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© REIT Version 10.1 - 2014 Property Management Legislation & Paperwork Manual.docx

Property Management Legislation & Documentation


Editors: Alicia Hutton, Robbie Yeoland, Gaye Anderson

Word processing and Graphics: REIT Professional

Development Departments Version: 10.1

These materials were adapted by the Real Estate Institute of Tasmania.

© 2014 The Real Estate Institute of Tasmania The REIT has issued this Unit to a candidate enrolled with the REIT in the Unit described in the title. This Unit is for the use of that candidate only, to develop skills, knowledge and competence of that candidate and the Unit does remain the property of the REIT and is not to be reproduced in any way or transferred to any other person or used for any other purpose. This work is copyright. Apart from any use permitted under the Copyright legislation, no part may be reproduced without prior written permission from REIT.

Disclosure Notice

The material contained in this Unit is information/opinion of a general type. You should seek your own independent/expert advice in relation to any issues the subject of this Unit. The REIT is not a legal adviser. The REIT will not have liability for any loss/liability suffered/incurred by reason of any reliance on the content of this Unit.

Property Management Legislation & Documentation


Welcome

Welcome to Property Management Legislation & Documentation.

Each Unit is designed as a stand-alone Unit, although relationships between Units will be identified as they arise. We hope you enjoy working through this workbook and find it professionally rewarding.

Unit outline and purpose

The purpose of this Unit is to give Property Consultants and Assistant Property Managers an understanding of the legislation and processes involved in the day to day practice of property management. In other Units of study we introduce you to the complex role of a Property Manager. This Unit has been designed to broaden your depth of knowledge in property management transactions, in particular those impacting on the Assistant Property Managers’ or Property Consultants’ role in servicing clients and customers and protecting the interests of the Registered Real Estate Agent or Property Manager.

Instructions for Distance Learning Candidates

Read through the training Unit;

Complete all activities in this Unit as you come to them;

Check all answers to the learning activities at the end of the Unit;

Complete the set written assessment task, referring back to your learning material where you need to;

Submit the written assessment task to the REIT. Remember to keep a copy.

For the purposes of this Unit, unless stated otherwise, the term Property Agent refers to a Property Manager and Assistant Property Manager.

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Chapter 1 The Legal Parameters of Residential Property Management

Unit introduction

This Unit is designed to give you an introduction to the use of the Residential Tenancy Act 1997, Anti–Discrimination Legislation and Privacy Legislation and the application of this legislation to the role of a Property Manager and Assistant Property Manager. We will look briefly at the scope of this legislation and we will give you some guidelines on how this legislation is to be applied when an Assistant Property Manager is dealing with clients and customers in real estate transactions involving residential investment property.

The Residential Tenancy Act 1997 and Amendments

Rental practices in Tasmania are regulated by an Act of State Parliament - the Residential Tenancy Act 1997. The Residential Tenancy Act 1997 1997 is divided into 5 Parts: 1. The Preliminary part contains the interpretation guidelines for the

implementation of the legislation. The preliminary also deals with the application of the Act, ie: which Residential Tenancy Agreements are affected.

2. The Residential Tenancy Commissioner 3. Residential Tenancy Agreements refers to the form of agreements, rents

and the receipting of security deposits, condition reports, disputes and holding fees. It also contains information and descriptions of Repairs, discussing differences between General, Urgent and Emergency repairs.

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4. (a) Termination of Agreements is a complex section detailing the

requirements of both parties, ie: tenants and property owners alike.

(b) Rental Deposit Authority - This section was included in the Act in

2009 when the RDA was enacted

5. Miscellaneous covers issues relating to subletting, use of premises, responsibility of tenants with regards to cleanliness and damage as well as alterations to the premises. Also mentioned in this section is the right of entry and locks and security devices, to who is responsible for the cost of preparing a Residential Tenancy Agreement

Property Agents and Land Transactions Act 2005

Parts of the Property Agents and Land Transactions Act 2005 also control property management activities. We will now look more closely at some of these sections. Sections 18 &19 deals with the need for the “Appointment to Act” to be in writing if the Property Agent wishes to recover expenses with a minimum of problems. So the Appointment to Act form – the Exclusive Property Management Agreement needs to detail the nature of all expenses to be incurred by the Property Agent on the owner’s behalf.

Commissions

The Appointment to Act (Exclusive Property Management Agreement) provides for the Property Agents’ payment of commission by the client. The commission payable is subject to GST where applicable. Section 18 & 19 provide that the Appointment has to clearly indicate the nature and extent of expenses that the Property Agent may incur on behalf of the client and how those expenses are to be recouped.

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Express commissions as a percentage

It is good business practice to always express the agreed commission payable as a percentage in the Appointment to Act (Exclusive Property Management Agreement) document. If fees or commissions are renegotiated during a transaction, it will be necessary for the Appointment to Act (Exclusive Property Management Agreement) to be altered and re-initialled by all parties to the original agreement, or a new (Exclusive Property Management Agreement) negotiated and signed.

Fees, Charges and Expenses

Fees A fee is the cost of a service provided by a Property Agent. A fee can be charged for a service not normally considered a part of a Property Agent’s prescribed activities when selling, managing or renting properties. A fee could be charged for the following services:

Supervising and inspecting major repairs and renovations, lodging building plans, and overseeing building applications;

Reading Meters;

Co-ordinating advertising consultants, copy writers, photographers, graphic artists and designers;

Co-ordinating a marketing campaign that involves detailed market analysis, project or development feasibilities;

Co-ordinating Property Agents who are not employees of your agency;

Consulting with architects, engineers and designers on behalf of a client;

Providing written reports that do not involve the sale, management or rental of a property.

A fee cannot be charged or recovered for any additional agency service unless the client has authorised the Property Agent in writing on the approved Appointment to Act (Exclusive Property Management Agreement) Form.

The Residential Tenancy Act 1997, at Section 17 deals with some fees which may not be charged. A Property Agent is not permitted to charge a tenant or prospective tenant a fee relating to the preparation of documents relating to a real estate transaction. This includes tenancy applications, lease agreements, management agreements, sales contracts, written market appraisals (relating to the sale or rental of a property) or listing documentation fees.

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Charges A charge is a cost incurred by the Property Agent whilst performing duties on behalf of the client. A charge or cost is fully recoverable by the Property Agent if authorised by the client and provision is made on the Appointment to Act. Charges are common in a continuing agency. An example of charges might be:

Telephone, fax, and postage;

Photocopying;

Travelling costs for the collection of rent or inspection of properties. Expense An expense is where the Property Agent has incurred a financial liability on behalf of the client. An expense is fully recoverable by the Property Agent if authorised by the client and provision is made on the Appointment to Act. An expense could be:

Promotional fees which include advertising and marketing costs;

Searches;

Other consultancy fees such as decorators, tradespeople, pest control, building inspectors etc.

Completing an Exclusive Property Management Agreement - Authority to act as Managing Agent

The Property Detail the correct property address and the rental rate per week or month expected. The term of the tenancy should also be mentioned here.

Security Deposits The maximum amount of security deposit allowed by the Act is already standardised and words entered into here.

Advertising Enter the maximum amount of expenditure on advertising authorised by the Owner.

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Disbursements These are the items paid by the Property Agent on behalf of the client. These payments are drawn from rent monies credited in the Client’s Account. Before a Property Agent can withdraw monies from a Client’s account, they must be authorised in writing to make these deductions. Full completion of these items will activate appropriate authority to undertake these activities.

Note: A Property Agent is liable for late payment of accounts and must ensure that they are paid on time. In the event of Council rates, a Property Agent is responsible for redirecting rates notices to the owner as soon as possible.

Below is a list of common best practice options:

Council water, sewerage and drainage rates if applicable;

Building Insurance;

Contents Insurance;

Legal Liability Insurance;

Property owners Protection;

Body Corporate Levies;

Land Tax. Simply tick the agreed option. It is important to ensure that details of the financial institution and account numbers are completed fully. It is also necessary for a branch number to be given for electronic transfers. This should be a 6-digit number. The payment period should also be amended here if required, ie: some Property Agents now make payments mid-month and end of month or fortnightly. Repairs and Other Outgoings If Property Agent receives authority to pay repairs, etc, then they can complete this section. A figure can be inserted here as agreed upon.

Insurance Cover It is important to establish which insurer the property is covered under in case you as Property Agent are required to make a claim on behalf of the property owner. Property Agents Authority This is the descriptive area which itemises the agreed practice the Property Agent will conduct on behalf of the property owner. It also establishes the scale of fees agreed upon.

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General Information and Other Instructions It is important to obtain up to date information of the owners preferred Solicitor and Accountant, as well as the Next Of Kin. This information is generally used when there is an emergency and the Property Agent is unable to establish contact with the property owner themselves. Establishing the owners preferred maintenance contacts is important at the beginning of a management. These contacts are able to be used in the instance that the owner has authorised the Property Agent to arrange and pay for repair work on their behalf. Being a preferred contact, the tradesperson is more than likely to have worked on the property before and will know readily what problems may exist in the event of requiring maintenance. This section also makes provision for courtesy calls to property owners on tenant selection and when repairs have been completed. It is advisable that the Property Agent keep the property owner fully informed regardless of special instructions, this would be considered to be good business practice by property owner. Included here can be instructions like:

Tenants responsible for water usage;

No pets or pets on approval from owner;

Tenants to maintain garden and lawn areas, etc. Property Agents Indemnity This is a standard clause in most Property Agent’s Authorities. It is used to indemnify the Property Agent against claims, suits, demands and costs brought against the Property Agent while lawfully performing duties under the Agreement. Termination To comply with Section 18 or 19 a Management Authority must have a termination clause. The clause must allow either party to terminate the agreement and state the conditions by which it may be terminated. Privacy Statement This section is a Notice to the parties of the agreement what the Property Agent will do with any of the personal details/data collected by the Property Agents during the course of the Authority.

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© Copyright REIT – Amended May 2012 Page 1 of 3

Exclusive Property Management Agreement

Authority to act as Managing Agent

PREMISES TO BE MANAGED: ..............................................................................

TO: ............................................................................................................................

(hereinafter called "The Agent")

of ......................................................................................................................................

OWNER .....................................................................................................................................................

ADDRESS ...........................................................................................................

Phone (home) ..... Phone (business) ....... Fax .........

Mobile ....................... Email ..............................................................

POWER OF ATTORNEY or EMERGENCY CONTACT: ......................................................................................

Address .............................................................................................................

Phone .............................................................................................................................................................

I/We being authorised to do so, hereby instruct the agent to act as my/our Managing Agent

on a Sole and Exclusive basis in respect of the following property:

1. THE PROPERTY is to be let:

and at a rental rate of $ ..................................................... or thereabouts per .......................................

for a preferred term of ................................................. .... (length of time) (Commencement Date)

The property will be available for an anticipated term of ...................................................................................................

2. SECURITY DEPOSITS: a security deposit is payable for four weeks rent and if you receive from the tenant a security deposit you are to lodge the security deposit with the Rental Deposit Authority within 3 days of receipt.

3. ADVERTISING: You are authorised to advertise the property at our expense to a maximum of:

4. DISBURSEMENTS: Please pay on my/our behalf: Council Rates Unit Levies

Land Tax Insurance

and remit the net balance (after deductions of your fees and expenses) on a monthly basis

or Bank Credit of ...............................................................................................................................

Branch (BSB No.) ...................... Account No. ..................................................................

Of the ...............................................................................................................................................

Or AGENT to hold all funds in trust.

If at any time the proposed disbursements should be in excess of the monies to be collected then I/We agree to pay such excess as requested by the Agent.

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5. REPAIRS AND OTHER OUTGOINGS: You are authorised to carry out all necessary repairs not exceeding the cost of $ ......... for any such maintenance matter and in the event that you are unable to contact me/us or my/our emergency contact, you are

authorised to attend to emergency repairs at your discretion.

6. INSURANCE COVER

Company Policy No. Due Date

Buildings

Contents

Public Liability

7. AGENTS AUTHORITY

THE AGENT is authorised to:

(i) Select tenants and sign Tenancy Agreements for the premises on my/our behalf.

(ii) Receive rents due and issue receipts for monies collected.

(iii) Exercise the owners rights to terminate tenancies or leases, serve notices and issue notices to quit.

(iv) Carry out all necessary proceedings for the eviction of tenants.

(v) Recover any monies due in respect to the management of the said premises.

(vi) Re-let at the end of each tenancy in the event of a vacancy.

(vii) Advertise the availability for rental or lease of the said premises.

(viii) Hire and discharge on my/our behalf all labour and employees necessary for the proper maintenance of the said property.

(ix) Carry out all urgent and necessary repairs without my/our prior authority.

(x) Pay on my/our behalf all outgoings as herein specified.

a) Letting Fee % .......................................................................................................

b) Management Fee $ ...................................................................... / ................ % of Gross Collections:

Applicable GST: ........................................................................................................................................................

c) Postage & cheque charge $ ............................................................. per ............................................................

d) Other ........................................................................................................................................................

........................................................................................................................................................

and such other fees as prescribed by regulation under the provision of the Property Agents and Land Transactions Act 2005.

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8. GENERAL INFORMATION AND OTHER INSTRUCTIONS

(EG. NOMINATED REPAIRERS, PLUMBERS, ELECTRICIANS, BUILDERS, ETC)

......................................................................................................................

.....................................................................................

.......................................................................

.....................................................................................

...................................................................................................................

...............................................................................

......................................................................

...................................................................................................

..........................................................................................................

............................................................................

......................................................................

..................................................................................................

9. I/We indemnify you and agree to keep you indemnified against all claims, suits, demands and costs (including legal costs) brought against you by third parties or incurred by you in the course of lawfully discharging your obligations under this Agreement.

10. All amounts for fees, commission and charges are exclusive of any tax to be introduced on amounts payable on the supply of goods, real property, services or any other thing supplied in connection with this agreement ("GST"). If GST is payable by the agent on a supply of services to be made under this agreement then any amount payable for fees, charges and costs shall be increased by the amount of any GST (or any other such amount permitted by law) payable by the agent with respect to such supply. 11. If you own property as at 1 July each year, that is not your Principal Place of Residence and is not used for Primary Production purposes, you may have to pay land tax. This tax is applied in accordance with the Land Tax Act 2000.

12. This Agreement may be terminated by either party on 30 days’ written notice sent by ordinary pre-paid post to the last known address of the other party. Notwithstanding any such termination I/We agree to pay all advertising and other expenses authorized by me/us prior to the giving of such notice and all commission and other fees referable to the period prior to the expiration of the 30 day notice period.

