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Terminating a fixed term contract.

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Some landlords are unsure about the procedures for ending a fixed term contract. A rental agreement is a legal document so both parties need to understand what is happening and what their rights and responsibilities are. Naturally things so often sound simple, but it is amazing how complicated they can get. Let me say that owning a rental property can be very rewarding when all parties have a well-defined agreement.

Keeping your tenancy contract ‘fixed’.

Fixed term tenancy agreements always remain fixed don’t they? No. There has been a few changes in the legislation, one which requires either party to notify the other of their intentions, within a specified period towards the end of the lease, whether or not they are continuing or terminating the tenancy agreement. Failure to do this could see the tenancy agreement lapses into a periodic tenancy agreement.

Let me give you an example. A landlord notifies their tenant in writing 21 days before the end of their tenancy agreement that the tenancy will not be renewed. This is outside the Act’s required notice period therefore, if there is no mutual agreement to terminate, the landlord is obligated to now issue a 60 day or 90 day written notification (depending on their circumstances), dated from the end of the original fixed term tenancy. This is treated exactly the same way as a periodic tenancy agreement.

Also, either party could terminate a fixed term tenancy agreement immediately on the grounds the property is uninhabitable or can’t be used for residential purposes or provide a period of 60 days’ notice if the property has been acquired by compulsory process.

Rent arrears do not necessarily release the tenant of their responsibilities.

Rent arrears generally leads to the termination of a tenancy agreement when the landlord (or agent acting on their behalf) issues a valid notice for breach. In the past, some tenants relied on rent arrears releasing them from the responsibilities of fixed term tenancies but this loophole no longer exists. Changes to the Residential Tenancies Act addressed the issue. Now a tenant may need to compensate the landlord for any loss (including loss of rent) caused by the early termination. The landlords must take every reasonable step to have the property rented again to minimise their loss.

In additional to this, if a landlord (or agent acting on their behalf) serves a tenant with the appropriate notification for rent arrears twice in an allocated period, they can then apply directly to the Residential Tenancies Tribunal for vacant possession, should the tenant become in rent arrears for a third time. Be prepared. The Tribunal may also make an order for a payment plan rather than terminating the agreement.

If you own an investment property and want peace of mind,
contact Lisa Akeroyd of Barossa Rental Specialists on
0414 335 660 to discuss your rental management strategy.

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