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Tenant Broke Tenancy Agreement but Court Awarded Bond

Discussion in 'Property Law Forum' started by Peta, 12 May 2014.

  1. Peta

    Peta Active Member

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    Hi there. Hoping for some legal answers or direction.
    The tenant has moved out of our rental property, breaking her 12 month lease. The tenant claims she has moved out on the basis of two things: First, she was issued with a 7 day eviction notice for not being up to date with her rent and second, the landlord/agent did not adhere to the conditions of the Tenancy Agreement that regular lawn mowing was included in the weekly rental charge, which the tenant claims did not occur.

    The Real Estate Agent (the agent) believes that the 7 day eviction notice was no longer valid as the tenant paid up all owed monies plus more before the 7 days expired.
    The tenant’s bond money was being held until new tenants were being found and the actual break lease costs could be accurately calculated.
    Lawn mowing was conducted every month (a reasonable timeframe for lawn mowing through Summer). On one occurrence, the tenant turned the lawn mowing contractor away as it wasn’t convenient to the tenant saying that the tenant was hosting a “meeting” at the property.
    The tenant took the agent to court seeking the release of her bond monies.

    A Clerk and a Magistrate heard the case on Friday 9th May and ultimately ruled in favour of the tenant. The agent believes that her evidence was not heard by the Magistrate and that the Magistrate even quoted the incorrect sections of the Tenancy Act. However, the agent’s advice is to accept it and move on.

    New tenants have been found and the house was vacant for 5.2 weeks which is a direct cost to us as landlords. The weekly rental amount was reduced by $30 per week in order to attract a new tenant quicker. It now appears our landlord insurance cannot go ahead with a valid claim as the bond money needs to be exhausted first.

    Is there anything we can do to seek compensation for this? I have heard that if the case was heard in front of a Magistrate as a minor case (which I assume this was) then it cannot be appealed - Is that correct?

    Thank you so much.
     
  2. Worldly1

    Worldly1 Well-Known Member

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    Hi Peta,
    Even though we’re posting in a legal forum I think its important to consider practicalities against principle.

    How much did the 5.2 weeks’ rental money amount to?
    Which State are you located in because the Residential Tenancies Acts can differ by State? (My understanding is that you don’t have much hope of appealing in WA if it was heard by the Magistrate as a minor case - unless natural justice was denied).

    Now assuming you could appeal to a higher court, say, the Supreme Court, you’d need to calculate the Court application fees and legal fees for representing you plus your time and effort. I imagine it would be close to, equal to or more than the 5.2 weeks of rental money.

    Unless the agent has some astounding evidence that the Magistrate denied them the opportunity to state your case, I don’t see that their’s much chance of appealing the Magistrate’s decision and even if you did, some (or a lot) of what you might recoup would likely go to Court and legal fees.

    Just some food for thought. I’d hate for you to appeal out of principle if its just going to waste your time and money!
     
  3. Peta

    Peta Active Member

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    Hi
    Thanks for your post. We are talking all up about $5k in Western Australia.
    We understand that legal fees will be costly but we thought it would be worth finding out if it would be worth appealing or even if the real estate agent should be held responsible for any part of it. $5k is a great deal to us and we just don't want to accept it before we research our options.
    Thanks
    Peta
     
  4. Worldly1

    Worldly1 Well-Known Member

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    Yes understood - its not a good situation.
    Unfortunately it doesn't seem like you've got a good chance of appealing given what the information said about appealing in WA if it was heard by the Magistrate as a minor case.
    You could perhaps try to recover some of the money from the real estate agent if you consider that they didn’t perform their duties with due care and skill (which is their legal obligation as a real estate agent).

    If you’re not satisfied with the agent’s actions and response to you, you could lodge a complaint against the agent. See http://www.commerce.wa.gov.au/consumer-protection/making-complaint
     
  5. Peta

    Peta Active Member

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    Hi Worldly1,
    We have received a call this afternoon to be told that the case is going to be reheard at the end of this month.....we don't know why or how but it has made our day!
    The funds paid by the tenant on day 6 to bring her up to date with her rent -plus a bit extra wasn't heard in court but the tenant clearly knew about it as she has since asked the agent for the bit extra to be paid back to her, so what more evidence do you need ....
    Fingers crossed the evidence can be heard on the day and the right decision is made.
    Thanks for your advice
    Peta
     
  6. Worldly1

    Worldly1 Well-Known Member

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    Wow that's a good bit of evidence!
    Well make sure you keep on top of everyone to put the best case forward for you.
    And let us know how you go - all the best with the process.
     
  7. Ash

    Ash Well-Known Member

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    Hi

    I would be really interested to hear how you got on and what prompted the case being heard again.

    I am in the same situation regarding a break lease and I understand it is getting more common in WA. Basically 2.5 mths into the lease the 1 of the tenants advises they are having to move back to NZ but they have a new tenant to take their place. So I advise about the requirement to do a new property condition report and we agree, in writing, this cost will be borne by them.

    All organised, paid for and go to finalise the second lease with the 1 tenant who remained & the new one. Had an issue with the lawn and couldn't transfer the bond, relationship breaks down and tenants wants to break the lease again but in 1 mth. So I cannot use the property condition report and it has to be done again when they exit. Cost of $350 x 2. This is a financial loss I have had to occur due to their decision to break it twice. Tenant disagrees.

    We end up at the magistrates court, magistrate rules in tenants favour for both property condition reports based on this being a cost which has been brought forward and I would have to pay for it anyway. But rules in my favour for the advertising costs. So why is the advertising costs not a cost brought forward but the property condition reports are?