PRIVACY ACT (COMMONWEALTH) 1988 - COLLECTION NOTICE The Agent uses personal information collected from the Principal (landlord) to act as the Principals agent and to perform their obligations under this Agreement. The Agent may also use such information collected to promote the services of the Agent and/or seek potential clients. The Agent may disclose such information, by use of the internet or otherwise, to other parties including potential tenants, clients of the Agent both existing and potential, parties engaged to evaluate the property, solicitors, trades people, bodies corporate, financial institutions, media organisations, government and statutory bodies and third parties as required by law. Unless you advise the Agent to the contrary, the Agent may also disclose such information to The Real Estate Institute of Tasmania Ltd (REIT) for the purpose of documenting all leasing data in the area for the benefit of its members as part of membership services and for others in the property or related industries, and so as to assist them in continuing to provide the best possible service to their clients. In providing this information, you agree to its use, unless you advise the Agent differently. The privacy policy of the REIT can be viewed on its website www.reit.com.au. The Agent will only disclose information in this way to other parties as required to perform their duties under this Agreement, to achieve the purposes specified above or as otherwise allowed under the Privacy Act. If the Principal would like to access this information, they can do so by contacting the Agent at the address and contact numbers contained in this Agreement or the REIT on (03) 62234769. The Principal can also correct this information if it is inaccurate, incomplete or out of date. Real estate and tax law requires some of this information to be collected. If the information is not provided, the Agent may not be able to act effectively on the Principals behalf or at all.

I/We acknowledge that I/We have read and understood the contents of the Privacy Collection Notice.

Signature date

Signature date

Signature of Agent date

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Tenant Selection Some Property Agents stereotype prospective tenants based on first impressions. Whilst first impressions are important, a person negatively stereotyped may not have a chance to demonstrate his or her suitability as a tenant. Stereotyping people or prejudging people is ‘human nature’ to some extent, but Property Agents need to take steps to ensure not only that they have the best tenant for the property, but also be able to justify that decision. This is why professional Property Agents develop clearly defined systems and procedures for the entire process of tenant selection. In this Unit we show you some of these systems and procedures associated with this process. These are covered in comprehensive detail in other property management Units.

Tenancy Applications

The Tenancy Application Form is used to formalise the process of tenant selection and to bring some objectivity to what can be a very subjective process that results in unfair judgments being made about tenants. The Property Agent, using questions from the Tenancy Application Form interviews the prospective tenant. Many of these questions would have been asked initially when the customer first inquired about rental property or during the inspection of property. The use of standard questions tends to make first impressions (particularly negative ones) less important. Tenant suitability can then be assessed using questions designed for the purpose. The Property Manager would ask the proposed applicants to record all information and would ensure that all sections of the Tenancy Application Form are completed. We will discuss this in more detail later in this Unit.

At the end of the interview, the tenant is asked to sign the Tenancy Application Form. Amongst other things, this records the amount of rent they are willing to pay for the property, the term of the tenancy and the proposed commencement day. As such, the Tenancy Application Form constitutes an ‘offer’ by the tenant to the property owner to rent the property. Once accepted by the property owner/Property Agent, this agreement theoretically becomes binding on all parties.

There are a variety of forms in use. In any event, the minimum information required is as follows:

full name of all applicants;

proof of identity for each applicant preferably with a photo- (driver’s licence or passport - photo copy should be retained with Tenancy Application Form);

current address and phone number (work and home) of each applicant;

name of owner or Property Agent for this property and contact address and phone;

previous address of each applicant;

name of owner or Property Agent for previous address;

names of all people wishing to reside at the property;

employment details for each applicant including name of employer, period of time employed, current position, income;

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previous employment details (as above, if current employment less than 12 months);

personal/business referees (at least 3);

whether the applicants wish to keep any pets at the premises; and

name, address and phone number of the applicant’s next of kin.

An example of a Tenancy Application Form is on the following page. Take the time to study this document now. Many Property Agents also incorporate with the Residential Tenancy Agreement a Guide to Renting through the agency. This document is in addition to the Tenancy Application Form and is designed to facilitate clear expectations when renting through the Agency. An example of the type of information included on the guide is:

Days that Tenancy Application Forms are processed, eg Monday to Friday, this avoids the issue of customers expecting to be able to move on a Saturday if they only viewed the property that day;

The number of forms of identification required before the Tenancy Application Form will be processed;

The time required to process the Tenancy Application Form – eg 24 hours. Some customers expect that they will have an answer within 1 hour;

The fact that all parties contributing to the rent payments must complete and support and Tenancy Application Form in their own right;

Whether the office accepts bond transfers (we will discuss this in more detail later);

Office policy in relation to bond and rent payments. Eg clear funds, cash, money order;

Office policy on acceptance of the Tenancy Application Form, eg how and when the prospective tenant will be contacted and the requirements for signing the legal paperwork prior to occupying the premises.

Essentially the guide gives the customer a clear understanding of “how this agency does business”. The customer can then be fully prepared and more importantly lessens the likelihood of conflict due to lack of information or communication.

Some agencies have a kit prepared that promotes the agency and incorporates the Guide to Renting, a list of suitable rental properties together with the Tenancy Application Form and standard terms and conditions of the tenancy.

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Tenancy Application Form This is a tenancy application form. Its purpose is to identify potential tenants. This form is not, nor does it form any part of, a tenancy agreement. Should your application be successful, your rights and obligations and those of the property owner will be governed by the Residential Tenancy Act 1997. If the information is not provided, the Agent may not be able to process the application. (To be completed by all persons 18 years and over. Please write clearly or Print)

Property Required Address ............................................................................................................................................... Rent Per week ...............................................................................................................................................

Personal Details Full Name .....................................................................................................................................

Current Address .....................................................................................................................................

Phone (h) ................................ Phone (w) .......................................................................

Mobile ................................ Email .......................................................................

Date of birth / Pension Card Number ....................................................................................................

Drivers License No ……………………… Passport .......................................................................

Rental History Are you currently renting? Yes / No

If yes - Agent Name and Phone No ........................................................................................................

Have you rented previously? Yes / No

If yes - Agent Name and Phone No ........................................................................................................

Was your bond refunded in full? Yes / No

If no – why ........................................................................................................

........................................................................................................

Employment history Current employer ........................................................................................................................

Contact person ............................................. Phone No.................................................

Length of employment ........................................................................................................................

Full time / Part time / Casual ........................................................................................................................

Hours per week ........................................................................................................................

Are you self employed Yes / No

If yes name of Company ........................................................................................................................

Business details ........................................................................................................................

Previous employment ........................................................................................................................

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Student College ............................................................................................................................................ ID Card Number ............................................................................................................................................ Course attending ............................................................................................................................................ Year ................................................ Full time / Part time .................................................................

Pets Dog / cat / bird / other .................................................................................................................................. Breed ................................................... How many .................................... ……………………………… Are they registered with Council? Yes / No Inside or outside Pet ..................................................................................................................................

General Details Do you smoke? Yes / No Inside or Outside .......................................................... Are you or have you been bankrupt? ................................................................................................. Do you have outstanding debts at a Collection Agency Yes / No

Next of Kin Name (not living with you) ........................................................................................................................... Address ........................................................................................................................... Phone (w) ................................... (h) ...................................... (m).................................................... Relationship ..................................................................................................................................................

Occupancy Details Number of Adults .................................................................................................................................. Number of Children ...........................................……………………………………………………………… Number of vehicles .................................................................................................................................. References 1. Name .................................................................................................................................. Address .................................................................................................................................. Phone (w) ............................................. (h) .................................................................... 2. Name .................................................................................................................................. Address .................................................................................................................................. Phone (w) ............................................. (h) ....................................................................

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3. Name .................................................................................................................................. Address .................................................................................................................................. Phone (w) ............................................. (h) ....................................................................

Additional Information .........................................................................................................................................................................

.........................................................................................................................................................................

.........................................................................................................................................................................

.........................................................................................................................................................................

.........................................................................................................................................................................

I acknowledge that all information contained within is true and correct and that all of the information was given of my own free will. I further authorise the letting agent to contact and/or conduct any inquiries and or searches in relation to the information and references supplied in this application. I confirm I have previously inspected the property prior to signing this application Yes / No Signed……………………………………. Date …………………………………… PRIVACY ACT (COMMONWEALTH) 1988 - COLLECTION NOTICE The personal information the prospective tenant provides in this application or that which is collected from other sources is necessary for the Agent to verify the Applicant's identity to process and evaluate the application and effectively manage the tenancy. The personal information collected about the Applicant may be disclosed, by use of the internet or otherwise, to other parties, including the landlord, trades people, referees, solicitors, financial institutions, media organizations, parties engaged to evaluate the property, bodies corporate, other agents, clients of the Agent both existing and potential, third party operators of tenancy reference databases, government, collection agencies, relevant Courts and Tribunals, and statutory bodies and other third parties as required by law. Information already held on tenancy reference databases may also be disclosed to the Agent and/or landlord. Unless you advise the Agent to the contrary, the Agent may also disclose such basic information to The Real Estate Institute of Tasmania Ltd (REIT) for the purpose of documenting leasing data in the area for the benefit of its members as part of membership services and for others in the property or related industries, and so as to assist them in continuing to provide the best possible service to their clients. In providing this information, you agree to its use, unless you advise the Agent differently. The privacy policy of the REIT can be viewed on its website www.reit.com.au The Agent will only disclose information in this way to other parties to achieve the purposes specified above or as otherwise allowed under the Privacy Act. If the Applicant would like to access this information they can do so by contacting the Agent at the address and contact numbers contained in this Application or the REIT on (03) 62234769. The Applicant can also correct this information if it is inaccurate, incomplete or out of date. I/We acknowledge that I/We have read and understood the contents of the Privacy Collection Notice. Signed……………………………………. Date ……………………………………

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Privacy Legislation

New private Sector provisions in the Privacy Act 1988 (the Privacy Act) regulate the way many private sector organizations collect, use, keep secure and disclose personal information. For the first time, it gives individuals the right to know what information an organisation holds about them and a right to correct that information if it is wrong.

Purpose of private sector provisions

The private sector provisions aim to give people greater control over the way information about them is handled in the private sector by requiring organisations to comply with ten National Privacy Principles (NPPs)..

Organisations now must take reasonable steps to make individuals aware that it is collecting personal information about them, the purposes for which it is collecting the information, and who it might pass the information on to. There are some restrictions on the uses an organization can make of personal information and on when an organisation can disclose personal information or transfer it overseas. Except for special circumstances, individuals have a right to get access to personal information an organisation holds about them and to have the information corrected or annotated if the information is incorrect, out-of-date or incomplete.

Individuals can also make a complaint to the Office of the Federal Privacy Commissioner if they think information about them is not being handled properly.

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Selection Process

The selection process is probably the most critical of all the steps in establishing new tenancies. It is now that the Property Agent must make a decision, taking into account all the information available, and having regard to the rights and obligations of all parties concerned. The decision process begins at the interview where the Property Agent is attempting to find answers to two main questions:

Will this person make a good tenant for the property?

Will this person be able to meet the financial commitment involved?

There is no perfect strategy to follow for selecting tenants. However the following principles should be kept in mind:

Although you are finding a tenant for another person’s property, select tenants you would be happy to have in your own property;

No doubt you will rely on your intuition in borderline cases. However, do try to be as objective as possible. Establish rapport and use probing questions to find out what the person is really like;

You may be called on at a later date to justify your choice of tenant or rejection of an applicant; accordingly a prudent Property Agent will keep detailed records of the selection process, including the Tenancy Application Form, record of interview and information supplied to satisfy all of the selection criteria.

Selection criteria

In deciding whether you have the right applicant for a particular property, you will need to examine five main types of evidence or have five essential selection criteria. These include:

positive identification of the applicant/s;

the demeanour (including both appearance and attitude) of the applicant/s;

the tenancy record of the applicant;

references the applicant can provide; and

information provided by a commercial referencing data base.

Let’s consider how we should go about using these criteria in making a decision:

Positive identification

When you receive a Tenancy Application Form you are required to make an informed decision as to whether this applicant is suitable to take possession of your client’s property. The very first step in this process must be to require the applicant to provide

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positive identification. This is a prerequisite to all your other reference checking and information verification. It’s ironic to think that to open a bank account in Australia (which is really just placing your own savings into an account), you are required to pass a 100 point checking system to prove who you are, yet a lot of Property Agents operate only on the strength of information provided on a Tenancy Application Form.

The best form of identification is one that includes the full name, address, photograph and signature of the applicant - driver’s licence, passport or 18+ card. If this is not possible a combination of other forms should be sought such as - Pension Card, Gas, Electricity or Telstra Accounts, Credit Cards, Student Identification, Workplace Security Cards.

Demeanour

A caution against jumping to quick conclusions regarding an applicant’s physical appearance, doesn’t mean you should hesitate in making some assessment of their overall attitude to renting and the way in which they present themself for interview. A lot of this useful information can be obtained by you at every stage of the selection process, both from observation and questioning the applicant/s. Of course, if you are accompanying prospective tenants on property inspections and personally conducting the interview, you will be well placed to accurately determine their past experience, their sense of responsibility, the way in which they treat property, their attitude towards you as a Property Agent and their rights and obligations as tenants. This is all valuable information and should be sought in assisting you to make a more accurate decision.

Tenancy Record

The verification of the applicant’s previous rental history is also a critical part of the selection process. In addition to references provided by previous property owners, the tenancy record also provides you with information regarding:-

the applicant’s previous rental experience;

their stability as tenants (ie, how often they have moved in the past);

reasons why they have moved or are seeking a move; as well as

any history of breaches of a Residential Tenancy Agreement. This information is obtained both on the Tenancy Application Form and verified during the interview. It might be prudent to include some extra questions on your Tenancy Application Form such as:

Has any property owner or Property Agent ever terminated a tenancy with you?

Has a property owner or Property Agent ever refused you another property?

Are you in debt to another property owner or Property Agent?

Were any deductions made from your rental bond at your last address? If so, provide details.

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In checking previous tenancy records, there are two scenarios worth watching for - firstly, the applicant who tells you they have never rented before - it is important to confirm this; and secondly an Tenancy Application Form from one person with a number of other persons requesting to live at the address. This is a common way of “hiding” from a past history of tenancy problems. It is important and necessary to have a complete Tenancy Application Form and Interview with every person who will be residing at the property, not just the applicant who wishes to be recorded on the Residential Tenancy Agreement. Of course, this does not mean that applicants who have not rented before are unsuitable. It does mean however, that you will need to be very prudent in checking and satisfying the other three criteria.

It is wise to check an ownership database to verify this information. If an applicant states they are living with their parents, friends or renting privately check RP Data or ABR to verify the details of ownership for the property match the details on the Tenancy Application Form.

References

References, written and otherwise, are of particular importance because they can cast light on all areas under consideration. The problem with a written reference, however, is that it may not always be what it seems. No one will provide a bad reference.

Clearly, a written reference should not be taken at face value, nor should you rely on it to provide evidence that you have investigated the applicant. Property owners expect more from you than the mere acceptance of a glowing recommendation.

Reference checking is essential. Calling the last Property Agent or property owner, calling the applicant’s employer, or the writer of any personal reference enables the Property Agent to ask questions about matters not covered in the reference. When checking with referees, the better the questions, the better the information you will receive. For example: “What sort of tenant was he?” can be better asked as “Can you give me some information on how they handled their tenancy?” You should look to framing questions around the following:

Were there any problems during the tenancy that required special intervention?

Was there cause to issue a Notice to Vacate during the tenancy? If so, what was the specific reason;

What was the payment history like?

Did they fulfil their obligations with any fixed term tenancies?

Was the bond repaid in full?

