Australia's #1 for Law

Join 150,000 Australians every month. Ask a question, respond to a question and better understand the law today!

VIC Can Trustee Claw Back Rent from Landlord?

Discussion in 'Debt and Bankruptcy Law Forum' started by Macaque, 12 September 2017.

Tags:
  1. Macaque

    Macaque Active Member

    Joined:
    12 September 2017
    Messages:
    14
    Likes Received:
    0
    How can you require a refund once you have paid?

    You might be entitled to a refund depending on the terms if the landlord ended the lease. Once the right to use has been granted then as far as the landlord is concerned full consideration has been given. If the tenant abandons the property what right do they have for a refund?

    The same as if I pay a deposit to buy a house and I become bankrupt and cannot complete the purchase. Are you saying the trustee could clawback the deposit from the vendor?
     
  2. Rob Legat - SBPL

    LawTap Verified Lawyer

    Joined:
    16 February 2017
    Messages:
    519
    Likes Received:
    135
    As I said, if the lease was suddenly ended.

    Full consideration is not given the moment the lease is entered into. If the tenant suddenly vacates, the landlord is entitled to damages for lost rent until the property is re-let, but has a duty to mitigate by seeking a new tenant. If one is obtained, they are not entitled to 'double rent'.

    Paying a deposit on a house is completely different.

    Argue however you want, but if a bankruptcy trustee thinks that the payment has been made in an effort to defeat creditors then they will likely act accordingly. In the outlined circumstances, pre-paying your rent would probably make the trustee look closer.
     
    Stop hovering to collapse... Click to collapse... Hover to expand... Click to expand...
  3. Macaque

    Macaque Active Member

    Joined:
    12 September 2017
    Messages:
    14
    Likes Received:
    0
    But that is not the situation I am describing. Perhaps I didn't make it clear. In this case the lease is for 2 years and the lease specifies a 2 year payment up front. It is not a prepayment.

    In that case grant of the right to use for two years is full consideration.

    What right does the tenant have to demand a refund? If there is no right to refund then there must have been full consideration.
     
  4. Rob Legat - SBPL

    LawTap Verified Lawyer

    Joined:
    16 February 2017
    Messages:
    519
    Likes Received:
    135
    It is a prepayment. As you originally said, you're paying "rent in advance". I'm not even touching on what your particular state's residential tenancy legislation may provide in that situation.

    If you think it'll work, good luck to you. You'll need it.
     
    Stop hovering to collapse... Click to collapse... Hover to expand... Click to expand...
  5. Macaque

    Macaque Active Member

    Joined:
    12 September 2017
    Messages:
    14
    Likes Received:
    0
    It would only be a prepayment if payments were say fortnightly.

    And I believe I restated that it is a single payment above, not rent in advance.
     
  6. Rob Legat - SBPL

    LawTap Verified Lawyer

    Joined:
    16 February 2017
    Messages:
    519
    Likes Received:
    135
    You're not understanding what I'm saying. Even if the agreement provided for a 'single payment', as you say, it would still be considered a prepayment or rent in advance because you're paying up front for a something that you cannot currently 'take'. The reason leases allow for payment in periodical increments is due to practicality. It would be completely unworkable to have to make rental payments every day/hour/minute etc.

    You may find that such an agreement is illegal in any case. For example, in Queensland, a residential lease cannot require more than 1 month prepayment of rent (and is usually restricted to a maximum of 2 weeks).
     
    Stop hovering to collapse... Click to collapse... Hover to expand... Click to expand...
  7. Macaque

    Macaque Active Member

    Joined:
    12 September 2017
    Messages:
    14
    Likes Received:
    0
    It's not me the money will be clawed back from, it's the landlord, and from the landlord's viewpoint the right to use has already been sold and full consideration given.

    Are you suggesting that the trustee would have the power to seize assets from the landlord and evict the tenant? That would seem to me to be an onerous effect on the landlord who has not done anything wrong.

    Can you cite a case where this has happened?

    Also there is no absolute limitation of prepayment in Victoria.
     
  8. Macaque

    Macaque Active Member

    Joined:
    12 September 2017
    Messages:
    14
    Likes Received:
    0
  9. Tim W

    Tim W Lawyer
    LawTap Verified Lawyer

    Joined:
    28 April 2014
    Messages:
    2,212
    Likes Received:
    514
    Victorian residential tenancy legislation
    is irrelevant to the administration of a bankruptcy.

    Also, there's no point in talking about a "refund".
    It isn't a refund because the money isn't coming back to the person who paid it.
    Money clawed back is typically remitted to the trustee.

    Further, it would be extraordinary indeed for a court to accept
    that paying a residential lease two years up front
    was anything other than an attempt to conceal cash from the trustee.
     
    Stop hovering to collapse... Click to collapse... Hover to expand... Click to expand...
  10. Macaque

    Macaque Active Member

    Joined:
    12 September 2017
    Messages:
    14
    Likes Received:
    0
    Victorian residential tenancy legislation
    is irrelevant to the administration of a bankruptcy.

    Not so. It contains provisions for termination of a lease in the case where a landlord is bankrupt.

    Also, there's no point in talking about a "refund".
    It isn't a refund because the money isn't coming back to the person who paid it.


    Not saying that it does. It is relevant to the question of the whole payment being consideration at the time of payment.

    it would be extraordinary indeed for a court to accept
    that paying a residential lease two years up front
    was anything other than an attempt to conceal cash from the trustee.

    That's not the question. The question is whether the landlord can rely on the whole payment being consideration which the transferee has to prove.
     
Loading...

Share This Page

Loading...
gt;