NSW Real Estate now charging for break lease fee after tribunal resolution

Discussion in 'Property Law Forum' started by Ashleigh Kady, 4 December 2019 at 4:42 PM.

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  1. Ashleigh Kady

    Ashleigh Kady Member

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    After a long drama of my co tenant not paying rent for 3 months, - I moved out and they took over the lease - Tribunal noted that i was not in the wrong -
    Going to tribunal where the member made a day for termination of non payment of rent and made a note of the payments that needed to be made. I have now received this from the real estate agent 3 weeks after the
    court imposed termination date:

    Please read carefully below for the issues that we have identified when conducting the inspection, accompanying with the photos attached for your information. (more photos can be provided upon request)

    1. Tenant lost fob x2 & garage remote x1 $176.00

    2. End of lease cleaning services $450.00

    3. Rekey deadlock & sliding door & mailbox & balcony door handle $571.50.

    4.Tenancy break lease fee $2970.00

    5. Tenant outstanding arrears 59 days $4164.86


    Please find attached invoices and quote for your reference.

    Furthermore, the current total outstanding is $8414.88, and there are two options below which can be resolved the amount accordingly.

    Option 1 - Claim the outstanding amount from the bond. This option takes 3-4 week business days for the remaining amount to be refunded back to you from fair trading.

    Option 2 - You make a payment directly to the XXX. Once the payment is made, we can process the full bond back to you after you send us with the payment receipt for verification. This option takes 1-2 business days for the full amount refunded from fair trading.


    - My understanding is that once tribunal has made a legally binding contract of termination that is all we had to pay. Now im getting this! Although its noted that its the cotenants issue not mine, im still worried as im still on the lease and bond (which is already been forfieted to the real estate in tribunal)

    Any help greatly appreciated!
     
  2. Scruff

    Scruff Well-Known Member

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    Unfortunately, I don't think this means much if your name is still on the lease (tenancy agreement). You should have asked the landlord to remove your name when you moved out as they are not allowed to "unreasonably" deny such a request. By leaving your name on the lease, you leave youself open to not only this kind of trouble, but a whole lot more. If a landlord refuses to remove you from a lease where there are co-tenants, then you can apply to the Tribunal to have it done.

    Break fees are only allowed under a fixed term tenancy agreement. If the fixed term is 3 years or less, then the maximum break fee allowed is:
    - 6 weeks rent if the agreement is terminated less than half way through the fixed term; or
    - 4 weeks rent otherwise.

    If the fixed term is more than 3 years, the amount of the break fee must be specified in the agreement.

    It's also worth noting that at the end of a fixed term agreement, if not renewed for another fixed term, it continues as a periodic agreement in which case a break fee is no longer permitted.

    The outstanding amount of $4164.86 for 59 days comes to around $70.59 per day, or $494.13 per week. (It's been my experience that these amounts are never accurate because oustanding rent claimed through the Tribunal is required to be calculated on a daily basis, not weekly.) The break fee of $2970 therefore appears to be based on the maximum 6 weeks at $495 per week. So if the weekly rent was actually $495, then the break fee would appear to be correct provided that:
    - the fixed term of the agreement was 3 years or less and the termination occurred within the first 18 months; or
    - the fixed term of the agreement was more than 3 years and a break fee of $2970 was specified in the agreement.

    If the fixed term of the agreement was 3 years or less and the termination occurred after 18 months, then the maximum break fee allowed is only 4 weeks, which at $495 per week, would be $1980.

    The most important thing to remember, is that the break fee must be stipulated in the tenancy agreement itself (usually under "Additional Terms"). If there is no mention of a break fee in the agreement, then the landlord is not permitted to charge one.
    It's actually a bunch of "orders", not a contract. The Tribunal will make several orders in these circumstances under various sections of the Residential Tenancies Act (RTA). In this case, the Tribunal would have made the following orders at the very least:
    1. An order that the tenancy is terminated under a specified section of the RTA.
    2. An order that the tenant(s) is/are to give vacant possession by a specified date.
    3. An order that the tenant(s) is/are to pay the landlord a specified amount being for outstanding rent.

    So as a bare minimum, there would have been three separate orders made.

    This is where things can get a bit tricky though. If the landlord included other matters in their application, then the Tribunal may have made additional orders, or may have dismissed those matters. This may or may not include the break fee.

    Since you said that the Tribunal stated that you were not at fault, I'm assuming at this point that you were named as a tenant on the landlord's application and that you attended the Tribunal hearing. If that's the case, then you should have received a copy of the both the application and the resulting orders in the mail. What you need to look for, is exactly what orders the landlord was seeking in their application (listed under "Orders Sought"). If the landlord sought an order relating to the break fee, then you need to check the Tribunal orders document to see what the result was. That document should either include an order to pay a specified amount for the break fee, or state that the application for the break fee was dismissed. If an order for a break fee was sought and dismissed, then you don't have to pay it.

    If there was no order sought by the landlord for the break fee, then that particular matter wasn't decided by the Tribunal. That would mean that the landlord can still charge the break fee, provided that the termination occurred under a fixed term agreement and the break fee was stipulated in the agreement.

    It's also worth noting that since the Tribunal stated you were not at fault, the member may have specifically stated that the orders apply to the co-tenant. If that's the case, you are not liable and the landlord can not pursue you in relation to those matters.

    So to sum up, you need to carefully check the wording of the tenancy agreement, the landlord's application and the tribunal's orders. Feel free to let us know if you need any help with that.
     
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    #2 Scruff, 5 December 2019 at 7:34 AM
    Last edited: 5 December 2019 at 7:40 AM
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