Would the referee rent to them again? Listen too for non-verbal clues that might qualify an answer. Hesitations, ‘damning with faint praise’, obvious discomfort with a question or avoidance of an answer, all could be indicators that the referee is not being totally honest with you.

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Commercial Database Checking

There are now national databases that, for a fee, provide information to Property Agents on tenant’s previous rental history. These databases vary in their composition and some record information on all tenants, some on tenants who have who caused problems for Property Agents/property owners in the past, or tenants who have a debt on a previous tenancy that is recognised by a Court Order.

The limitation of some databases is the service is only as good as the database itself. In other words, it is dependent on information being reported by other property owner/Property Agents. The longer a database has been established the more information it holds, and hence the more credible is the data it provides.

Documenting the Selection Process

The golden rule of property management is to document everything, and tenant selection is no exception. It is not sufficient to make mental notes of information gained when verifying information and checking references. The Property Agent has a clear duty of care to act in the best interests of the property owner/client at all times.

Whilst you may firmly believe that you always do that - should you have a negligence case brought against you because of poor tenant selection, then the onus is on you to prove that due care and diligence was exercised. There is no better defence than to have your Tenancy Application Form and selection process documented in your office procedures, then to be able to clearly show that you followed that process to the letter.

Once the information is supplied by the tenant via the Tenancy Application Form the selection process goes something like this:

gather information about the tenant/s;

verify that information;

compare the information against your predetermined selection criteria;

discussions with property owner/client (depending on instructions);

decision and documentation;

advice to tenant/s of the outcome.

Client involvement

Involving the property owner/client in the final selection is something you will need to consider on an individual basis, taking into account:

the procedures in your office; and

the specific instructions given by your property owner/client at the time of negotiating the Exclusive Property Management Agreement.

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There are some that would argue vehemently that failure to seek a property owner’s instructions in every instance leaves you wide open to a negligence action. Yet others would say that provided you have exercised your legal responsibilities; are able to show that you have a clearly defined selection policy, which has been strictly adhered to (with all of the information documented to back this statement up) then you should be able to make the letting decision.

There are of course some property owners who believe this is what they are paying you for, and don’t want to be involved. The Property Agent needs to realise that every Tenancy Application Form is a form of offer therefore the Property Agent would still need to verify the terms of the tenancy with the property owner and seek their acceptance. This relates to the applicant’s offer of rent per week, term of the tenancy and commencement date of the tenancy.

Whatever the instructions, it is essential that there is some level of involvement and communication with the property owner/client. From your previous communication and correspondence, the property owner/client will be aware that the property is going to be vacant. From the moment they know this, they will be concerned about the lack of rent and the expected vacancy period.

What you must do now is remain in daily contact with your property owner/client advising them of the situation. It is not enough to do a good job for the property owner - i.e., find a good tenant quickly at a premium rental. What is important is that the property owner perceives that you are doing a good job and acting in his/her best interests. Communication is the one action, which can have a huge effect on your present and future relationship, and the level of trust between you both. Golden Rule Number Two: Keep your property owner/client informed at all times.

Discrimination

The risk of an action or complaint against the Property Agent for discrimination in the tenant selection process is so great, that it deserves special attention. This is not just a good practice issue but is based on legislative requirements. Knowing the law is one issue, applying it is often difficult in practice. The most important element in discrimination is to clearly understand what is meant by discrimination. Discrimination is not about deciding someone is unsuitable as a tenant or rejecting an applicant based on your selection criteria. It is about treating people differently. So the onus is on Property Agents (and they may be held to account for this) to show that any tenant or prospective tenant has not been treated differently in the process of selection based on the fact that they are a member of a minority group. Of course the problem generally only arises when applicants are rejected, particularly when they will want to know why. They will be concerned that they will also fail with their next application and so be left homeless. Regardless of the Property Agent’s procedures,

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rejected tenants have a natural tendency to feel they have been singled out or discriminated against in some way and may look to making a complaint to the Equal Opportunity/Anti-Discrimination Commission. In this instance, prevention is far better than cure. Here’s what you can do to avoid such problems: (a) Be aware of the provisions of the Anti-Discrimination legislation. It is illegal to

make a letting decision based on any of the following criteria:

gender;

age;

race or nationality;

marital status;

the fact that they have children;

sexual preference;

disability or impairment;

pregnancy;

religion; or

political beliefs or trade union activity. (b) Educate and advise property owners regarding these requirements.

Although the property owner is your client, and legally therefore you must follow his/her instructions, this does not mean you are required to take instructions which contravene Anti-Discrimination or any other legislation.

(c) Use the same procedure for every tenant or prospective tenant - if this can be

shown through your office procedures and documentation you should not have any cause for concern.

(d) Be sensitive to applicants who are rejected. Whilst you are not required to give a

reason for declining an application at the moment, you should always respect the privacy, and confidentiality of these applicants. Treating people respectfully, whatever their circumstances will greatly diminish the risk of any complaint or claim against you. Generally it is better to phone applicants and advise them that, “I am sorry but your application has been unsuccessful.” Whether you are prepared to discuss the matter further depends on the situation. In some cases you might. In others all you can say is “I’m sorry but the application terms are not suitable to the owner”.

However, if you have not contravened any law in coming to the decision, and therefore are not open to any anti-discrimination action, then don’t worry about it. Sometimes you just have to make a hard decision and suffer the fallout that might result.

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File Management

We have already said that the golden rule of Property Management is Document, Document, Document.

Property Agents use both manual filing systems and computer database information systems to keep accurate records on tenancy transactions.

Manual Filing Systems can consist of lockable filing cabinets with files for:

Owner;

Property;

Tenant; or,

One file incorporating all under owner name or property name.

The systems vary from office to office although essentially there would be an active file containing all current information and an archived file of all documentation relating to the client, property and previous tenancies. An active file would have the:

The Authority of Instructions from the owner;

Property Description details and listing form;

Current tenancy details including all inspection and maintenance reports during the current tenancy.

An archived file would contain at least;

All legal documentation relating to previous tenancies;

Condition and Exit Reports;

Bond Finalisations;

Arrears History;

Maintenance Reports;

Maintenance costs;

Routine inspection reports;

Incident reports;

Complaints associated with the tenancy, property or client. Offices are now using suspended files that are colour coded. Not unlike a Doctors Surgery. A filing room is then accessed and is lockable for all current files and archived files are stored either on site or off site. Usually an index is available to retrieve archived files, which is either indexed by client or property. This system is more space effective and ensures information is being kept confidential and secure. The Information Database combines accounting records together with records on tenancy transactions. They support the documentation that is contained in the file by recording in chronological sequence the events that have occurred on the property.

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Learning Activity 1

1.1 Name the legislation that would impact on the process that a Property Agent adopts

for tenant selection? 1.2 Explain why it is critical that a Property Agent adopts standard selection criteria in

the processing of tenancy applications? 1.3 Why should a Property Agent involve the client in the final approval of a tenancy

application? 1.4 If a client instructed you to refuse an application simply because the applicant was a

single parent, how would you handle this situation? 1.5 What document details the legal relationship between the client and Property

Agent? Where would this document be filed?

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Chapter 2 The Residential Tenancy Act 1997 and amendments - an overview

Chapter Introduction

This Chapter is designed to give you an introduction to the use of the Residential Tenancy Act 1997 and amendments. We will look briefly at the scope of this legislation - that is when it applies and when it doesn’t. Additionally, we will give you some guidelines on how to use it as a resource document for the remainder of the course and incorporate compliance with this legislation.

Introducing the Act

The Residential Tenancy Act 1997 and amendments is a very comprehensive and modern piece of legislation. It provides guidelines for many areas of management, on which - prior to 1997 - there were no specific rulings or direction. This has resulted in great changes and challenges for Property Agents in particular and the industry in general. Prior to this Act, Property Agents resolved many situations that arose based on what was in the best interest of the property owner. The new legislation changed that because it held as a basic assumption that both tenants and property owners had equal rights.

The introduction of this legislation brought a period of some upheaval as many of the traditional approaches to rental management in Tasmania were significantly challenged. In response to this the Residential Tenancy Authority commenced a lengthy review process of the Act and its implementation, involving a wide range of industry practitioners and tenancy stakeholders. This review process culminated in a revised document known as Post Implementation Review which was tabled in Parliament in late 2001.

We now have in Tasmania an Act, which is seen to be fairer and more balanced in its approach, and which provides much clearer guidelines to both parties about what is expected. Whilst the intent of the Act has not changed, there are many provisions of the Act, which are left open to interpretation, and therefore the possibility of dispute between the parties. This makes the role of management very challenging, as the interpretation of the Property Agent may well have been different to that of the property owner or tenant. Additionally, the ultimate ruling on any tenancy situation rests with the Magistrates Court. The Act requires Property Agents to negotiate with parties and resolve situations before reaching the court – a far better outcome for all involved.

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Residential Tenancy Commissioner

The Residential Tenancy Commissioner is a person appointed by the Minister to determine disputes arising in relation to the disbursement of security deposits. This person may do anything that is necessary or incidental to carry out his or her functions.

Through the Commissioner, the Act provides property owners, Property Agents and tenants with greater access to information and a dispute resolution service that is a time and cost effective alternative to legal action.

The Residential Tenancy Commissioner has the following specific roles in relation to administration and implementation of the Act. Rental Bond (Security Deposit) Dispute Service – Rental security bond monies paid by tenants for residential premises are required to be lodged with the Residential Deposit Authority (RDA). The required bond may be paid to Service Tasmania or to a Property Agent who is registered as an agent of the RDA. In that event, the Property Agent is required to lodge the bond with the RDA within 3 working days. Bonds are refunded to the appropriate party by the RDA as directed either by agreement between the property owner/Property Agent and the tenant or direction from the Residential Tenancy Commissioner or the Magistrates Courts, at the end of the tenancy. The completion of a RDA Claim Form, signed by both parties will authorise the release of the bond by the RDA. If deductions from the bond are claimed and an agreement cannot be reached the dispute will automatically be referred to the Residential Tenancy Commissioner who will call on written evidence from both parties and make a determination based on the evidence submitted.

Using the Act - The Preliminaries

Let’s begin by looking at how the Residential Tenancy Act 1997 is put together.

The Act is divided into five parts, part three with several divisions and sub-sections, which deal with different areas. Every piece of information or ruling is numbered sequentially throughout the Act from 1 to 69. These are known as Sections of the Act, and we will use this form of referencing throughout this Unit.

Part 1 of the Act is a Preliminary Section, which sets out the legal framework for the rest of the document. It includes notes on the interpretation of particular terms, definitions, and the scope of the Act - in other words who and what it does and doesn’t apply to. You

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will note that the Residential Tenancy Act 1997 also applies to the management of mobile dwellings (or caravan parks). For the purposes of this study, we will not be dealing with this area at all.

There are some important points to note from reading division 1 of the Act:

A Residential Tenancy Agreement can exist and be enforced regardless of whether it is in writing. This complies with the basic rules of Contract Law. When a tenant applies to rent a property that application constitutes an offer to the property owner. If the property owner accepts that offer and when acceptance is communicated to the tenants, then an enforceable contract is in existence. It is of course a requirement of the Act (as we will see later) that the property owner provides a written Residential Tenancy Agreement to the tenant. However, you will note from Section 13 that the agreement is still valid even if the written form is not completed.

The normal commercial considerations need to apply and suitability of the tenant must be assessed in the normal manner. To disregard an application merely because of an age consideration would constitute discrimination. It would be in the best interests of the property owner/Property Agent to either obtain a Guardian consent or better still, a relative over the age of 18 years who will actually commit as the tenant therefore the responsibility for the property falls on this commitment.

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Learning Activity 2

1. Name 10 major terms defined in Part 1 of the Act? Make sure you are clear on the meanings of these terms, as they are used consistently throughout the Act and this Unit. 2. Does someone under the age of 18 have the right to enter into a Residential Tenancy

Agreement? Would it be a valid and enforceable agreement? 3. Tim and Marion Smith have just purchased a property through your agency, and are

unable to complete the settlement for six months. As part of the negotiations of the sale, it was agreed by the seller, who lives out of town, that the Smiths could rent the home for this period at a figure substantially less than market rental. Is it appropriate to use the standard Residential Tenancy Agreement in this situation? Explain your answer.

4. List two other ‘rental’ situations in which the Act does not apply.

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The Commencement of Tenancies

We will now look at the provisions of the Act in relation to the start of a tenancy. We will consider in much more detail the requirements of the Act in relation to Residential Tenancy Agreements. We will look at the different types of Residential Tenancy Agreements and provide you with the necessary skills to prepare, use and interpret these agreements.

Residential Tenancy Agreement - Section 10

A Residential Tenancy Agreement occurs when a person gives another the right to occupy residential premises. As such, it is a contract between the property owner and the tenant, giving the tenant exclusive possession of the property according to the terms and conditions of the agreement.

The following points should be noted from reading Section 10:

Contracting out of the Act – It is important that any inclusion of further clauses into the Residential Tenancy Agreement do not conflict with any standard terms and conditions of the Act. A conflict of terms could make the Residential Tenancy Agreement void.

The Residential Tenancy Act 1997 states: “A provision of a Residential Tenancy Agreement that is inconsistent with a provision of this Act has no effect.”

The terms and conditions of the Residential Tenancy Agreement have been standardised to a degree whereby the Act highlights those points required to be fulfilled by the agreement. The Real Estate Institute of Tasmania has produced its own Residential Tenancy Agreement that has terms and conditions approved by the Residential Tenancy Act 1997.

An example of this is:

The REIT’s Agreement has a standard clause that tenants must have the carpet professionally cleaned upon vacating and produce a receipt to the Property Agent. The Residential Tenancy Act however does not have this as a standard clause as this is not written word for word in the legislation. For the REIT condition to withstand scrutiny through the Courts the Property Agent would need to support that the carpet was professionally cleaned when the tenant first commenced occupancy.

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The property owner is required to give a written agreement to the tenant, therefore any costs associated with preparation of the agreement are borne by the property owner. Note also that an agreement is still enforceable even when it is not in writing.

A property owner is required to give a written Residential Tenancy Agreement to a tenant within 14 days after the agreement takes effect. This provision is included ensure that both parties receive a copy of the completed agreement. It is in no way intended to mean that property owners allow tenants to take possession of the property before a Residential Tenancy Agreement is signed or to hold up the commencement of a tenancy for a period of fourteen (14) days.

In practice many Property Agents have adopted a policy guideline stating that a formal sign up appointment is conducted with all new tenants. This formalises the process and gives the tenant the opportunity to make an educated and fully informed decision when entering into the agreement. It is at this point that the relationship between the Property Agent and the tenant is formally established and relationships build.

There is no clear direction in the Act about property owners giving tenants a proposed agreement to read before entering into the agreement. This is however good practice and will assist in the process of validating the importance of Residential Tenancy Agreements. It is critical that both parties understand they are entering into a legally enforceable agreement, and this should be reinforced as often as possible.

