Updated Feb 2021. What happens when a tenant breaks lease? We understand that Lease Breaks can cause owners frustration and financial hardship. In the instance of a tenant breaking lease, we work with the owners and the tenants in this unfortunate situation and are guided by the legislation for each situation.
Does the tenant continue to pay rent?
The tenant is responsible for the rent until a new lease is secured and most tenants understand their obligations and will continue to pay. The tenants will cover costs for advertising and letting fees and these costs are paid by the tenant or withheld from their bond (which we have to Apply to NTCAT to have awarded).
What happens when the tenant returns the keys?
The return of keys constitutes termination of the lease and responsibilities, for example, maintaining the spa, electricity connection, surface cleans for showings etc. We can apply to NT CAT for the tenant to compensate the owner, however the Application has costs involved and Tribunal decision vary greatly. We advise our owners to expect to maintain the property as it would be if it were a “normal” vacancy. We do our best but the legislation is limiting at times.
What if a tenant abandons a property?
A worse case scenario is when a tenant doesn’t pay rent and abandons the property. We will hold the bond of course, but cannot compensate owners until an NT CAT tribunal hearing awards the bond to the owner and we can make a claim on landlord insurance.
No matter the circumstances, we will keep you informed of your/our position with relation to the Tenancy Act along the way depending on the circumstances and how they unfold. We educate and seek cooperation from the tenant to ensure good references and not being lodged on the tenant default database and hope that this unfortunate event has the best outcome possible.
Can you claim on landlord insurance?
When finalising the lease (when a new tenancy is secured) we make a landlord insurance claim (no excess for loss of rent) and utilise the bond and hope that the period of cover is enough to cover the landlord during this time.
If you have any questions about lease breaks, please contact your Property Manager.