Has anyone any experience with verbal leases ??
We’ve just about to inherit a few tenants who have been on a bit of a ‘wink and a nod’ verbal agreement with the previous owner for the past 15 years or so. The rent they are paying is woefully below current nett market values, and they haven’t been chipping in for any property costs.
We intend on bringing them into the 21st century with a formal, written lease…but not having any paperwork to go off it’s hard to know what the notice period should be.
Currently they pay monthly in advance – so I presume it’s monthly ??
I’d like to get them all signed up instantly if they intend to stay or evict them straight away if they don’t want to pay current nett market rates plus all my property costs.
Any clues ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Dazzling, when we purchased a house we inherited tenants who were friends of the owner and had rented privately for 7 years. Prior to settlement, the property was given the agent who manages other properties for us. The rent was assessed at $30pw more, the tenants tried to find something else and couldn’t at their previous rental and 14 months later, are still there. When a lease agreement is drawn up, when the rent is to be paid, either weekly, fortnightly, monthly in advance, will be stipulated in the lease and you will need to get 4 weeks bond as well which should be lodged with the appropriate authority in your state.
I wonder what property costs you think they should pay. I guess as they didn’t own the property, they had no need to chip in for any costs or improvements relating to the property as they’re the owner’s responsibility. But then some tenants might request permission to do a few things at their cost but you would have to be pretty careful that they are done in a tradesman like way. I wouldn’t like the thought of it. One of our tenants asked if they could redo the gardens at the front and did a good job. Another changed the curtains with permission, the originals to be put back when they moved out, etc.
Eviction is unpleasant and takes months anyway, with tribunal hearings. I am surprised that your solicitor didn’t state vacant possession on the contract of sale if that is what you want. That way the tenants have to vacate when it becomes your property, you can then tidy it up and have a rental assessment from a few agents. Anyway if they’ve been there 15 years, they must be good payers.
Anna
Hi there Dazzling,
In “The Landlord’s Handbook” which is published by Dept of Consumer and Employment Protection in WA it states:
“You many only increase the rent under certain circumstances. These are as follows:
– a minimum of 60 days’ notice in writing is to be given to your tenants; and
– not less than six months must have passed since the tenancy commenced or since the last increase took effect. Note: it is not necessary to give your tenant 60 days notice if their fixed-term tenancy agreement is being renewed as all conditions (including rent) can be negotiated at this time. However, it is a good idea to warn your tenant of the intended increased some weeks prior to signing the new lease so efforts can be made to find new occupants if your tenant does not accept the proposed increase.”Hope this helps. If it was me I would give the 60 days notice as long as all of them have been there longer than 6 months. With prior arrangements being verbal it’s hard to prove anything else, so benefit of the doubt and give the 60 days.
By property costs I assume you are talkinga bout excess water, this would need to be written into the new lease. You also need to get the water authority to do a reading at the date that the new lease starts, you’ll have to cover the water prior to the new lease starting.
Good Luck, let us know how you go.
Regards
PKHi Dazzling,
If you are talking residential I would agree with PK’s comments.
The irony of it all is that we have to give 60 days notice and the tenant only has to provide a 4 week bond. And the reckon landlords get all the advantages.
Derek
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0409 882 958
Property investment advice and researched property in quality locations available.If you are talking residential I would agree with PK’s commentsDerek, good point, I automatically assumed “Residential”. Never good to assume anything!
PK
Wow guys, thanks for the very quick responses.
Perhaps I shouldn’t of confused the issue with mentioning property costs.
The tenants are carpenters / upholsterers and fibreglass boat manufacturers in industrial sheds.
Looks like I need to give them 30…don’t think the usual ridiculous tenancy laws stating 60 days apply.
It’s funny you mention the poor lot the Landlord usually has to put up with Derek…I stopped playing those games last year. The bond is 2 or 3 months worth of rent, signed over to us and put in our bank.
PK, these tenants shall be paying all my prop. costs, not just water. CR / WR / LT / Ins / and renovations. Wouldn’t dream of forking out for those myself. Actually, hadn’t thought of actual water bills, will lump that on them as well.
Thanks guys, still can’t believe the quick response time. [thumbsupanim]
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
with a verbal agreement in place it is imperative that you get an agent to manage the property and do an entry report asap. If this cannot be arranged then the next best thing are the building and poest reports as a starting point.
With the low rent its either too good a tenant and thats got to be a very hard thing to convince me of, or they are willing to stay at current market rates. I have done this in both SEQ and Launceston in tas, where the tenant has been there so long they class it as theirs.
If you have to do a reno on the place, send them on a timeshare bonus week while you do the work. So they get a week off and you gat time to paint carpet tile and fix the niggling things. End result is the tenant loves you from day one. You get the place revaled and go again after repairs and everyone wins.
It works as long as the tenant agrees to take the time out and is ok to have their stuff in a garage for a week while they are away. Dont be afraid to ask these questions they may get a yes.
DD
PS146 Certified Financial Planner and Buyers Agent
Don’t sweat the small stuff,and it’s all small stuff!!Hi Dazzling
I think NSW also has 60 notice before a rent increase for periodical tenants. You could check with the tenancy people if your property is in NSW.
Good Luck,
Anne.
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