Expiry– and Extension and Renewal Section 11 – and Section 12

There are two types of Residential Tenancy Agreements in Tasmania - fixed term and no fixed term tenancy. A fixed term tenancy has a definite commencement date and expiration date (the Act stipulating that this period is for at least 4 weeks) and most commonly being for a 26 or 52 week period. A no fixed period also has a definite commencement date, ie the original agreement commencement date, but no expiration date. If the original agreement for a fixed period expires and it is not extended or renewed under Section 12, a new Residential Tenancy Agreement for a no fixed period is established. The difference between the two lies mostly in different requirements for Notice of termination by either party.

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A No Fixed Term Tenancy requires that: Should they require tenants to vacate their property, property owners give tenants at

least 28 days notice by way of a Notice to Vacate on the following grounds: o if the premises are to be sold; o renovated; or o used for another purpose.

Tenants in turn are required to give property owners 14 days Notice of Termination.

A Fixed Term Tenancy means that both parties are contractually bound to the tenancy until the end of the agreement. Should neither party give notification to the other party of their intention to terminate the tenancy, then the fixed term tenancy automatically reverts to a No Fixed Term tenancy after a period of 28 days after expiry. After this 28 day period concludes there is no requirement to complete a new agreement as the terms and conditions of the original Residential Tenancy Agreement apply, with the only difference being that the fixed term has now expired and has become a No Fixed Term tenancy. The renewal of a fixed term tenancy at the conclusion of the first term requires the completion of a new agreement signed by all parties. The agreement may only be extended or renewed within 28 days after it has expired. It is advisable that either an entire new agreement be negotiated during this 28 day period or, if there are no changes to the original Residential Tenancy Agreement in terms or conditions, a written extension of the original document extending the tenancy to a new fixed date can be established. This document is to be signed by all the original parties to the tenancy. This can save costs and time to the agency as the document is often only one page as opposed to a full Residential Tenancy Agreement.

However should either party wish to end a tenancy at the expiry of the fixed term then:

The property owner is required to give the tenant a Notice to Vacate requesting vacant

possession of the property on lease expiry date. The is a 28 day notice and must be given 28 days prior to the end of the lease.

The tenant is able to return possession of the property back to the property owner on the day of expiry without providing any notification. Part 3, Section 11 of the Act explains that an agreement for a fixed period, unless earlier terminated under Part 4, expires on a date specified in the agreement.

With the exception of the above examples, in all cases both property owner and tenant are required to give their Notices to the other party in an ‘approved form’, as outlined in Section 40 (for tenants) and Section 44 (for property owners).

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Form of Notice of Termination from a tenant is required to state the following:

The date of service of the Notice;

The name of the tenant;

The name of the owner;

The residential premises to which the Notice applies;

The details of the ground on which the Notice is served;

The date on which the notice takes effect. Form of Notice to Vacate from a property owner is required to state the following:

The date of serving the Notice;

The name of the tenant;

The name of the owner;

The residential premises to which the Notice relates;

Details of the reason for which the Notice is served.

The date on which the Notice takes effect. Since the Residential Tenancy Agreement defines the rights and obligations of both parties, either party has the right to serve a Notice on the other party for a breach of the agreement. Depending on the circumstances, the offending party is asked to remedy the situation. If this is not done within a specified time, then the aggrieved party may have the right to terminate the Residential Tenancy Agreement. A standard REIT Residential Tenancy Agreement is included on the following pages. You should take the time now to read through this agreement thoroughly. It has been written in plain English and is designed to be easy to understand and complete.

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COPYRIGHT by the

REAL ESTATE INSTITUTE OF TASMANIA

RESIDENTIAL TENANCY AGREEMENT

VERSION 3.0 July 2013

IMPORTANT NOTICE

This is an agreement between the owner and the tenant for the tenant to have the right to occupy residential premises in exchange for a rent and a security deposit. The individual details are as listed in the Schedule attached to this Agreement. Nearly all the terms in this agreement are included under a Law called the Residential Tenancy Act 1997 as amended and any regulations made pursuant to that Act (referred to in the rest of this agreement as "the Act"). If there is any dispute about the meaning of any word in this agreement, it has the meaning given in the Act. If there is any inconsistency between the Act and this agreement, the Act will take precedence. Tenants must be aware that their goods are not covered by any insurance taken out by the owner, and they have to take out their own cover if they want insurance for their goods.

REPRODUCTION OF THIS AGREEMENT IN ANY FORM IS STRICTLY PROHIBITED

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RESIDENTIAL TENANCY AGREEMENT SCHEDULE

INDIVIDUAL DETAILS

Owner: ......................................................................................................................................................................

......................................................................................................................................................................

......................................................................................................................................................................

......................................................................................................................................................................

Tenant: ......................................................................................................................................................................

......................................................................................................................................................................

......................................................................................................................................................................

Approved Occupants: ......................................................................................................................................................................

......................................................................................................................................................................

Start Date: ......................................................................................................................................................................

(If Start Date is conditional upon an event (eg vacancy or sale) insert here) ...................................................................................

Fixed Period: ......................................................................................................................................................................

Change Date: ......................................................................................................................................................................

Premises: ......................................................................................................................................................................

(If relevant, describe any area not included in the Premises) ............................................................................................................

Rent: ......................................................................................................................................................................

......................................................................................................................................................................

Security Deposit: ......................................................................................................................................................................

Nominated Repairers: ......................................................................................................................................................................

Electrical: ......................................................................................................................................................................

......................................................................................................................................................................

Plumbing: ......................................................................................................................................................................

......................................................................................................................................................................

Glass: ......................................................................................................................................................................

......................................................................................................................................................................

Maintenance: ......................................................................................................................................................................

......................................................................................................................................................................

Approved ......................................................................................................................................................................

Cleaning Company: ......................................................................................................................................................................

PRIVACY ACT (COMMONWEALTH) 1988 - COLLECTION NOTICE The personal information the prospective tenant provides in this application or that which is collected from other sources is necessary for the Agent to verify the Applicants identity, to process and evaluate the application and to manage the tenancy. The Agent may disclose information (including information with respect to the sale of the property) to other parties including the Real Estate Institute of Tasmania, media organisations, potential buyers, existing and potential future clients of the agent, parties engaged to evaluate the property, owner corporations, government and statutory bodies, financial institutions, and by publication on the Internet. Information already held on tenancy reference databases may also be disclosed to the Agent and/or landlord. Unless you advise the Agent to the contrary, the Agent may also disclose such information to The Real Estate Institute of Tasmania Ltd (REIT) for the purpose of documenting all leasing data in the area for the benefit of its members as part of membership services and for others in the property or related industries, and so as to assist them in continuing to provide the best possible service to their client. In providing this information, you agree to its use, unless you advise the Agent differently. The privacy policy of the REIT can be viewed on its website www.reit.com.au. If the Applicant enters into a Residential Tenancy Agreement and if the Applicant fails to comply with their obligations under the Agreement, that fact and other relevant personal information collected about the Applicant during the course of the tenancy may also be disclosed to other parties, including those referred to above. The Agent will only disclose information in this way to other parties to achieve the purposes specified above or as otherwise allowed under the Privacy Act. If the Applicant would like to access this information they can do so by contacting the Agent at the address and contact numbers contained in this Application or the REIT on (03) 62234769. The Applicant can also correct this information if it is inaccurate, incomplete or out of date. If the information is not provided, the Agent may not be able to process the application and manage the tenancy.

I / We ......................................................................................................................................................................................................................

Acknowledge that I/We have read and understood the contents of this Privacy Collection Notice Date ...................................

.................................................................................................................................................................................................. (Tenant/s to sign)

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RESIDENTIAL TENANCY AGREEMENT

INDEX 1. Agreement 2. Rent 3. Security Deposit 4. General Repairs 5. Urgent Repairs 6. Emergency Repairs 7. Cost of Urgent or Emergency Repairs 8. Termination by a Tenant 9. Termination by Court 10. Termination by Owner 11. Termination by Abandonment 12. Termination by Early Vacation 13. Termination by Agreement 14. Sale of Abandoned Goods 15. Subletting 16. Vacant Possession 17. Use of Premises 18. Looking After the Premises 19. Privacy 20. Right of Entry 21. Locks and Security Devices 22. Tenant's Liability for Action of Others 23. Record of Rent 24. Notification of Owner's name and address 25. Tenant's Bills 26. Parking 27. Body Corporate Rules 28. Breach of Agreement 29. Notice 30. Smoke Alarms 31. Additional Clauses

1. AGREEMENT (1) Individual Details

This is an agreement between the people shown on the schedule, and with the individual details shown on the Schedule that is attached to this agreement, and which is a part of the agreement.

(2) Fixed Period The fixed period of this agreement lasts from the start date (see Schedule) until the change date (see Schedule) and for the fixed period shown on the Schedule.

(3) During Fixed Period Between the start date and the change date the agreement can be ended if it is specifically terminated by the tenant (see clause 8) or the owner (see Clause 10) or by agreement of the tenant and the owner (see Clause 13) or a Court Order (see Clause 9). It cannot be terminated just because one party wants to.

(4) After Fixed Period When the fixed period is finished, the agreement does not automatically end. Twenty eight (28) days after the period ends the agreement automatically changes from a fixed period agreement to a no-fixed-

period agreement and goes on for an indefinite time unless it is terminated.

(5) First 28 Days In the first twenty eight (28) days after the fixed period has ended, the agreement can be extended for a further fixed period if both parties agree so long as it is done in writing. Either party can terminate the agreement if they want to during this period by a fourteen (14) days notice given by the tenant (see Clause 8) or the owner (see Clause 10), just because they want to. But if it is not terminated or extended it continues indefinitely on the same terms until it is terminated by the owner, the tenant, an agreement between the owner and the tenant, or a Court Order. The tenant cannot just move out, and the owner cannot just move someone in without the proper notices.

(6) Subject to section 47C of the Act, if the tenant includes more than one (1) person, each person is jointly and severally liable under the agreement. This means each person is individually liable for all damages for breach of the agreement, although each person has a right to seek reimbursement from the other persons to share equally in the liability. Any tenant who ceases to occupy the premises is not liable for any loss caused by an act or omission of any other tenant who remains in occupation of the premises if that act or omission occurred after the tenant who has ceased to occupy the premises has left. The onus of proving when an act or omission causing loss occurred is on the tenant who has left the premises.

(7) Only the persons named as tenant or as an approved occupant may occupy the premises. If any other person becomes a permanent occupier without the written consent of the owner that person will be a trespasser.

(8) The owner must provide the tenant with a copy of this agreement within fourteen (14) days after the start date.

2. RENT (1) Rent must be paid a fortnight or calendar month in

advance (as notified by the owner) as from the start date until the agreement is validly terminated.

(2) Every six (6) months the rent can be increased by a reasonable amount upon the owner giving sixty (60) days notice in writing to the tenant. If the tenant thinks the increase is unreasonable, an application can be made to a Magistrate to decide the dispute.

(3) If rent is paid in cash or by cheque the owner must give the prescribed receipt.

3. SECURITY DEPOSIT (1) Unless otherwise agreed, the tenant cannot take

possession of the premises until payment of the security deposit.

(2) The owner must give the tenant a bond lodgment form with the owner’s signature which states the amount of

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the security deposit (being no more than 4 weeks rent). The bond lodgment form must be signed by the tenant and any person who contributed to the security deposit.

(3) The security deposit must be paid by the tenant with the completed bond lodgment form to either: (a) the Rental Deposit Authority; or (b) if the premises are managed on the owner’s behalf

by a property agent either: (i) to that property agent, who is required to

lodge the bond within 3 days of receipt; or (ii) to the Rental Deposit Authority.

(4) The owner must give the tenant two (2) copies of a report stating the condition of the premises on or before the day the tenant occupies the premises, and the tenant must agree or disagree with the report by writing on it what they disagree with, signing it and returning it to the owner within two (2) days.

(5) Within three (3) working days of the termination of the agreement the owner must give to the tenant a claim form signed by the owner. If the owner believes they are entitled to a disbursement of the security deposit, the claim form must include:

(a) the reason for the disbursement of the security deposit to the owner; and

(b) the amount that it is considered should be disbursed to the owner or an estimate of the date on which it is expected that the amount will be determined.

(6) If the owner, all tenants and all deposit contributors agree with the claim form and endorse the claim form any person may lodge the claim form with the Rental Deposit Authority.

(7) The owner may lodge a claim form with the Rental Deposit Authority if the tenancy has ended and if the deposit contributor has not lodged a claim form with the Rental Deposit Authority, and a) within 10 days after it was given to the tenant

under clause 3(5) it has not been lodged by the tenant, or

b) the owner has been unable to give the claim form to any tenant after taking all reasonable steps to do so.

(8) If the tenant has not received a claim form from the owner within 3 working days from termination of the residential tenancy agreement the tenant may lodge a claim form with the Rental Deposit Authority.

(9) If the tenant disputes a claim form received from the owner, the tenant may lodge with the Commissioner of the Rental Deposit Authority a dispute at any time before the claim form is lodged with the Rental Deposit Authority or in all other cases within 10 days after the lodgment of the claim form with the Rental Deposit Authority.

4. GENERAL REPAIRS (1) The owner must maintain the premises as nearly as

possible in the condition they were on the day this agreement was entered into except for reasonable wear and tear.

(2) The tenant must notify the owner of any repairs needed in respect of the premises within seven (7) days of the need arising.

(3) The owner must carry out any repairs specified in the notice that are not the tenant's fault within twenty eight (28) days of being notified.

(4) The tenant must carry out any repairs to the premises (including pipes) which are the tenant's fault within twenty eight (28) days of the need arising.

5. URGENT REPAIRS (1) If the water, sewerage, grey water and sullage or

electricity supplies, or the heating, cooking stove or hot water service ceases to function, (excluding problems caused by electrical fuses, light globes, tubes or tap washers which must be fixed by the tenant) the tenant must notify the owner as soon as practicable of the need for urgent repair.

(2) If the owner cannot be contacted or does not arrange for the repairs to be done within twenty four (24) hours after being notified, the tenant can authorise the nominated repairer or another suitable repairer to make the service function again. If the owner arranges for the repairs to be carried out within twenty four (24) hours after being notified, the owner must ensure that the repairs are actually carried out as soon as practicable.

6. EMERGENCY REPAIRS (1) If premises are damaged, and if the damage is not

repaired further damage is likely to occur as a result, (for example a hole in the roof), then the tenant must notify the owner as soon as practicable.

(2) If the owner cannot be contacted promptly, the tenant may authorise the nominated repairer or another suitable repairer to fix the damage so far as is necessary to stop any further damage occurring. If the owner arranges for the repairs to be carried out within twenty four (24) hours after being notified, the owner must ensure that the repairs are actually carried out as soon as practicable.

7. COST OF URGENT OR EMERGENCY REPAIRS

(1) The cost of any urgent or emergency repairs done by a nominated repairer has to be paid by the owner, but if liability is disputed, it can be decided by a Magistrate.

(2) The cost of any urgent or emergency repairs done by a suitable repairer has to be paid by the tenant, and the owner must reimburse the tenant. If there is a dispute it can be decided by a Magistrate.

