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VIC Conflict of Interest and VCAT - Sub-tenancy of Co-tenancy

Discussion in 'Property Law Forum' started by Lemrac15, 24 September 2015.

  1. Lemrac15

    Lemrac15 Member

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    My agent highly recommended two new tenants, one of whom I discovered later is also a client of my property agency as they also manage her rental property. Potential conflict of interest, but a different agent officer to mine manages her property. The tenants have a 12 month lease and no history of sub-letting as far as we know. My agent emailed me the lease agreement three weeks after the tenants moved in with the instruction to sign it.(I think she forgot to send it). I still have not signed it as problems have developed.

    Issue:
    Two weeks into the new tenant's stay, they have a 3rd person staying. They say they are not sub-letting to him but they want to and declared that they had always intended to have a 3rd person but failed to mention this at the time of signing the lease agreement. The two new tenants are now seeking my consent to sub-let to this 3rd person who is in the house. I believe they have breached the lease agreement but proving this would be difficult.

    I noted that within two weeks of moving in, they have managed to break a bookcase and have the house look unclean and smelly. But the agent insists "they are good tenants". [I visited property by agreement with tenants to see if routine repairs/maintenance were needed after previous tenants left. I missed Exit inspection].

    My agent is urging me to accept sub-tenancy but I do not want the sub-tenancy as I believe I lose control over who is living in my house. The tenants argue that if I do not consent they will take the matter to VCAT on the basis that I am being "unreasonable". I no longer trust the agent as she keeps saying to me, "what do you want me to do? I will do what you want."

    If I could, I would issue a breach of lease agreement or ask these tenants to leave but cannot due to the fixed term lease. I could issue a 90-day notice "end of fixed term tenancy of 6 mos or more" closer to the end of their lease. In the interim, can I insist that I will only accept the 3rd person as a co-tenant which means the agent rather than the "head-tenant" is responsible for the 3rd person? How will this sit with VCAT in case tenants take me there.

    Any other suggestions on how I can extricate myself from this situation or prevent similar happening again? What do I do about the unsigned lease now? In the end, I do not want my property involved in sub-tenancy if this can be avoided.
     
  2. Sophea

    Sophea Well-Known Member

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    Hi Lemrac15,

    Notwithstanding the fact that you haven't signed the lease, you are in a verbal lease agreement with these tenants, which must comply with the Residential Tenancies Act. This requires that if your tenants want to sublease they must first seek your permission but that your permission cannot be unreasonably withheld. If you do withhold your permission they can go to VCAT and get an order dispensing with the requirement for it.
     

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