Would subletting worry you?

We rented a 4 bed 2 bath IP to a couple who signed an 18 month lease. The lease agreement says all occupants of house must be vetted by PM. It is a standard ressi lease. From the outset I questioned why there were always three cars outside. Tenants consistently deny subletting and said they owned 3 cars. Funny how they could manage to drive all three of them off on some days...

On 1st 3 monthly inspection PM said everything looked ok. On 2nd inspection my wife inspected with PM. All bedrooms are clearly occupied, and one of the living areas is also being used as a bedroom.

The tenants pay the rent, and are looking after the place reasonably well (some issues with garden neglect).

Should I be worried? Are there any insurance implications?:confused:
 
I'd put a stop to this immediately. Whilst it might be okay to have additional tenants, you need to know about it, vet them and add them to the lease.

* Who's responsible if the unknown tenant damages the property? You don't want to have to be the mediator.

* What happens if the rent's late?

* What happens if the original tenant moves out but the second tenant doesn't want to? I purchased my first IP where the guy on the bond was not the tenants in the property. This can cause a legal nightmare when claiming bond back.

The list of potential problems goes on for ever...

Either get the unknown people on the lease, or evict the lot. This is not something I'd comprimise on.
 
I am with PT Bear on this. We had a situation where two young chaps rented from us. They wanted to keep their costs down and allowed someone from their gym (they did not know him very well) to rent the third bedroom.

This chap was not on a lease, was home all day, had his girlfriend there all the time with him and was generally being a nuisance to the neighbours with his loud music and dangerous driving techniques in the street.

It could have become difficult to get him out. We gave the original chaps the option of breaking their lease with no penalty from us. We explained how it was their money being held as bond, and that the police had been brought into it by the neighbours worried about the driving. We didn't want them to get into trouble, because they made a bad choice. We explained it was their bond that this other chap could cause them to lose if he damaged anything.

They all moved out, and the two original chaps moved to another place without the third chap. However, if the third chap had not moved, we would have been in the position of having someone in our IP with no lease and none of his money at risk via the bond, hence no real incentive to move until he was good and ready.

Lucky it turned out well, the young boys learned a valuable lesson and house was left immaculately, but it could have gone very pear shaped.

So, get them on the lease, or issue a "notice to remedy breach" notice.

Wylie
 
However, if the third chap had not moved, we would have been in the position of having someone in our IP with no lease and none of his money at risk via the bond, hence no real incentive to move until he was good and ready.

If the people on the lease give notice to vacate and leave, why does the other person have any right to be in the house? Can't you just kick him out (with police if necessary) if neither you or the people on the lease are giving him permssion to be in the house?

Also most leases say that the tenant is responsible for damage cased by them or anyone they allow onto the property. I would be holding bond until the house was vacant and in good order.
 
If the people on the lease give notice to vacate and leave, why does the other person have any right to be in the house? Can't you just kick him out (with police if necessary) if neither you or the people on the lease are giving him permssion to be in the house?

Also most leases say that the tenant is responsible for damage cased by them or anyone they allow onto the property. I would be holding bond until the house was vacant and in good order.

Well, the people on the lease did give him permission to move in, even though by doing so without our permission meant they had breached the lease. Of course, if he refused to leave, the police would have been called, but I didn't know him, had never met him and for all I knew he could be aggressive. He wouldn't care what my rights as a landlord are, just that he has just moved in and got comfy and now he is being asked to leave.

It is hard enough getting someone out of a house when they have breached a lease, with all the notice periods and rigmarole involved and I didn't want to try to get someone out who is basically squatting.

Smooth and easy is my motto. Don't ruffle feathers that don't need ruffling.

Would be interesting to get Tania's take on what would have happened if this chap had decided to stay put.

Wylie
 
I don't know why you haven't sacked your PM or at least asked them to fix it. If there are 2 people on the lease that are stated as occupants, then that is how many people you agreed to be living there full time. They are allowed to have visitors and that is a shade of grey area.
Why not get some better communication happening and get over this stuff. It is your house, after all.
Simon
 
I am with PT on this. We had the same thing happen, 2 people moved in to a 3 bedroom house, they sublet without permission to a third person. The first two moved on and we were left with the 3rd person who we did not know living in the house, he was paying the rent but we had not done any checks on him and didn't know him!!! He then proceeded to sublet. It was very difficult to get them out.