    As property condition reports are mandatory now in WA I have no choice. The other issue I experienced was one of the tenants was not present. Had signed the legal representation over to the other tenant but not used the correct form and not complied with section 22 (ie other tenant was not an agent nor a legal representative).

    Like you I feel like appealing based on section 22 and also feel there needs to be a good case history set for the issue which is a real concern around the property condition report costs. Especially with it becoming more common in WA. It has just happened again to me with my new tenants and within 6 months of a 12 month lease.
     
  8. Peta

    Peta Active Member

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    Hi
    Well funnily enough our tenant was from NZ too, hopefully it's not the same person .....
    Unfortunately, after a full day In court with both the trouble tenant and the property agent being cross examined, all evidence possible was presented on the day, to me it was clear cut, we had all the evidence and if a decision was to be based on evidence why wouldn't we win right?
    Well we lost, the tenant was rewarded her full bond back
    We couldn't believe it!!!!
    All we could do was try and move on $5k out of pocket.
    The good result was though that our landlord insurance did cover our out of pocket expenses less advertising and out excess so it wasn't completely doom and gloom.
    We can not understand how a judge could rule against the evidence but she did, victim tenant v bullish property agent!! So they thought!!

    As to why the case was reheard, to this day we have no idea, all we can say is that between my husband and I and the property managers contacted all possible people that could potentially help to see what could be done and that random call from the courts came saying it was to be reheard. The clerk thought the case was clear cut but the judge had a different idea.
    Good luck with your situation but our lesson learned was that there is simply no justice for the landlord and tenants seem to have the power to do as they please.
    Hope it works out your way
    Peta
     
  9. Ash

    Ash Well-Known Member

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    Hi

    I would love to know more about your case. Happy to go off line but think people can learn from it.

    With the case being reheard - was this in the magistrates court or did it go higher?

    I find it incredible you were not compensated for loss of rent? What makes up your $5k loss? On REIWA's web site it states that a landlord must be no financial worse off due to the break of a lease. It really needs to be written very clearly into the act.

    A couple of lessons learnt for me:-
    * always get both tenants' agreement in writing with a signature that they will pay break lease costs. tenant 1 and I talked and she advised she would pay the property condition report, I sent an email confirming the same, tenant 2 was cc'd in, tenant 1 acknowledged the email and tenant 2 would pay the invoice once received. But this wasn't enough in court. Magistrate said "did tenant 2 ever give her approval". the answer to this is a No. However she didn't object either and had copies of all the emails and approved the date of the property condition report so wouldn't you object if you weren't willing to pay it?

    * My landlord insurance does not cover for loss of rent or costs incurred as a result of break lease IF the tenant gives notice.

    I do question how you can enter a legally binding document for 12 months and then decide to break it with very little damages (ie costs).

    I also missed my chance in court to produce some evidence as I was feeling a bit intimated by the magistrate's tone and was reluctant to speak up unless asked a direct question. It cost me...
     
  10. Peta

    Peta Active Member

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    Hi Ash
    The case was reheard in front of the magistrate as a minor case, just as it was the first time around, therefore no chance of appeal. It still baffles us why the case was reheard, but at the time we thought we were in a very strong position based on this decision. I attended the second hearing with our property manager (only our property manager attended the first hearing) and we thought it was going to be a quick clear cut hearing.
    I also found the hearing very intimidating and our property manager, who has over 10 years in the industry, has never experienced anything like it.
    I was able to ensure all evidence was presented on the day, and therefore know there wasn't any more we could have possibly done to help our case on the day.

    We had to adjourn for 2 hours for the judge to deliberate and that's when out property manager and I started to get a little concerned, and at that point realised the decision might not actually go in our favour.

    The tenant had provided her own evidence of financials, conveniently excluding a rental payment which showed she was paid up in full. The judge picked up on this and it was a good feeling when the judge explained how our tenants numbers were incorrect. This confirmed the judge knew the tenants rent was paid up to date and the eviction notice (due to being behind in rent) was no longer valid, and therefore wasn't grounds for her to leave on.

    Anyway, unfortunately the case didn't go in our favour. The reasons given by the judge were:
    -The property agent had an opportunity to confirm with the tenant that the eviction notice was no longer valid but didn't give "sufficient notice"
    -Our property agent still pursued the shortfall in rent (cost of lawn mowing paid by the tenant) after the tenants payment had already been received,
    The tenant therefore, had no option but to feel moving out was her only option.
    Even though our tenant had agreed to meet with our property manager and the agency principle to discuss and try and resolve the issue days before the eviction notice expired. They did meet on the last day of the eviction notice and all this was explained to our tenant, but she had already made up her mind to leave. She actually denied she was aware in court (that's lying under oath isn't it...)

    Our agent warned us that these sort of hearings very rarely go in the landlords favour, but we were convinced we had a pretty clear case in our favour, but the courts obviously didn't see it that way.
    Our property was rented at $725 p/w so by the time we got new tenants in, given the extremely short notice, we were out of pocket circa $5k. Also at the time we felt strongly that we would recoup this loss in rent due to our tenant signing a 12 month lease. Advice from our property manager at the time was to reduce the rent in order to get a new tenant in ASAP. Reducing the rent would reduce the amount owed to us by our original tenant and we could claim this shortfall up until her original 12 month lease would have expired. We reduced by $30 p/w which, of course, has only resulted in us renting our property out for $30 p/w less than it was originally valued at.

    I wouldn't like to go through this again, the best way to avoid it is a very thorough checking process at the beginning. Unfortunately for us our tenant had no rental history due to, what we understand, a relationship separation. We feel we are good landlords and tried to get things off to a good start by leaving our tenant an expensive bottle of Champers! In hindsight my husband and I wish we drank that bottle ourselves!
     

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