Industry Update August 2022
August 2022
26th August 2022
QCAT Appeal case Michell v St Vincent De Paul Society QLD Housing [2022] QCATA 116
Whilst the following case is unfortunate, and sad given the human element, it is interesting to see how this QCAT appeal case resulted in the tenant warrant of possession order being enforced. The tenant was breached for failure to keep the premises clean, and then a notice to leave for unremedied breach was issued.
A case worthy of review, given it demonstrates the rights of a lessor if a tenant does breach the tenancy agreement contract, and how the Tribunal may rule given all of the circumstances of each case and their own facts.
Review (download) the case here.
15th August 2022
Rent in advance (Queensland)
The RTRA Act allows for tenants to be required to pay rent in advance; for a fixed term tenancy, the maximum amount is 1 month’s rent and for a periodic tenancy the maximum amount is 2 weeks rent.
It is important to understand the relevant section of the Act in entirety as set out in section 87 as to what are acceptable compliant practices. Usual practice upon acceptance of a tenancy is for the agency to request the tenant to pay the bond of 4 weeks rent (for rent $700 per week or less), and the first two weeks rent. (Refer to PME manual chapter 5 and 6 for more information regarding applications and tenancy sign up procedures). Property Management Excellence (PME) system (www.realestateexcellence.com.au)
Rent in advance from the RTA website
A tenant will often be asked to pay ‘rent in advance’. This is simply the first rent payment the tenant makes to the property manager/owner (before, or on the day, they move in). The tenant cannot be asked to make another rent payment until the ‘rent in advance’ has been used up.
Example: The agreement states the tenant must pay rent of $400 a fortnight. Before they move in they pay $400 ‘rent in advance’. The tenant moves into the property and lives there for 2 weeks. At the end of that 2 weeks their next $400 rent payment is due. The ‘rent in advance’ has been used up.
PME manual source below Property Management Excellence (PME) system (realestateexcellence.com.au
Section 87 (1) of the RTRA Act means in practice that upon acceptance of a fixed term tenancy, the tenant can be requested to pay up to one month’s rent as the first payment. For a periodic agreement, up to 2 weeks rent. Periodic agreements are rare type of tenancy agreement contract upon commencement.
The tenant can pay rent in advance, and any amount they wish if the agency and lessor have not requested more than the amount allowable under the Act. (up to one month’s rent for fixed term agreement and two weeks rent for a periodic agreement).
For example, if the tenant requests to, wants to pay 12 months’ rent in advance, they can do so, if the lessor/agent has not requested for this to be paid.
It is difficult to enforce a tenant be in advance with their rent always due to section 87 subsection 2. Tenants cannot be required to pay rent in a period that rent has already been paid. Rent is “due when it is due” meaning that if a tenant is paid to the 5th November, rent is due on or before the 6th November as opposed to enforcing two weeks rent in advance always.
A tenant cannot be asked, nor can there be a special term in the tenancy agreement contract for the tenant to pay ‘rent in advance’. The tenant cannot be asked to make another rent payment until the rent already paid has been used up.
Example. The agreement states the tenant must pay rent of $400 a fortnight. Before they move in, the tenant pays $400 ‘rent in advance’ which is their first two weeks rent as opposed to rent in advance. The tenant moves into the property and lives there for 2 weeks. At the end of that 2 weeks their next $400 rent payment is due. The ‘rent in advance’ has been used up. There is no such thing as rent in advance. Tenants can be encouraged to pay rent earlier, which is best practice for property managers as part of education to tenants. They cannot be requested to pay rent for a period that has not happened yet.
Sourced from the PME manual Folder /Chapter 07. Property Management Excellence (PME) system (realestateexcellence.com.au)
Understanding the tenancy agreement/contract (RTA Form 18a)
It is important property managers understand the tenancy agreement/contract used by the agency and are familiar with the standard terms/ clauses (which are the law and non-negotiable) and special terms (which cannot contract outside the law). Form providers such as ADL forms and Realworks are private commercial businesses who provide agencies with special terms legally drafted by lawyers. If agencies have questions or concerns about special terms provided by the form provider, it is recommended contact be made with the form provider direct.
Below are some key points that should be considered in relation to tenancy agreements.
• Special terms to the agreement can only be written by a lawyer or the lessor (Legal Profession Act – section 24).
• If a term is already stated in the standard or special terms, it should not be repeated in annexures or elsewhere in the agreement. There are risks of inconsistency in the agreement which could void the term and or contracting outside the Act. Refer to PME manual chapter 5.14 for more information if required regarding contracting outside the Act and special terms.
• Property managers should regularly review the terms of agreements used to remain familiar with the agreement. Property managers should also be familiar with the RTRA Act and regulations.
• If tenants breach the agreement or the Act, the standard or special term reference number or relevant section of the Act should be referenced on the breach notice (RTA Form 11).
Most agencies use Realworks or ADL (form providers for the industry) for their statutory approved and best practice forms. The forms providers make available special terms for agency use as part of their services. If additional terms are needed for a property, property managers should discuss with the lessor the terms they are requiring and ensure to the best of their knowledge the terms being requested do not contract outside the Act. Agencies should contact their form provider for more information about special terms provided available as part of their service to the agency if required.