairs.
     
  15. thatbum

    thatbum law talking guy

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    That's right Dazz, how dare I advise people of the law in their best interests. And as a free community service too.

    I should be shot.
     
  16. Nemo30

    Nemo30 Member

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    I have to agree with Dazz. Sure your advice might work out well for Sammy - however i didnt see it as being legally, ethically or morally correct.

    If you are going to advise a tenant to stop paying their rent, then expect landlords to be outraged...
     
  17. Edmond Dantes

    Edmond Dantes Member

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    You can forget about these two words when dealing with some lawyers.
     
  18. wylie

    wylie Member

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    Reading Dazz's post... well it is pretty much what I thought too, but I have no idea if following such advice is against the law or is just morally wrong. I'm glad Dazz has brought it up though.

    I was a bit surprised that this advice came from thatbum, who it seems is involved in the law and should know his stuff. Is he advising action that is unlawful? Or is he speaking as someone who is out to screw the landlord because most landlords would not spend money on a lawyer to get back four weeks' rent? What about the signed contract?

    Seems tenants want it all their way... but the same tenant who would consider breaking a contract to suit him/herself would probably be the first to jump up and down if a landlord did such a morally wrong thing to the "poor honest tenant".
     
    Last edited: 23rd Sep, 2012
    Nemo30 likes this.
  19. Sammyk

    Sammyk Member

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    Thanks a lot for the advice everyone, the comment from Mr Fantastic did bring me back to Earth a bit, all I'd really be fighting for would be less than one weeks rent...

    I do respect the opinion of a lawyer because they should know whats right, but I also respect the opinion of the members on here who have been on the receiving end of a tenant breaking their lease early too.

    I'll get back to everyone on what eventually happens..

    Oh and I'm a guy Dazz :)
     
  20. thatbum

    thatbum law talking guy

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    I suppose it can be shocking to hear me advise someone to stop paying rent, but a break lease situation is one of the few circumstances where its called for - and probably in the tenant's best interest.

    The advice isn't to screw the landlord, its to see if the landlord complies with their obligation to mitigate their loss in a break lease situation - something that often doesn't happen, or doesn't happen fast enough. I'd not be doing my job if I was getting my clients to give money away if they didn't have to.

    In contract terms its called a "repudiation" and its really old and established contract common law. Just because someone signs a contract, doesn't mean they have to follow it - the repudiating party just has to be prepared to pay damages to the other party arising from the breach.

    I suppose it can be a strange way to think about contracts.