Chris
 
I don't know why you haven't sacked your PM or at least asked them to fix it. If there are 2 people on the lease that are stated as occupants, then that is how many people you agreed to be living there full time. They are allowed to have visitors and that is a shade of grey area.
Why not get some better communication happening and get over this stuff. It is your house, after all.
Simon

Simon

I appreciate your comments, thanks. I am trying to get better communication happening. I know you PM for yourself but it really is harder to keep track using an agency, they are very shy of anything that might breach tenancy laws (they felt thay had to ask the tenants permission for my wife to accompany the PM on the inspection, didn't realise you had to go to that extent). This is only the second PM inspection (we are only 6 months in) and the tenants have up to now denied that they are subletting. Short of raiding their mailbox to check on who gets mail there I don't know what else we could have done up to now. Now our suspicion has gone up another level due to our inspection, and we will be asking hard questions of our PM. My post was to also guage our liability position re insurance, and the replies have been extremely helpful as I hadn't considered the legality of the situation where the original tenants move out leaving the secret subletters in place. As they are paying a good rent and apparently looking after the place I wouldn't necessarily want to turf them out IF they came clean. If they don't then we will likely serve them notice as suggested.

It may be that we are just lucky :)rolleyes:), but on another of our IPs when the PM went to inspect a few months ago she found the tenants in the process of moving out. The PM rang me to tell me this and said it was OK, the tenant was fully aware of his responsibilities under the lease and was happy to pay rent for the remaining 5 months. The IP is close to our house and I happened to drive past that weekend and saw another family moving in.... The tenants had sublet to their friends without telling anyone. Bit naughty of them said the PM but the new family seems nice, and the rent is getting paid, so what are you worrying about?
 
I don't know why you haven't sacked your PM or at least asked them to fix it. If there are 2 people on the lease that are stated as occupants, then that is how many people you agreed to be living there full time. They are allowed to have visitors and that is a shade of grey area.
Why not get some better communication happening and get over this stuff. It is your house, after all.
Simon

My Mother-in-law is going through a similar situation (which I only found out about the other day). She has a 1 bedroom cottage which has been tenanted by a single guy for about 3 years I think. Anyway, over a period of a few months, his girlfriend and baby and her mother are all now living in this small house. Get this though...the property is being 'managed' by a RE agent, but basically pays my MIL off at every opportunity. My MIL has not even seen inside the premises for about 3 years !

I was so furious when I heard this, that I told her to get rid of this incompetent 'property manager'. Although the tenant is now on a periodic lease, my MIL (who is almost 70) is too polite to make any waves. The rent also has not been reviewed in these 3 years.

All she wants is to get a decent rent for what the place is worth and these tenants seem to be taking advantage of the situation (with the assistance of the property manager, it seems)

Does anyone have any advice how I can approach my MIL and "advise" her to get rid of these people and get another agent to manage it. I understand that it is still 60 days notice without reason on a period lease. ? (in NSW)

Thanks in advance,
Phil.
 
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Does anyone have any advice how I can approach my MIL and "advise" her to get rid of these people and get another agent to manage it. I understand that it is still 60 days notice without reason on a period lease. ? (in NSW)

Thanks in advance,
Phil.

If she doesn't want any confrontation, then get her to tell the PM that she wants to move in. This will get rid of the tenants & the R/E. She can change her mind again later & rent it out through another agency.:D
 
If she doesn't want any confrontation, then get her to tell the PM that she wants to move in. This will get rid of the tenants & the R/E. She can change her mind again later & rent it out through another agency.:D

Thanks Skater,

If she took this course of action however, how much notice would she be obliged to give?

Cheers,
Phil
 
Don't quote me but 30days if they are not on a lease - all up though I would say somewhere between 30-60days by the time notice is received etc. May vary by state. Skaters idea of telling that you are going to move in is what I have done in the past and worked sort of well for me - they were assisted with their removal. Also if you start looking for another agent in the meantime be discreet - don't mention the exact property etc until you have the keys in your hands.
 
