Fixed Term Contract Cancellation

Mon Gol on 11/09/2014 - 13:21
Last edited 11/09/2014 - 13:24

hi guys,

we are renting a house, contract expires on the 7 January.
this is our second contract for this house.
before we signed it, we told agent that we will be moving interstate as of end of December therefore contract end date needs to be 20-25 December. Agent said that LL is concerned that they will not be able to find tenants during festive season and asked to sign up until second week of January.
we thought that there can be some circumstances and probably it is good to have a buffer of few days in January, so that if our move is delayed we have a place to stay at.

now it all came to the point that we are going to be moving as of end of November.
we understand it is breach of fixed term contract and there is a cost associated with this.

in this case, what is the best to do? so that we bear minimum expenses, as well as LL?
I have not approached agent as yet, decided to listen to fellow ozbaraginers' opinions first.

my understanding is that once tenant notifies agency of the fact he wants to cancel the contract, agency should be taking reasonable actions in order to find new tenants. Current tenant can contribute financially to property advertisement (may be this can be taken out from bond, please correct me if this is wrong).
we are giving agency plenty of time to find new tenants and expect them to find someone before we move out so that LL signs a new contract, we are free to go with bond paid out in full.
am I too naïve?

what if agency is not looking for tenants. Can I stop paying rent? Ie, if I do not pay 1 month rent, this is the bond amount, understand LL will keep it (and I am happy if he keeps in since we did not pay rent). But could there be other costs in this scenario?

not willing to pay rent for two houses really… please advise.
thank you.

Home & Garden

Comments

  • geek001 on 11/09/2014 - 13:33

    Not sure if your contact allows it, but maybe you can try and put your rental up for rent on AirBNB or stayz.com if it doesn't make financial sense for you to break the contract. :)

  • Shadow54 on 11/09/2014 - 13:43

    I think in Victoria 60 days' notice (i.e. to mid-November) is the requirement. As you said you may be up for LLs advertising cost and possibly even for loss of rent if a tenant cannot be found in 60 days……
    There should be a Tenancy Rights body in your state, so ask Mr Google to guide you there.
    If you think the agent will not try hard enough to find a new tenant, then maybe you can locate potential tenants yourself through Gumtree or word-of-mouth. If you find the replacement tenant you may also be able to avoid the advertising costs.
    Let me know how you go.

  • cypher67 on 11/09/2014 - 13:49

    Unless you can prove that they broke the contract first or you can find a loophole (doubtful) then no, thats the idea of a contract. Only alternative is to find someone to take over the contract.

  • wei13 on 11/09/2014 - 13:57

    from the basics: the contract means simply that you are liable to pay rent at the agreed amount for the place up until the 7th of January. You are right that if you stop paying before the date, it is breach of tenancy and they can pursue the matter.

    yes if they can find a new tenant before that, they you are free from your contract. so basically you need to pay until the date a new tenants signs contract, or January 7th, whichever comes first.

    If you give intention to leave, most decent agents will be happy to post up vacancy notice for new tenants (since they'll have to do that eventually anyways). You might be able to facilitate the process by keeping your place presentable, and letting them bring people for inspection without the usual 24 hours notice.

    however, if the agents chooses to do nothing until the 7th of january, i don't think there is much you can do. although as a landlord i'd be pretty unimpressed with such an agent.

    I have had my tenants wanting to break lease, and my property managers found new tenants, so the original tenants didn't need to pay till the end of lease. from landlord perspective, most important is to minimise any vacant period without rental income.

  • Mon Gol on 11/09/2014 - 14:33

    thank you guys!

    so sooner we approach agent is better.
    will notify agency that we are moving out end of November (will let them know exact date).
    2.5 months should be plenty enough to find new tenants…
    I am totally open - they can bring potential tenants for inspections, it is in our interest as well.
    our agent is a nice lady, hopefully she stays nice when it comes to this unpleasant discussion of early cancellation))

    if agent chooses to do nothing until 7th Jan, then I will stop paying rent in the beginning of Nov…this will definitely motivate agent to find new tenants. but would love to avoid it

  • Shadow54 on 12/09/2014 - 12:02

    If you simply stop paying in November, you are in breach of contract. You could be sued for rent PLUS legal costs…..

    • Mon Gol on 12/09/2014 - 15:28

      no, I am not going to simply stop paying…
      as I said - if agent is not doing anything to find new tenants, then yes - will have.

  • emiko on 12/09/2014 - 13:30

    my tenants broke his year contract half way last week. My agent told me they have to pay 4 weeks rent in total as breakage fee. Maybe check with your lease agreement see if there was a clause like that.
    My tenants only gave us a week notice….

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