8. TERMINATION OF AGREEMENT BY A TENANT

(1) The tenant can only terminate the agreement if: (a) The owner has breached the agreement in some

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way, (for example by failing to carry out repairs); or

(b) The tenant wishes to, and the change date has passed without extension of the fixed period so the agreement is a no-fixed-period agreement.

(2) The tenant can only terminate the agreement by giving a Termination Notice stating a date at least fourteen (14) days after the notice is served when the agreement will end.

(3) If the Termination Notice is given because the owner has breached a provision of the agreement, other than a provision relating to repairs, and the owner fixes the breach before the fourteen (14) days runs out, then the notice has no effect and the agreement stays in force.

(4) The Termination Notice must state: (a) The date of service of the notice; (b) The name of the tenant; (c) The name of the owner; (d) The address of the premises;

(e) The details of the reason the notice is served; (f) The date more than fourteen (14) days after the

date of service on which the agreement is to end.

9. TERMINATION BY COURT (1) Either party can apply to a Magistrate for an Order to

terminate the agreement because the other party: (a) Has or is likely to cause serious damage to the

premises or their contents or to any neighbouring premises; or

(b) Has or is likely to cause physical injury to themselves, another party to the agreement or an occupier of neighbouring premises.

10. TERMINATION BY OWNER (1) The owner may terminate the agreement by serving

on a tenant of the premises a Notice to Vacate for any of the following reasons:

(a) The tenant has failed to comply with the agreement in some way (for example by failing to pay the rent on time); or

(b) The agreement expired less than twenty eight (28) days before the service of the Notice to Vacate; or

(c) The agreement is not for a fixed period and the premises are to be sold, renovated or used for another purpose; or

(d) The agreement is due to expire not more than twenty eight (28) days after the service of a Notice to Vacate where that Notice to Vacate requires the tenant to vacate not earlier than the change date; or

(e) An order has been made under section 86 of the Land Titles Act 1980 for foreclosure of the premises; or

(f) The premises are to be sold pursuant to section 78 of the Land Titles Act 1980; or

(g) The tenant has caused a nuisance at the premises which is substantial.

(2) A Notice to Vacate must state:

(a) The date of service of the notice; (b) The name of the tenant; (c) The name of the owner; (d) The address of the premises; (e) The details of the reason the notice is served; and (f) The date more than fourteen (14) days after the

date of service on which the agreement is to end.

(3) A Notice to Vacate takes effect: (a) fourteen (14) days after the Notice is served for

one or more of the reasons set out in sub-clause (1)(a), (b) or (g);

(b) twenty eight (28) days after the Notice is issued for one or more of the reasons set out in sub-clause (1)(c), (e) or (f);

(c) fourteen (14) days after the Notice is served for the reason set out in sub-clause (1)(d) but not before the change date.

(4) If the reason for the Notice is because the tenant has breached a provision of the agreement, and the tenant fixes the breach before the fourteen (14) days runs out (for example by repairing damage the tenant has caused) then the Notice has no effect and the agreement stays in force EXCEPT if the tenant has received two (2) prior Notices to Vacate for non payment of rent in the preceding 12 months, in which case the breach cannot be fixed any more and the Notice to Vacate will take effect regardless of what the tenant does and the agreement will end after the fourteen (14) days runs out.

(5) A Notice to Vacate expires after the period of 28 days from the date on which it took effect.

11. TERMINATION BY ABANDONMENT (1) Premises are abandoned if the tenant stops occupying

them without any valid Termination Notice or Notice To Vacate being delivered.

(2) If a tenant abandons premises the tenant is liable to the owner for:

(a) rent payable under the agreement from the date of abandonment until the date on which another residential tenancy agreement for the premises is entered into or the date on which the agreement could have been terminated under the Act if another residential tenancy agreement for the premises is not entered into before that date; and

(b) any other loss arising from the abandonment.

(3) If a tenant abandons premises the owner must take reasonable steps to re-let the premises and reduce loss as much as possible.

12. TERMINATION BY EARLY VACATION (1) Early vacation of premises occurs if the tenant stops

occupying them without any valid Termination Notice or Notice to Vacate being delivered and if the tenant has notified the owner of his/her intention to stop occupying the premises.

(2) If a tenant vacates premises early the tenant is liable to the owner for:

(a) rent payable under the agreement from the date of

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early vacation until the date on which another residential tenancy agreement for the premises is entered into or the date on which the agreement could have been terminated under the Act if another residential tenancy agreement for the premises is not entered into before that date; and

(b) any other loss arising from the early vacation. (3) If a tenant vacates premises early the owner must

take reasonable steps to re-let the premises and reduce loss as much as possible.

13. TERMINATION BY AGREEMENT (1) If both the tenant and the owner wish to terminate

the agreement early, they can always agree to do so.

(2) The agreement to terminate early may include terms of compensation as part of the agreement, and this will be binding on the parties.

(3) If one party does not wish to terminate early by agreement, subject to clause 12, the other party cannot break the lease without being liable for breach of the agreement in accordance with Clause 28.

14. SALE OF ABANDONED GOODS If a tenant leaves goods on the premises after an agreement is terminated, the owner can dispose of them if they seem to have no value, sell them if they seem to be worth under Three Hundred Dollars ($300.00), or get a Magistrate's permission to sell them if they seem to be worth more than Three Hundred Dollars ($300.00). The proceeds of sale can be used for compensation to the owner, and any balance not collected by the tenant within six (6) months is forfeited to the Government.

15. SUBLETTING (1) The tenant must not rent the premises to someone

else, transfer this agreement, give possession of the premises to someone else, or allow extra people to permanently occupy the premises without the consent in writing of the owner.

(2) If the owner consents to any such requests, subject to clause 1(6), all of the old tenants and the new tenants will be bound by this agreement.

(3) The owner cannot unreasonably refuse to give that consent, or charge the tenant for giving that consent except for reasonable expenses caused by giving that consent.

16. VACANT POSSESSION The owner must ensure the premises are vacant on the start date and the tenant must ensure the premises are vacant on the day after the agreement ends.

17. USE OF PREMISES The tenant must not use the premises for anything other than a residence, and must not cause or permit a nuisance to be made on or from the premises.

18. LOOKING AFTER THE PREMISES

(1) The tenant must keep the premises reasonably clean, and in the same condition they were in on the start date apart from reasonable wear and tear.

(2) Looking after the premises means, in addition to anything else, that the tenant must:

(a) Keep all baths, sinks, water pipes, drains, drain pipes and toilet systems cleaned and maintained;

(b) Clear any stoppage or blockage in any pipes caused by the tenant's conduct;

(c) The Tenant agrees that he/she shall be responsible for the periodic replacement of electric light globes and other consumable items such as fluorescent starters, fuses and tap washers. The Tenant further acknowledges that, unless details of missing or malfunctioning items were included in the condition report, all electric globes, tubes and starters for all light fittings were present and in working condition as at the commencement of the Tenant’s occupancy of the property;

(d) Notify the owner of any leaking taps not the fault of the tenant, and fix leaking taps, which are the fault of the tenant;

(e) Replace broken or cracked glass, which is the fault of the tenant;

(f) Remove marks, scratches and stains which are the fault of the tenant;

(g) Repair all damage caused by the tenant or any person coming onto the premises with the tenant's stated or implied consent;

(h) Keep the garden and grounds belonging to or surrounding the premises neat and tidy and in the same order and condition as they were in at the start date;

(i) Supply a garbage can with a tight fitting lid and place all rubbish and refuse securely in it and regularly place it in a position required by the collectors on the days set aside for garbage collection; and

(j) Hire and pay for a chimney sweep to clean and sweep any chimney once each winter and to keep all forms of heating free of lint and other contaminants and to ensure filters of heat pumps are cleaned regularly in accordance with the manufacturers instructions.

(k) Maintain and clean any swimming pool on the premises so that it is suitable for human use at all times.

(3) Looking after the premises means, in addition to anything else, that the tenant must not without the consent of the owner in writing:

(a) Throw or permit to be thrown any fat, tea leaves or other solid matter down any sink, drain or pipe;

(b) Paint, drive nails or screws into the walls, ceilings or floors;

(c) Fix anything to the walls, which will mark or damage the walls or paint work;

(d) Make any alteration or addition to the premises; (e) Put up any placard, sign, board or advertisement; (f) Hang any clothes or other articles out of the

windows or on the outside of the premises other than on clothes drying facilities provided;

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(g) Use a kerosene heater; (h) Keep on the premises any animal, bird or other

pet; (i) Obstruct the premises or permit any

obstructions; (j) Accumulate or permit any accumulation of

rubbish, refuse or material. (k) Carry out any car repairs or maintenance other

than cleaning or polishing. (l) Break, scratch, scrape or otherwise damage in

any way any part of the premises. (m) Smoke or allow to be smoked any cigarette,

cigar, pipe or other device inside the premises.

(4) When the tenant leaves the premises, they must be left in the same condition, as nearly as possible, apart from reasonable wear and tear, as they were in on the start date, and the tenant for that purpose must:-

(a) Return all keys to the owner by 2.00pm on the day after the agreement ends;

(b) Polish all floors; (c) Clean all sinks, hand basins, baths, shower

recess and toilets; (d) Remove all marks from walls caused by the

tenant; (e) Defrost and clean the refrigerator, turn off the

power and leave the fridge door open; (f) Clean the stove inside and out, front and sides

and top and bottom; (g) Clean all venetian blinds; (h) Clean all windows and doors internally and

externally; (i) Ensure that all lawns are mowed and the garden

is in good order; (j) Remove all garbage and rubbish from the

premises; (k) Remove all the tenant's goods; and (l) Have the carpets professionally cleaned by a

professional cleaning company, approved by the owner.

(m) Have the premises professionally fumigated, if consent has been granted under clause 18(3)(h) for any animal, bird or other pet to be kept on the premises.

19. PRIVACY An owner of residential premises must not interfere with the reasonable peace, comfort and privacy of the tenant other than as specified in this agreement or permitted by law and must pay by the due date all rates and land taxes in respect of the premises.

20. RIGHT OF ENTRY (1) The owner of the premises may enter the premises at

any time without the tenant's permission if it is reasonably believed that: (a) The tenant is ill or injured and is unable to give permission; (b) A denial of immediate access is likely to result

in damage to all or part of the premises; (c) There is a risk to the tenant or another person

present on the premises; (d) Damage has occurred to the premises; or (e) The premises have been abandoned.

(2) The owner of the premises may enter the premises on giving twenty four (24) hours' notice to the tenant for any of the following reasons:

(a) To meet commitments under this agreement; (b) If it is reasonably suspected that the tenant has

breached the agreement; (c) To check that repairs have been properly carried

out; and (d) To carry out an inspection within one (1) month

of the start date; and (e) To carry out routine inspections once every three

(3) months. After giving the notice specified in sub-clause (2) the owner may enter the premises during any period the tenant agrees to or, if there is no agreement, between the hours of 8am and 6pm as specified by the owner.

(3) If a Notice to Vacate or Notice of Termination has been given, the owner of the premises may within 28 days of the expiry of the agreement enter the premises without the tenant's approval to show the premises to one prospective tenant only and any persons accompanying the prospective tenant:

(a) On not more than one occasion on any one day; (b) On not more than 5 days in any one week;

(c) On the giving of at least 48 hours' notice in writing to the tenant;

(d) Between the hours of 8am and 6pm.

(4) If a Notice to Vacate or Notice of Termination has not been given, the owner of the premises may enter the premises without the tenant's approval to show the premises to one prospective tenant only and any persons accompanying the prospective tenant: (a) On not more than one occasion on any one day; (b) On not more than 5 days in any one week; (c) On the giving of at least 48 hours' notice in

writing to the tenant; (d) Between the hours of 8am and 6pm.

(5) If the owner wishes to let the premises the owner may, with the prior written approval of the tenant, by notice to the public, invite prospective tenants to inspect the premises in the presence of the owner within the period specified in the tenant's approval.

(6) The owner of the premises may enter the premises without the tenant's approval to show the premises to one prospective purchaser only and any person’s accompanying the prospective purchaser: (a) On not more than one occasion on any one day; (b) On not more than 5 days in any one week; (c) On the giving of at least 48 hours' notice in

writing to the tenant; (d) Between the hours of 8am and 6pm.

(7) If the owner wishes to sell the premises the owner may, with the prior written approval of the tenant, by notice to the public, invite prospective purchasers to inspect the premises in the presence of the owner

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within the period specified in the tenant's approval.

21. LOCKS AND SECURITY DEVICES (1) The owner must install and maintain adequate locks

and security devices to secure the premises. (2) No party may add, alter or remove any lock or

security device without the permission of the other party or a Court Order and a copy being given to the other party.

(3) The tenant may apply to a Magistrate for an order that the owner comply with either sub-section (1) or (2) of this clause.

22. TENANT'S LIABILITY FOR ACTION OF OTHERS

The tenant is liable for anything done by any person who is on the premises with the tenant's stated or implied permission.

23. RECORD OF RENT The owner must keep a record of all rent received

from the tenant for five (5) years after the agreement is terminated.

24. NOTIFICATION OF OWNER'S NAME AND ADDRESS

(1) The owner must by the start date notify the tenant in writing of the full name and address of the owner or any agent of the owner or if a corporation the name of a responsible officer and the address of the registered office.

(2) The owner must notify the tenant of any change to such a name and address.

25. TENANT'S BILLS (1) The tenant must pay all charges to, for or on behalf of

the tenant in respect of: (a) gas, (b) electric light and power,

(c) telephone calls, rental and installation on the premises,

(d) water consumption charges if the residential premises are equipped with a device that calculates the amount of water used at those premises; and

(e) all other charges levied by any competent authority providing services (other than water charges if the premises is not equipped with a device that calculates water used at those premises); and

(f) charges for reading meters and issuing accounts for gas or electricity used by the tenant.

(2) The tenant further acknowledges and agrees that the electricity supply to the property must remain connected until a vacating inspection occurs.

(3) The tenant must pay for any water consumption charge levied on an owner by a council for water consumed by the tenant and any other competent authority if permitted by the Act.

26. PARKING The tenant must not use any part of the premises nor any part of any other property owned by the owner for the standing, storing or parking of the tenant's vehicle or vehicles unless an area is specifically set aside for that purpose, in which case the tenant must use only that area.

27. BODY CORPORATE RULES The tenant must comply with any applicable By-Laws of any Body Corporate of the premises that are existing or introduced by it from time to time provided they do not conflict with the Act. The tenant acknowledges having received a copy of the Body Corporate By-Laws relating to the premises before entering into this agreement.

28. BREACH OF AGREEMENT (1) If any party does not do something that has been

agreed will be done (such as pay rent or do repairs) or does something prohibited by the agreement (such as damage the premises) the other party is entitled to:

(a) Terminate the agreement in accordance with the terms set out above and the Act, and also

(b) Payment of compensation for losses arising from the breach of agreement (such as rent until a substitute tenant is found, associated costs and advertising expenses); and also

(c) Be repaid any costs (such as Court fees, solicitors fees, service fees and so on) reasonably incurred in getting the compensation.