Hi Folks
There are three C's with my appraoch to Property managment.
Care
comtribution
and COMMUNICATION
If you don't have a PM with the third skill , get one who does because then the other two C's will not be an issue.
I have reduced the amount of properties under external management to one full time and another casual letting, all the others I manage myself. If you are serious about making money out of residential realestate it would be good practice to understand what is involved in the management side even if you choose not to do it yourself.Education about all aspects of your investment help to sustain it as a lasting one.
My thoughts
Simon
 
Well I rent...well at least for a few more week, I have a friend living with me. I pay the rent, I am the tenant, am still responsible 100% for everything.

The management knows she is here but doesn't really say anything.

I would not have a problem with it if there was plenty of room in the house, the rent was up to date and the propety was maintained.

Regardless of who does the damage, if the tenant invites someone into the house and they do damge they are responsible for their invitee's behaviour. And the rent in full regardless of who else lives there.
 
Well that's just great letiha, but of course when people take responsibility for paying the rent, keep the place clean and tidy, don't damage the infrastructure and generally act as per the wording of the Lease, well....the Lease is hardly necessary is it ?? Everything just ticks along tickety boo and along we go. Good onya for having a sterling attitude. Unfortunately not everyone has your responsible outlook.

It's only when the brown hits the fan, and (you should know this studying the law) with our pecuniary / adversarial law system, you get the....."and what are you going to do about it" factor.

All of these issues only arise and all of the wording only ever comes into play when things need to be enforced. Trouble is, as many folk have already pointed out, it's jolly hard to actually DO anything. There are so many 'laws' against you to levering unwanteds out of a residence (for many and varied reasons) that it's nigh on impossible.

The biggest thing by FAR with the situation you are all describing, is that the Landlord doesn't hold not nearly enough of the tenant's cold hard folding cash to "encourage" the sitting tenant to take full responsibility. Or as my wife likes to put it, you don't have a hammer.

We've found all of the words and threats and bellyaching in the world doesn't count for a hill of beans if you don't have a hammer to back it up with. If you get a hard case who digs their heels in, I know for a fact solicitors letters are nigh on useless. Costs you plenty good lah, but nothing comes of it.

Police are absolutely no use to you at all, as they will not act without a written order, and we all know how long and drawn out that can be.....meanwhile the cashflow goes down the gurgler and the damage bill goes through the roof.

Not that anyone's interested, but with the Leases we have, the "subletting" clause runs to about 6 pages in itself, and is chock ful of every scenario possible, with reams of clauses that forbid the Lessee to do as they please on a wink and a nod, and the Lessor being able to vet and approve at their total discretion and sub-lessee, as long as the assigned burden of responsibility is fully assigned jointly and severally with the initial Lessee, with a written and enforceable guarantee that the original Lessee shall still be bound by the agreement.....(i.e. no handballing and then skivving off). Suffice to say the conditions are onerous enough to make the Lessee work extremely hard before they even contemplate asking us if they can sublet.
 
... If you are serious about making money out of residential realestate it would be good practice to understand what is involved in the management side even if you choose not to do it yourself.Education about all aspects of your investment help to sustain it as a lasting one.
My thoughts
Simon

I agree to a point, but isn't that also the very reason for delegation? They get paid for their time and experience like any other individual, and at the end of the day, (in my case) my MIL can go about doing her gardening and seeing her friends rather than worrying about how many people can fit into a one bedroom cottage :D. Seriously though, I'm glad that self-management works for you Simon, but probably not appropriate for my ageing MIL.

I would be interested in your Subletting clause Dazzling :) Do you have an electronic copy of it available?
 
I have ended a lease previously on the basis that they subletted without permission. Basically they broke a condition of their lease. When I attended the routine inspection neither the property manger nor I knew the guy living in the house. That's not ok. So we gave them two week's notice and they were gone. That is the only time we have had an issues with share households and usually they are great about going any change of of tenants or adding extra tenants by the book.

I have a no zero tolerance in this area and tenants are told up front that we never unreasonably stop extra tenants moving in or swapping tenants but that all changes must be done officially.
 
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