My PM just told me my tenant has broken his lease and will vacate on monday, his lease was due to end first week in July. He is also 3 weeks behind in rent but is organising some sort of payment plan for money owing. My belief was that if a tenant broke their lease then they forfeited their bond money but my PM tells me otherwise. Is the bond money only to cover damages etc? Could someone clarify. Cheers.[blush2]
Depends which state you are in.
A call to your Office of Fair Trading or equivalent should get the the right answer.
See it as an opportunity t get a better tenant – not a disaster!
Cheers,
Simon Macks
Finance Broker
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I was under the impression that the tenant had a legal obligation to pay the existing lease until it ran out or a replacement tenant could be found, which ever is first.????
Either way the tennent still owes. At least that’s my understanding…
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To the best of my understanding, the bond can be used in lieu of unpaid monies. To this point, you need to apply to the rental bond board and state your case. Your managing agent may also be able to help to facilitate this process.
The tenant should be paying untill the lease expires in july however if it goes to tribunal you will have to demonstrate you have done everything in your power to find a new tenant, make sure a for lease sign goes up and take a photo. Also keep any advertising newspaper ads. I have been advised you cant use the bond for unpaid rent here in vic by an incompetant PM but I believe this is incorrect. Im sure the tenant will claim hardship. Hope you have tenant insurance.
Hi Veronica
instead of trying to debate about who keeps the bond, the best thing to do in this situation is to 1. give the tennant a chance to remedy the breach of contract. ie give them a chance to pay back what they own, if they dont, the money owned can be deducted from THEIR bond money.
2. try to mitigate your losses ASAP, get the house rent ready and put it up for lease again. Any money you have lost in the process as a result of the tennant leaving early can be deducted from the bond. ie, if it takes a week to find a new tennant and it has cost you $50 in advertising, you can deduct from the bond one week rent + $50, the rest should be given back to the tennant. Making them pay until July without you actively trying to do anything to mitigate your own losses would not be looked upon favourably in a tribunal hearing.
In a nutshell, the bond belongs to the tennant, however, if the landlord has suffered financial damage due to something the tennant has done, that financial damage can be deducted from the bond. But you just cant keep their bond because they have left early, if you have lost no money as a result.hope this helps
Xenia
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phone 0412 437 582In Qld, [dead2] you cannot access the tenant’s bond unless the property has been relet or the end of the lease (whichever comes first). At that point, you can work out how much is owing (including rent owing, cost of advertising to relet, any clean up costs and reletting fee.
If the tenant agrees [thumbsupanim] and the whole or part of the bond will cover outstanding debt and they sign over the bond, then great! If the outstanding monies are greater than the bond and the tenant is happy to sign the bond over and then formulate a plan to repay any outstanding debt, then great!
If the tenant has just left never to been seen again, then you can send a bond form into the RTA (in Qld) without the tenants signature and the RTA will spend 3 weeks endeavouring to locate the tenant. If they cannot, after 3 weeks, the bond (or the part of the bond that is legally yours due to loss incurred by the tenant breaking their lease and leaving) will be forwarded to you (or your agent).
If the tenant disputes the release of the bond, then the matter will go to mediation and if not resolved, to small claims court! [whip]
The first thing to do is to ensure the property has not been damaged and is being offered to let.
Hope this helps
Yasna & Simon
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