(2) The owner is: (a) Obliged to take all reasonable measures to

minimise any loss or damage to the premises; (b) Obliged to take all reasonable measures to enter

into a new residential tenancy agreement for the premises with another tenant as soon as possible after the early vacation or abandonment of the premises;

(c) Not entitled to be paid for any loss or damage that occurs because of the failure to take those measures.

(3) Subject to clause 28 (2) it is specifically agreed that if the tenant does not return the key by 2.00pm the day after the agreement ends, one days rent will be payable as compensation for that and one days rent will be payable for every day that the keys are not returned.

29. NOTICE (1) Any notice to be given under this agreement is

sufficiently given: (a) If left at the last known address of the party to

whom it is directed; (b) If posted to the last known address of the party to

whom it is given; or (c) If handed to the party to whom it is given.

(2) Any notice left or posted to an address shall be deemed to have been given on the second day after it has been posted or left.

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30. SMOKE ALARMS The tenant MUST: (a) Test and clean the smoke alarms in the property

every six months; (b) Advise the Property Agent of the Owner if the

alarm/s do not function as intended; and (c) Replace the smoke alarms batteries (other

than 10-year non-removable batteries) every 12 months.

31. ADDITIONAL CLAUSES (If required)

IN WITNESS WHEREOF THE PARTIES TO THIS AGREEMENT HAVE SIGNED IT THIS DAY OF

................................................. ....................................................... Day/Month Year SIGNED by the tenant ) ..................................................................................................................................................

In the presence of: ) ..................................................................................................................................................

SIGNED by the owner ) ..................................................................................................................................................


SIGNED by the Property Agent as agent for the owner) …………………………. ........................................................


(NOTE: owner is not required to sign where the owner has appointed the agent to sign on behalf of the owner pursuant to Management Agreement or other Authority)

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Associated Documents

It is a requirement that all tenants be given the following associated documents at the start of a tenancy which is the day they take possession of the property:

Condition Report - Section 26

If a property owner requires a tenant to pay an amount as a security deposit (bond), the owner is to give the tenant 2 copies of a report stating the condition of the premises and its contents, on the day on which the tenant occupies the premises.

This report is to specify the general state of repair of the premises and must be signed by the owner. It is a requirement of the Act that it be completed by the property owner/Property Agent and given to the tenant prior to them taking possession of the property.

The tenant would then sign 3 copies (the original which is kept in the office and the 2 copies which are to be given to the tenant). On receipt of the 2 copies of the report the tenant is required to inspect the property to ascertain that the report is correct The tenant is then required to return one copy of the report to the owner (or Property Agent) within 2 working days.

It is essential that tenants are made aware of the importance of returning the Condition Report within two working days of moving in, so that any discrepancies or areas of disagreement can be discussed and resolved. They need to be made aware of the fact that you will be using this Form for the determination of their bond refund on the conclusion of their tenancy, so it is in their interest to comply with this requirement.

In many instances the Condition Report takes the form of a statement by one party to another (property owner or Property Agent to tenant) regarding the condition of the property at the start of the tenancy. This was not the intention when the form was designed. It is intended to be an agreement between the parties as to the condition of the property. This means that the mere completion of the form is insufficient to meet your obligations. Property Agents need to take a proactive approach to problem solving by getting actively involved in communicating with new tenants regarding any discrepancies on the Condition Report. Any actions taken at the start of the tenancy to ensure agreement on the condition of the property should be noted on the form, to streamline the process on completion. If a Residential Tenancy Agreement is wholly or partly oral, the owner is to provide to the tenant a copy of any information relating to the rights and obligations under the residential tenancy agreement, as the Director of Consumer Affairs may direct.

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There is a booklet available called The Rental Guide which includes information on:-

the rights, duties and obligations of tenants in a variety of situation;

the procedures for resolving disputes under the agreement; and

the resources available for advice or assistance during the tenancy.

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- CONDITION REPORT -

Property Address: ________________________________________________________________________

Owner: ________________________________________________________________________________

Tenant: ________________________________________________________________________________

ROOM ITEM G F P COMMENTS

ENTRY Doors/Walls/Locks

Ceilings/Light Fittings

Windows/Screens/

Sill/Tracks/Locks

Blinds/Curtains

Floor Coverings

Power Points

Passage

LOUNGE Doors/Walls

Windows/Screens

Tracks/Locks

Blinds/Curtains


Floor Coverings

Heating

Power Points

Other

KITCHEN Doors/Walls

Windows/Screens/

Sills/Tracks/Locks

Blinds/Curtains


Floor Coverings

Cupboards/Drawers

Benchtops/Tiling

Sinks/Taps

Stove Top

Grill

Oven

Refrigerator

Exhaust Fan/Power Points

Other

G=Good; F=Fair; P=Poor

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DINING Doors/Walls

Windows/Screens/ Sill/Tracks/Locks

Blinds/Curtains


Floor Coverings

Heating

Power Points

Other

BEDROOM Doors/Walls

ONE Wardrobe/Drawers

Windows/Screens/Sills/Tracks/Locks

Blinds/Curtains


Floor Coverings

Heating

Power Points

Other

ENSUITE Doors/Walls

Windows/Screens/Sills/Tracks/Locks

Blinds/Curtains


Floor Coverings

Bath

Shower Screen

Wash Basin/Vanity

Toilet

Tiling

Heating

Power Points

Other


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BEDROOM

TWO

Doors/Walls

Wardrobe/Drawers

Windows/Screens/

Sill/Tracks/Locks

Blinds/Curtains


Floor Coverings

Power Points

Other

BEDROOM Doors/Walls

THREE Wardrobe/Drawers

Windows/Screens/

Sills/Tracks/Locks

Blinds/Curtains


Floor Coverings

Power Points

Other

BATH- Doors/Walls

ROOM Windows/Screens/

Sills/Tracks/Locks

Blinds/Curtains


Floor Coverings

Bath

Shower/Shower Screen

Wash Basin/Vanity

Tiling/Taps

Mirror/Cabinet

Towel Rails

Toilet

Heating/Power Points

Other


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LAUNDRY Doors/Walls

Windows/Screens/

Sill/Tracks/Locks

Blinds/Curtains


Floor Coverings

Trough/Taps

Washing Machine

Dryer/Power Points

Other

TOILET Doors/Walls

Windows/Screens/

Sills/Tracks/Locks

Blinds/Curtains


Floor Coverings

Cistern/Bowl

Other

GARAGE Doors/Walls

Windows/Screens/

Sills/Tracks/Locks


Floor Coverings

Power Points

Other/Work Benches

RUMPUS/ Doors/Walls

FOURTH

BEDROOM

Windows/Screens/

Sills/Tracks/Locks


Wardrobe/Drawers

Blinds/Curtains

Power Points

Floor Coverings

Other


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AREA ITEM G F P COMMENTS

Storeroom

Carport

Out Building/GardenShed

Driveways

Concrete Paths

Gates/Fences

Gardens

External Doors

Staircases

Balcony/Porch/Sundeck

Letterbox

Hot Water System

Street Number

Keys

Door Locks

Recycling Bin

Washing Line

Security System

TV Aerial

Smoke Alarm(s)


Further Items:


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NOTES:

RESIDENTIAL PREMISES – CONDITION REPORT PRIVACY ACT (COMMONWEALTH) 1988

COLLECTION NOTICE Personal information collected by the Agent through this report is necessary to manage the tenancy. The information collected in this report may be disclosed, by use of the internet or otherwise, to other parties including the landlord, trades people, financial institutions, other agents, solicitors, parties engaged to evaluate the property, third party operators of tenancy reference databases, government and statutory bodies and other third parties as required by law. Information already held on tenancy reference databases may also be disclosed to the Agent and/or landlord.

If you would like to access this information you can do so by contacting the Agent using the details provided below.

You can also correct this information if it is inaccurate, incomplete or out of date.

If the information is not provided, the Agent may not be able to manage the tenancy effectively.

Agents Contact Details: I/We Insert names(s) of Tenant(s) Acknowledge that I/We have read and understood the contents of this Privacy Collection Notice. Tenant(s) to Sign Date Signature at Date

Owner ________________________________________ Commencement __________________ _________________

________________________________________ Completion __________________ _________________

Tenant ________________________________________ Commencement __________________ _________________

________________________________________ Completion __________________ _________________

Water Meter Location Water Reading

Commencement __________________

Completion __________________

__________________

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Body Corporate By-Laws –

This only applies when the rental property is part of a Strata Title Development. All Strata Title Developments have a body corporate – this falls under the Strata Titles Act.

It is advisable to provide the tenant with either a copy of the actual body corporate by-laws, or more appropriately an explanation of the obligations of the tenants in relation to these by-laws. They should clearly spell out the body corporate rules in relation to noise, parking, visitors, and presentation of the property, the keeping of pets and any other relevant aspects. Rent - Section 17 - 24

It is important with tenants to establish clearly at the start of the tenancy where and how rent is to be paid. Of course this is also noted in the Act. The Act requires tenants to pay their rent on time and in advance for a payment period.

Rent can be paid by:

cash or cheque;

direct bank deposit to an account specified by the property owner/Property Agent;

credit card;

electronic fund transfer;

payroll deductions (or pension deduction); or

a method agreed to by all parties.

Rent accrues on a daily basis while the tenant occupies the premises, or holds the premises after termination. Despite any rent owed by a tenant, property owners cannot seize or hold the tenant’s property or goods in return for unpaid rent.

You will note that the Act specifies what is to be included on the rent receipt. In agency practice the provisions of the Property Agents and Land Transaction Regulations 2006, in relation to trust account management also controls this. The Residential Tenancy Act 1997 does not mention the requirement to give the tenant a receipt if the money is paid by electronic means or direct transfer. The Property Agents and Land Transaction Regulations 2006 provides for all trust money to be accounted for, however if the trust money is received by EFT, unless requested to do so, the Property Agent does not need to issue a receipt to the tenant.

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An example of a trust account receipt is shown below. You will note how this layout fulfils the requirements of both the Property Agents and Land Transactions Regulations 2006 and the Residential Tenancy Act.

It is a general requirement that tenants pay two weeks rent in advance at the start of a tenancy and are thereafter required to keep their payments in advance at all times.

Security Deposits or Bonds- Section 25

A rental bond is money paid by a tenant, usually to Service Tasmania or Property Agent at the start of a tenancy as a security against the tenant breaching the terms of the Residential Tenancy Agreement. By law, no more than four times the weekly rent can be charged as a rental bond.

Summaries of the important points from these sections are as follows:

The rental bond is an amount (other than rent in advance) intended to be available for the financial protection of the property owner against the tenant breaching the Residential Tenancy Agreement.

TRUST ACCOUNT RECEIPT NO:

Date ………………….

Cash/Cheque/EFT ……………………Drawer …………………………………………

Received from: ……………………………………………………………………………………

The Sum of …………………………………………………………………………….

Being For: …………………………………………………………………. $.

………………………………………………………………………………………….

…………………………………………………………………. Total $

Account: ………………………………………………………

Signed:

Property Agent’s Name ABN/ACN

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When a tenant pays a bond to the Property Agent the tenant/s and Property Agent are required to complete a Bond Lodgement Form. This form together with the bond is to be lodged with the Rental Deposit Authority (RDA) within 3 day of receipt.

A receipt must be given when the rental bond is received and signed by the person receiving the bond. The details to be included in the receipt are set out in the Property Agents and Land Transactions Regulations 2006.

Note –An owner must not require or receive more than one security deposit in relation to one Residential Tenancy Agreement. A property owner is able to note the individual contributions to the bond if two or more co-tenants require this. This information should be detailed on the Residential Tenancy Agreement to avoid any confusion or dispute at the conclusion of the agreement and to enable correct distribution of funds. It is common practice amongst Property Agents to avoid this practice of differentiating which tenant contributed what amount of bond at the commencement of a tenancy. The main reason for this is to make all tenants responsible for the entire property, not what they see as their “share”. Again this helps prevent disputes at the conclusion of a tenancy.

At the conclusion of the Residential Tenancy Agreement, the owner/Property Agent is to return the security deposit to the tenant less any amount due to the owner arising from the non-performance of the Residential Tenancy Agreement by the tenant.

Key and Holding Deposits- Section 17 (1c) and (2a)

A key deposit is an amount paid to a Property Agent or property owner for the use of a key to enter and inspect premises with a view to renting the premises. Whilst this is viewed as a risky, if not dangerous, practice it is acknowledged that some Property Agents still persist in doing it. Apart from the normal risk management procedures, which should be instigated, key deposits paid to the Property Agent are receipted and refunded upon return of the key. Key deposits are not receipted into the Trust Account, but rather into a separate general account. At this time it is also advisable to obtain a copy of the prospective tenant’s Drivers Licence details and a contact telephone number. The Property Agent must have the Property Owner’s permission if keys are to be handed out to prospective tenants to view vacant properties

Additionally, prospective tenants may be required to pay a holding deposit for premises they are considering renting. This is at the discretion of the property owner or Property Agent involved. However, it is really important that the guidelines of the Residential Tenancy Act 1997 are followed in this regard, as there is a penalty for non-compliance. The term ‘holding deposit’ was used in the industry long before the current Act was written, it is imperative that you understand just what it means for the purposes of the Act.

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Section 31 of the Act provides the following definition for ‘holding agreements and fees’:

(1) “The owner of residential premises that are unoccupied and a

prospective tenant may enter into an agreement to hold the premises for the future occupancy of the prospective tenant for a specified period exceeding 7 days”,

(2) “The holding agreement may impose a fee payable by the prospective

tenant as a condition of the holding agreement.”

It is common practice for a holding deposit to be obtained from the prospective tenant to “secure” the particular property until that tenant is able to commence a tenancy. Once a prospective tenant has been confirmed as a successful applicant for a property then the money paid forms part of the bond and initial first two weeks rent payment. A receipt must be provided for the initial deposit stating clearly that it is a holding deposit. This means that the property owner/Property Agent must keep the property available for the tenant. Depending on office procedures, it is usually done after the tenant’s application is approved. Bear in mind that if the tenant doesn’t sign the lease agreement when the deposit is paid and then changes his/her mind and decides not to rent the property the deposit is to be refunded and the property is still on the market. Should the tenant sign the lease agreement when the deposit is paid and then decide not to rent the property it then becomes a lease break situation and penalties may apply

The Residential Tenancy Act 1997 stipulates that:- “an owner/Property Agent must not require or receive from a tenant or prospective tenant any money or other consideration for entering into, renewing, extending or continuing a residential tenancy agreement other an –

(a) rent in advance for the relevant payment period; and (b) a security deposit; and (c) a holding fee”

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Starting a New Tenancy

In Introduction to Property Management we spent some time looking at the role of Property Agents with new tenancies. Having now studied in detail the requirements for Residential Tenancy Agreements and associated documents, we can summarise those aspects of new tenancies, which are governed by the Residential Tenancy Act 1997. You will realise by this stage that legal requirements impact on Property Agents in the following areas of implementing new tenancies:

taking of holding deposits;

management of security deposits to include the maximum security deposit which can be taken, and its receipting;

preparation and execution of Residential Tenancy Agreements and the associated documentation;

providing information in relation to the Residential Tenancy Agreement to tenants prior to their signing the Residential Tenancy Agreement; and

management of Condition Reports.

