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Tenancy - being your own landlord

1 July 2015

Bill is very excited; he has been thrifty and has now been able to purchase an investment property. The house is quite old but a very solid 3 bedroom double brick home in pretty good condition.

In order to save costs, Bill has decided to look after the management of the property himself. Any rent can be deposited directly to his bank account to offset his mortgage payments and Bill prides himself in being very practical, so he can look after any maintenance.

He advertises in the local paper and before long he has a tenant, Mary who is a single mother of two and who assures him that with her income from her job, she can easily afford the rent. Bill knows a bit about renting and obtains a Residential Tenancy Agreement from the newsagent and he and Mary complete the Agreement together. They agree on a 12 month lease and they both sign the lease and complete the property condition report. Mary pays a bond equivalent to 4 weeks rent and the bond is lodged with the NSW Office of Fair Trading.

Bill is pleased with the arrangement and several months pass without incident. He then has a call from Mary to advise that the roof is leaking. Bill is pretty busy but makes time to attend to fix the problem. The job is bigger than expected but he does his best to patch the roof. Unfortunately the rain keeps falling and the roof continues to leak.

Mary continues to call Bill and also advises that the leaking roof is causing mildew to form on the walls and her furniture and both of her children are suffering from asthma caused by the damp and mildew. Further, her new television and sound system were destroyed by water leaking through the ceiling of the living room and she wants immediate compensation.

In desperation, Mary withholds her rent in the hope that Bill will fix the roof.

Bill again attempts to fix the roof but cannot afford to compensate Mary for the loss of her electrical equipment. Mary keeps contacting Bill and Bill is becoming annoyed. He is a busy man!

Bill checks his bank statement and realises that Mary has not paid rent for 3 weeks. He decides that Mary is a pest and he will give her notice to vacate the premises and get another tenant who will pay their rent. He looks at the Agreement and sees that he is required to give 14 days’ notice if the tenant is more than 14 days behind in their rent. He immediately writes a letter giving the 14-day notice and posts it.

After 14 days, he calls into the property but Mary is still living there. He tells her that she has been given notice and must go. The next day whilst Mary is at work, he calls to the property and changes the locks so that Mary can no longer access her home.

Mary stays with her mother and had already applied to Fair Trading for a hearing upon receiving the notice.

What has Bill done wrong?

The tribunal determined that Bill:
1. breached the agreement as he failed to give clear 14 day notice as he did not allow extra days for the service of the notice so the notice was invalid;
2. illegally gained access to the house and changed the locks.
3. failed to repair the roof satisfactorily resulting in damage to the tenants possessions and harm to her children’s health resulting in the tenant being entitled to damages.

The tribunal ordered that:
1. Bill is to immediately have the roof professionally repaired in a good and workmanlike manner.
2. Bill is to pay for the walls, carpet, furnishings and any other items damaged by water to be professionally cleaned and made good, including the painting of the walls where necessary.
3. Bill is to pay damages to the tenant for his various breaches amounting to the equivalent of 18 weeks rent plus providing funds to the tenant for replacement of electrical equipment.
4. Bill is to provide keys and access to the tenant to enable the tenant to continue to live in the property.
5. The tenant is to bring her rent up to date.

The moral of this story is that Bill failed to adhere to the legal terms of his Tenancy Agreement with Mary and because of this he has paid dearly.

If you are planning to manage an investment property yourself please ensure that you have an excellent understanding of the legal documents and if you need assistance, contact an agent or JMA Legal.

This article is general information only and should not be relied on without obtaining further specific information.

Author: Margot Gill

 

Margot Gill Property Lawyer / Director

Margot Gill is a Senior Property Lawyer with expertise in property law, rural conveyancing and agribusiness. Margot has a rural background and has.. Learn more about Margot Gill

Click here to contact Margot Gill.
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