Condition Reports

The way in which these are managed will govern both the number and severity of bond disputes at the finalisation of tenancies. You can virtually eliminate disputes by ensuring:

attention to detail and accuracy in the initial Report;

the tenant is made aware of how important the report is;

that it is returned by the tenant within the prescribed period. (It is easy to say that it is the tenant’s responsibility to do this, however it is also your responsibility to minimise losses for the property owner); and

that any differences between your observations and the tenant’s findings are addressed and corrected, if necessary, at the beginning of the tenancy.

Residential Tenancy Agreement

Again you can eliminate or minimise the difficulties that arise during or at the conclusion of tenancies by following a few simple rules. You need to ensure that:

the Residential Tenancy Agreement is signed by all parties in the correct format prior to the commencement of the tenancy - that is, prior to them moving into the property;

tenants are given copies of the relevant associated documents as required under the Act, and as listed on the Residential Tenancy Agreement;

you explain clearly the standard terms of the Residential Tenancy Agreement and highlight the relevant areas on the actual agreement;

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tenants understand that rent is paid in advance, and clearly know when their rental payments are due; and

tenants know that the property owner has a right of entry during the tenancy, but there are strict guidelines, which will be followed.

The old adage certainly applies here - “Prevention is better than cure!” It is a very important part of your role to ensure that you employ effective preventative management procedures. Some of them may seem unnecessary, until a problem or dispute arises. It is often only then that we appreciate the time taken at the beginning of tenancies to educate, inform and really manage the situation on behalf of the property owner.

On the following page is an example of the type of checklist an office may use during a Formal Sign Up Appointment to ensure all the legislative and office procedures have been followed.

Checklist for commencing new tenancies.

Clauses contained within the Residential Tenancy Agreement are explained to the tenants;

Tenants to read through the Residential Tenancy Agreement prior to signing;

The signing of the agreement is witnessed and endorsed ;

1 copy of the Residential Tenancy Agreement, after signing, is supplied to the tenant;

2 copies of the Condition Report are provided to the tenant;

Condition Report obligations are explained to the tenant, ie. 1 copy is required to be returned to the Property Agent within 2 days;

Failure to return a copy of the Condition Report makes the original document to be a true representation of the condition of the property;

Information booklet outlining the rights and responsibilities of both tenants and property owners is provided;

Security Deposit equivalent of up to 4 weeks rent is paid and receipted into the Trust Account;

The first 2 weeks rent is paid and receipted into the Trust Account;

Property keys are photocopied and provided to the tenants.

An annual inspection and test of the smoke alarms has been conducted prior to any new tenancy.

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Property Owner’s Obligations at the Start of a Tenancy

We have considered so far the documentation that the property owner must provide to commence a new tenancy. There are a number of other obligations on a property owner, which relate specifically to the property they are going to provide. The important points to note here are: The property owner must ensure that there is no legal impediment to the tenant being given occupation of the property, eg

The property owner must actually be the legal owner of the property;

There must be a current certificate of occupation provided by the local authority (this applies specifically to new buildings, where occupation must await final building and health department approval from the local authority);

The Property Owner must ensure that the smoke alarms in the property are working and back up batteries or 9 volt batteries are replaced at the commencement of a new tenancy, or were tested and batteries replaced at least annually.

The property owner may in some instances require permission from their mortgagee to rent the property;

The property owner must ensure that there is vacant possession of the property on the day the tenancy is due to commence. (This can present a problem if for some reason the previous tenant did not vacate as advised, hence the reason for having tenants issue the correct Notices in the approved manner.)

The property owner must take reasonable steps to ensure that the tenant has quiet enjoyment of the property, this means without interference by the owner of the premises. Once possession of the property is given over to the tenant they have sole rights to occupy it, apart from the right to enter given to the property owner under the Right of Entry provisions. Property owners need to be aware of this and comply with this requirement of the Act;

The property owner must ensure that the premises and inclusions are clean (fit to live in, good repair and not in breach of any health or safety regulation).

As the property owner’s agent representative the Property Agent has a clear duty to ensure these requirements are complied with in every respect.

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Learning Activity 3

Case Study - Joe Thomas

You have just received a phone call from Joe Thomas. He explains he owns a house in your area, and he has heard that, “you run a good business”. Joe has the house rented - the current tenants are friends of his and paying the rent directly to Joe. He thinks they’ve been living there for about 3 to 4 months. Joe is preparing to go overseas and he’d like to sell the property before he goes and he thinks the property is ideal for an investor. You have asked him to bring in all his paperwork and arrange to inspect the property together, before he departs. Joe appears happy with this and the appointment time is set.

1. Apart from the Exclusive Property Management Agreement and the Title Search, what

information or documentation do you need to get from Joe in relation to this tenancy?

Case Study

You are the Property Manager for Top Rentals Pty Ltd of Hobart and have in place the following policies and procedures relating to tenancy practices.

Tenants are required to make rental payments by direct deposit to your nominated bank by use of an identification number or pay direct to your office by cash or cheque;

Tenants are required to report maintenance matters to your office during business hours;

If after hours emergency maintenance is required tenants are connected to a paging service, which is attended by Property Managers on a roster basis.

A new management listing has just been secured. A quality newly built 2-bedroom unit at 4/21 High Street, Bellerive with single car garage with internal access, quality carpets, drapes and fittings and expansive views over the Derwent River to Hobart City. There is a Westinghouse dishwasher, 4 plate electric range and is one of 6 units in the complex. The property is listed at an asking rent of $310.00 per week. The owner has been advised that a rental range of $290.00 to $310.00 per week would be considered realistic. The owner, Mr Fred Brown, has recently purchased the unit as an investment and he resides at 565 Smith Street, North Hobart 7002. You have just shown Mary and Don Friend through the unit and they have fallen in love with the location and the views. They have submitted a Tenancy Application Form requesting approval on a 12-month lease term, commencing on 9th October 2009 at a rental of $300.00 per week. The Tenancy Application Form is in the name of Mary and Don Friend however they have friend, John Bloke, who lives with them but will not be party to the tenancy. They wanted to move in on a Friday as that is their payday. Mary and Don would like to transfer their bond of $1,200.00 from their previous premises. You explain your strict office

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policy that security bonds must be paid on signing of the Residential Tenancy Agreement and before keys to the property are released. The Tenancy Application Form is approved on 7th October 2009 and Mary and Don are so keen, they come into the office to complete all paperwork that afternoon. Learning Activity 3.1

Prepare the Tenancy Application Form and the Residential Tenancy Agreement using the forms provided at the end of this Unit.

Learning Activity 3.2

List the documents that you will give to Don and Mary at this appointment and explain your answers.


Explain the implications to the Property owner/Property Agent and Tenant if the Condition Report is not completed thoroughly at the commencement of the tenancy.


What type of tenancy are Don and Mary entering into?

Learning Activity 3.5 What is the requirement for the lodgment of bonds? Quote the relevant section of the Residential Tenancy Act specifying this requirement.

Learning Activity 3.6 List the functions of the Residential Tenancy Commissioner in relation to tenancy disputes and compliance issues.

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Chapter 3 Rights, duties and obligations during the tenancy Unit introduction

In this Chapter, we will start to focus on what occurs during the tenancy and how the Residential Tenancy Act 1997 impacts on property management practice. We will look at issues such as maintenance of properties, security of properties, tenancy renewals, rent changes, entry to properties and what occurs when a rental property is listed for sale.

Condition of Rental Properties

Important points to note here include:

The property owner is responsible for all maintenance to the property. The property must be maintained in a condition as near as possible as to the condition at the commencement of the tenancy as detailed in the Condition Report, which is fit for the tenants to live in and which does not breach any health or safety regulation. Additionally the property owner must keep any common areas clean.

Should a property owner fail to comply with this obligation under the Act, the tenant may make application to a Magistrate for an order that the owner carry out any reasonable repairs that do not arise from any fault of the tenant. The Magistrates Court has the power to order the work to be carried out.

If a tenant wishes to attach fixtures or make any structural changes to the property they must apply to the property owner for permission to do so. Any agreement reached between the parties must be in writing and state the nature of the work and whether any fixtures are to be removed or what state the property is to be left in at the end of the tenancy. The property owner must act reasonably in making this agreement. Both parties are bound to it.

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Urgent Repairs and Emergency Repairs Section 33 and Section 34

The Residential Tenancy Act 1997 requires property owners to take immediate action in the event of one of these ‘urgent’ or ‘emergency’ situations. The Act allows for the nomination of urgent and emergency repairers by the property owner on the Residential Tenancy Agreement. In the event that the tenant has not been able to contact the property owner or the property owner has failed to respond quickly to a request for emergency repairs and the damage is likely to result in further damage to, or deterioration of, the premises, the tenant may authorise one of the following to repair the damage: (a) a nominated repairer; (b) if there is not a nominated repairer, a suitable repairer.

‘Urgent Repairs” relate to specifics in the Act, and must be repaired as soon as possible. Emergency Repairs are to be carried out only to the extent that is required to prevent further damage or deterioration of the premises. The cost of repairs is to be paid by the owner, if carried out by a nominated repairer or by the tenant if carried out by a suitable repairer. If a suitable repairer carried out the repairs the tenant is to give the property owner the following documents:

(a) a statement from the repairer as to the apparent cause of the need for repair;

(b) a copy of the statement of account; (c) a receipt of payment of the account.

The property owner is then to reimburse the tenant with the correct amount within 14 days after receiving the documents unless the owner makes an application under Section 36 of the Act which refers to the disputing liability to reimburse.

Entry to Properties- Section 56

Whilst a tenant is given sole rights of occupancy to a property, the property owners reserve the right to enter the property provided they comply with the provisions of the Residential Tenancy Act 1997 in relation to Notice periods.

Entry to a property does not therefore need the permission or agreement of the tenant provided the correct time periods are adhered to. Having said this, it is important to acknowledge that tenants have the right to ‘quiet enjoyment’ of the property. This has some implications when planning inspection times and the frequency of inspections.

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The Act states that Right of Entry is subject to the following criteria: (1) An owner must not enter the premises without the tenant’s permission; A penalty does

exist for non-compliance of this action. (2) An owner may enter the premises at any time without the tenant’s permission if it is

reasonably believed that;

the tenant is ill or injured and is unlikely to give permission;

denial for immediate access is likely to cause damage to the property;

there is a risk to the tenant or other present persons on the premises;

damage has already occurred to the premises; or

it is reasonably believed that the premises have been abandoned. (3) An owner is able to enter the premises without the tenant’s permission between

8.00am and 6.00pm by giving at least 24 hours’ notice to the tenant if entry is for one of the following reasons:

to meet commitments under the Residential Tenancy Agreement;

if it is reasonably suspected that the tenant has failed to comply with any provision of the residential tenancy agreement;

to ensure that repairs have been properly carried out;

to carry out routine inspections once every 3 months;

to carry out an inspection of smoke alarms on an annual basis. It is very important for the Property Agent to communicate with the tenant and manage each situation on a case by case requirement. The Act acknowledges that the meaning of Property Agent refers to a person authorised by an owner to act on behalf of the owner in any matter to which this Act relates, therefore including anyone the property owner appoints to act on their behalf (including a selling agent, valuer, or a tradesperson appointed by the property owner).

Restriction of general inspections

As detailed above, the Act stipulates that routine inspections can be conducted once every 3 months. This also includes inspections by property owners, therefore it is of benefit for a Property Agent to establish a good relationship with the tenant and build a bond.

Entry Notice

It would be good business practice to provide a Notice to the tenant when the property is required to be entered stating the reason for the proposed entry and what time and date the agreed, if agreed, entry would be conducted.

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Management of Properties Listed for Sale

Whilst there are no specific sections of the Act, which relate to this, there are a number of places where there are some effects on sales.

Listing of Rental Properties

It is not a specific requirement of the Act that tenants are told of a property owner’s intention to sell the property they are renting.

As part of good management practice the managing Property Agent and selling Property Agent should have a procedure in place whereby the tenant is advised of the appointment to sell and how it will affect the tenancy in place.

Generally, selling Property Agents will contact the tenants to discuss how they anticipate the sale will take effect. This enables the Property Consultant to discuss issues regarding inspections and open homes direct with the tenants concerned. Without the co-operation of the tenants the Property Consultant’s job could be made all that much more difficult.

It is advisable that progress reports be directed to the Property Manager/Assistant Property Manager to assist in the preparation of any required documentation necessary in completing a sales contract, ie. relevant vacating Notice to existing tenants depending upon what term of lease the tenancy exists in.

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Entry to Properties

Property owners need to be very well educated about the implications of selling a tenanted property. If a property owner is very dependent on the cash flow from the rental of the property at the same time as it is listed, then it will be critical that the secondary (selling) Property Agent does not do anything which might jeopardise the tenancy. This could constitute a breach of the Property Agent’s duty of care to the client.

1) An owner may enter the property if the tenant has given notice or the owner has

given notice or to show a prospective purchaser

Once a day

Not more than 5 days per week

By giving 48 hours notice in writing

Between the hours of 8.00am and 6.00pm 2) Open Homes

Should the owner of rented properties wish to sell his/her property he/she must have the tenant’s prior written permission to conduct open homes

Properties Sold

A fixed term Residential Tenancy Agreement represents an encumbrance on the property and is therefore transferred to the new owner as part of the conveyance. It would be good practice to either prepare a new Residential Tenancy Agreement, which indicates to the tenants that there is a new owner of the property or simply to write to the tenants advising them of the change of ownership and how this affects them, eg. a change of maintenance instructions, etc. Note: a new Exclusive Property Management Agreement would need to be completed by the new owner to enable further management of the property.

If vacant possession of the property is required in order to affect the sale, then the required Notice periods must be given to terminate the tenancy. We will discuss termination later in this Unit.

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Rent Increases during a Tenancy- Sections 20

You will note the following:

Rent can be increased during a fixed term tenancy providing the Residential Tenancy Agreement provides for a rent increase.

An increase in the rent may only take effect from a day that is:

(a) more than 60 days after the day on which the Notice is given; or (b) if the Residential Tenancy Agreement commenced less than 60 days before the day

on which the Notice was given, more than 6 months after that commencement; or (c) if rent has been previously increased, more than 6 months after the last increase; or (d) if a magistrate makes an order under section 23(3), more than 6 months after the

date of that order.

Tenants have the right to appeal to a Magistrate in a Magistrates Court if they believe a rent increase is excessive and unreasonable. This is not an attempt by the Act to ‘cap’ rents but rather gives tenants the right to seek an independent judgement on a rent increase.

This has some important management implications. An excessive rent increase is not in anyone’s best interests. Until recently the only remedy a tenant had in this situation was to terminate the tenancy, leaving a vacant and overpriced property. Should a property owner request an excessive rent increase the Property Agent would respond with appropriate information necessary to ‘educate’ the property owner as to market place realities. This would include information on properties currently vacant and listed or advertised for rental. It would also include comparative properties in the Property Agent’s portfolio and any marketplace statistics such as those produced by the REIT on average rentals achieved.

Unreasonable Rent- Section 23

In determining whether an increase in the rent is unreasonable, the Magistrate will consider - (a) The general level of rents for comparable residential premises in the locality or a

similar locality; and (b) Any other relevant matter.

If satisfied that the increase in the rent is unreasonable, the Magistrate can order that the increase in the rent be changed to an amount that does not exceed a specified amount.

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Security of Properties- Section 57

You will note the following from this reading:

The property owner is held responsible for providing what is considered reasonable security for tenants, which may vary from one location to another. However, this only relates to the provision of locks and keys. If a tenant feels that the locks are inadequate they may apply to the Magistrates Court for an order authorising that party to alter, add or remove any lock or other security device. Either party may also change the locks if there is a good reason and with the permission of the other party, also providing the necessary keys to the other party.

Charging for Services to the Property

During a tenancy the tenant is required to connect and pay for the services to the property of electricity, telephone and gas. In the event that these are not individually metered then the way in which the charge is to be calculated or apportioned must be agreed at the start of the tenancy and documented in the Residential Tenancy Agreement.

With the introduction of the water “User Pays” system throughout Tasmania, the charging of water should be agreed to at the start of a Residential Tenancy Agreement.

If a property is individually metered, ie. an exact usage is able to be calculated, then it is common practice that the tenant pay for the kilolitres used and charged for the period of their occupancy.

It is important for Property Agents to establish the whereabouts of the water meter at the property and to take accurate readings at the commencement and termination of the tenancy period. Local Councils/water authorities are able to offer assistance, if required. However, if the property is not individually metered then water usage cannot be charged to the tenant in the same way that other services can be. Water can only be charged as it is used – this means it is not acceptable to charge a flat fee or a percentage of the total water account. Water can only be charged at the rate at which the local authority or provider charges. The charging for water can be done when the account is provided to the property owner or when the tenant vacates, but will in most instances require a pro-rata calculation to be done. The Condition Report should include a space for the ingoing water meter reading, which facilitates this process, and where the meter is actually located at the property for easier future reference.

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Breaches of the Agreement or the Act by either party

Breaches by the Property ownerProperty Agent

If a property owner/Property Agent breaches the terms of the Residential Tenancy Agreement or the Act, then the tenant can issue a Notice of Termination to the property owner/Property Agent. If the breach is remedied there is no further action by the tenant. If they fail to remedy the breach within the statutory period, ie. within 14 days after the Notice is served, the tenant may vacate the property.

There are three possible outcomes to this situation once a Notice to Terminate has been issued:

the property owner/Property Agent remedies the situation within the period of Notice. In this case the tenant is required to remain at the property;

the property owner/Property Agent fails to remedy the situation and the tenancy terminates;

the property owner/Property Agent may disagree with the grounds given in either Notice and apply to the Magistrates Court for an order to resolve the dispute and continue the tenancy.

Note: By the time the property owner/Property Agent registers a dispute the tenant may well have left the property. Should the property owner/Property Agent wish to make a claim for all or part of the bond or seek further compensation from the tenant/s, they need to continue the dispute process and seek a hearing from the Magistrates Court.

A tenant may withdraw a Notice to Terminate after it has been served.

In much the same way, where a tenant has breached the terms of the Residential Tenancy Agreement, the property owner/Property Agent can issue a Notice to Vacate.

If the tenant breaches the Residential Tenancy Agreement and is given a Notice to Vacate by the property owner/Property Agent, the Notice takes effect on a date specified in the Notice. That date is:

(a) at least 14 days after the Notice is served if the reason for serving the Notices is for failure to comply with any provision of the agreement or that the agreement expired less than 28 days before the service of the Notices, (Section 42(a) and (b));

(b) at least 28 days after the Notice is served if the agreement is not for a fixed period and the premises are to be sold, renovated or used for another purpose. (Section 42(a)(c)).

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If a tenant receives a Notice to Vacate for failure to pay rent, this Notice is of no effect if the tenant pays all arrears in rent before expiry of that Notice. This is, however, not the case if 2 or more Notices for non-payment of rent have been served on the tenant during the immediately preceding 12 months.

A Notice to Vacate is of no effect if served on a tenant for failure to comply with a provision of the Residential Tenancy Agreement, if the tenant complies with the provision before the period referred to in the Notice expires.

Resolving disputes

Residential tenancy can become a source of disagreement, if either of the parties fail to meet the terms of the Residential Tenancy Agreement. Although there is a formal legal process to decide such disputes, the Act encourages those involved in the tenancy to resolve such disagreements between themselves rather than by recourse to the courts. Professional management practices, such as clearly defined policies, and early recognition and intervention of problems, are particularly important to this resolution process.

Best practice would suggest that all complaints from either a client or customer should be handled via a company’s internal complaint process before encouraging external intervention via the Magistrates Court. Often disputes escalate if not dealt with in a timely manner. Most agencies are requesting in their complaint procedure for the complaints to be in writing

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The Magistrates Court

The Magistrates Court is the body which has the power to rule on unresolved tenancy disputes or conflicts. It is quite separate from the Residential Tenancy Commissioner and whilst taking into account the proceedings which have occurred, and the guidelines set by the Residential Tenancy Act 1997, it ultimately operates under its own guidelines and jurisdiction.

Generally applications are made to the Magistrates Court to either enforce the provisions of the Residential Tenancy Act 1997, or to terminate a Residential Tenancy Agreement.

The Residential Tenancy Act 1997 does not provide any specific reference to either Urgent or Non Urgent applications to the Magistrates Court. This lack of reference and detail within the Act can contribute to time delays in hearings causing some situations to escalate if a decision is not provided quickly, this is the case when dealing with orders relating to abandonment and vacant possession.

The Residential Tenancy Act 1997 does provide for Orders being obtained for the following circumstances, under the following sections of the Act:

Section 16 – Order relating to inconsistency;

Section 23 – Order declaring unreasonable rent increase;

Section 36 – Order determining liability of repair costs;

Section 41 – Order of termination;

Section 45 – Order for vacant possession;

Section 46 – Order declaring Abandonment.

Court applications and outcomes

The submission of a Tenancy Dispute to the Magistrates Court is the final step available to either party to resolve the dispute. To prevent one party being unfairly disadvantaged in the process, there are restrictions to legal representation before the Court. However, Property Agents are generally permitted to represent property owner’s, although you may be required to show documentary evidence that you are a legal representative of the property owner. Given these restrictions and the finality inherent in the process, it is most important that applications to the Court are presented in a manner, which both comply with the legal requirements and give the property owner the best possible chance of a satisfactory outcome.

The onus is, therefore, on Property Agent to thoroughly prepare and present a complete and accurate claim to the Magistrates Court. Apart from all of the copies of the forms, which the application requires, the applicant should prepare a concise summary of events for the referee to peruse. This not only saves time, but also indicates that you are a professional person who has taken the time to organise the evidence and present it in its best manner.

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Disputes and the Residential Tenancy Act 1997

Even with the best management practices disputes can, and do, arise in every office. They can occur at any point during a tenancy, usually as a result of one party breaching some part of their Residential Tenancy Agreement, but also commonly at the termination of a tenancy. Once a breach or area of conflict has developed into a dispute - that is, it is no longer able to be resolved within your office, then the aggrieved party can apply to the Real Estate Institute of Tasmania for assistance to resolve the dispute or to the Property Agents Board for formal disciplinary action to be taken against the Property Agent

Other resources available as a means of seeking information of rights are:

The Office of Consumer Affairs and Fair Trading; The Tenants Union of Tasmania; Legal Aid Commission of Tasmania .

Under the provisions of the Act, both parties must attempt Dispute Resolution for many matters before resorting to the Magistrates Court for a decision. Other more urgent matters can be referred directly to the Magistrates Court for a decision.

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Learning Activity 4

4.1 You are an Assistant Property Manager and a tenant contacts you and says that she never received an entry Notice for the inspection just completed. Your first reaction is to log this conversation on the tenant/property file on the computer. Explain the process that would be adopted via the Residential Tenancy Act 1997 and to resolve this dispute. 4.2 If a tenant issued a Termination Notice for unauthorised entry would the tenant be able to proceed to Magistrates Court to make an application to terminate the tenancy? Yes/No

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Chapter 4 Termination of Residential Tenancy Agreements

Chapter introduction

In this Chapter we will deal with the responsibilities of property owners/Property Agents and tenants when terminating Residential Tenancy Agreements. There are various ways in which a Residential Tenancy Agreement can be finalised or terminated and all of these are covered in the Act. A Property Agent needs to be professional and unbiased in their approach to this important area. This ensures minimal losses to the property owner, whilst at the same time respecting the rights of the tenant. In this Chapter we identify the correct procedures and the documentation necessary to comply with the Residential Tenancy Act 1997 requirements for termination, as well as the possible outcomes if the tenant fails to comply with the terms of their Residential Tenancy Agreement.

Termination - General guidelines

Residential Tenancy Agreements can only be terminated in accordance with the Residential Tenancy Act 1997 in one of the following ways:

The tenant provides vacant possession to the owner as a result of their agreement to terminate the Residential Tenancy Agreement;

The tenant provides vacant possession to the owner following a Notice to Vacate by the owner;

The tenant delivers vacant possession to the owner following a Notice to Terminate by the tenant;

The Magistrates Court orders for the delivery of vacant possession to the owner;

The recovery of vacant possession of the premises by the owner following abandonment of the premises.

It is very important this is clearly understood. The absence of a tenant from a property does not necessarily mean that the tenancy is terminated. A formal termination process must be instituted by the Property Agent to ensure that the owner of the property can rightfully seek possession of the property again.

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In order for a termination to be considered valid, there must also be a formal handover of the property. This can be done voluntarily following the issue of the Notices, the tenant might abandon the property or the tenant may be removed from the premises following an order from the Magistrates Court.

In each of these cases there is a formal termination agreement and a vacating of the property.

Reasons for Termination by property owners and tenants

A Notice to Terminate can be issued to either party for any of the following reasons:

A no fixed period Residential Tenancy Agreement can be terminated without ground (ie, without the need to state any reason) by the tenant giving two weeks’ Notice. A property owner/Property Agent is required to give to the tenant at least 28 days after the Notice is served, if the property is sold, renovated or used for another purpose, if the tenancy is on a no fixed period. Note: - renovating means structural changes not painting, renewing of carpet or replacement of drapes – this is classed as refurbishment

Agreement Frustrated

Either party can terminate the Residential Tenancy Agreement if the premises are wholly or partly destroyed, or can no longer be used legally as a dwelling (except if the damage was caused by a breach to the agreement, ie, wilfully damaged by the tenants). This also applies if the premises have been compulsorily acquired by an authority (eg Road or Rail resumption of land). The Notice to Terminate is given on the grounds of “Non-Liveability” or “Compulsory acquisition” as appropriate.

Termination by the Magistrates Court

A property owner may make an application for a termination of the tenancy by the Magistrates Court on the basis of

Failure to leave the premises:

The property owner gave a Notice to Vacate and the tenant failed to leave within the prescribed time period or

Excessive Hardship:

Where a tenant or property owner finds they would suffer excessive personal hardship if a Residential Tenancy Agreement were not terminated, the parties should try to remedy the matter through mediation and can terminate the Residential Tenancy Agreement by mutual consent (in exceptional circumstances).

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Damage or injury –

The tenancy may be terminated by the Magistrates Court, following an application by the property owner/Property Agent; if it believes the tenant has or will cause damage or injury to either the premises or other people (including neighbours and their property).

Termination by other parties

Action of Mortgagee

A Mortgagee in Possession can terminate a tenancy by giving 28 days Notice to a tenant, if the property is to be sold under the Land Titles Act.

Procedures for issuing Notices

The Application Forms for the Magistrates Court need to be obtained from the Magistrates Court Office.

Notice Periods

Section 38 - Notice of Termination issued by tenant

A Notice to Terminate by the Tenant may be issued by the tenant for the following reasons;

28 days after the lease agreement expired

The tenant is a no fixed term tenant

A Notice to Terminate for these reasons takes effect after 14 days. Note: In accordance with the Residential Tenancy Act the tenant is not required to give notice should they wish to vacate the property on lease expiry. Section 42 - Notice to Vacate issued by owner

A Notice to Vacate by the Owner may be served for the following reasons;

The tenant has failed to comply with any provision of the agreement

The tenant has caused a substantial nuisance

Less than 28 days has lapsed since the agreement expired

A Notice to Vacate for these reasons takes effect after 14 clear days

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An Owner may serve a Notice to Vacate if:

The fixed period agreement is due to expire within 28 days after the service of the notice

The agreement is for no fixed period and the property is to be sold, renovated or used for another purpose

The property is to be sold to a lending institute to recover monies owed by the owner.

A Notice to Vacate for these reasons takes effect after 28 clear days.

As you can see, the Act provides a number of possible Notices available for transactions between property owners and tenants. Importantly, the person giving the relevant Notice must allow for the correct notice period or the Notice may be invalid. If this was the case, ie, the Notice was ruled invalid, the server of the Notice would have to reissue another Notice, thereby giving the defaulting party more time.

Calculating days for Notice Periods

Notice periods refer to numbers of clear days. The period does not include the day the Notice is delivered. For example, say we are serving a 14 day Notice to Vacate on a tenant. Today is the 1st of the month. Even if the Notice is personally delivered today, day 1 starts tomorrow – ie 2nd of the month and ends at 12.00 midnight on the 15th of the month. We therefore are can take possession of the property the next day. This makes a total of 16 days.

Method of delivery

For personal delivery, a Notice can be delivered personally to the tenant, delivered personally to the person who pays the rent (if not the tenant), or by placing the Notice in the letterbox. It is not permissible, according to the Act, to enter the property to deliver Notices. Also when hand delivering Notices always consider what would be considered “reasonable”. In particular, Property Consultants delivering Notices for 24 hours for entry to show a prospective buyer. If you deliver a Notice in the morning knowing full well that the tenant won’t receive the Notice until late that night, the tenant may challenge the Notice on the grounds that the Notice period was not reasonable as the Property Consultant acted in a manner that wasn’t fair and reasonable.

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Finalisation procedures – The Bond

Regardless of how the tenancy is terminated - voluntarily by the tenant, as a result of an unremedied breach, or compulsorily by the Magistrates Court - there are strict procedures which must be followed in accordance with the Act and the Residential Tenancy Agreement in relation to the legal entitlements to the refund of all or part of the bond monies.

As we have identified earlier the security deposit is a payment held in lieu of the tenants returning the property to the property owner in good clean condition. Its impending refund can therefore provide a clear incentive to tenants both during and at the conclusion of a tenancy to maintain the property and to leave it clean and undamaged. Having said that, in no circumstances does the bond money automatically become the property of the property owner. Likewise, the property owner does not have any right to use the bond money for payment of rent money owing to the property owner.

The Act specifies that a Security Deposit is obtained as security for the performance of obligations under the Residential Tenancy Agreement.

Final Inspections

When a tenant vacates a property or the Residential Tenancy Agreement is terminated for some other reason, the final inspection serves an important function not only to ensure that the property is ready for re-rental, but to assess whether the outgoing tenant has complied with their obligations and therefore their bond entitlement.

Exit Condition Report

There are no legal obligations for both parties (that is the property owner/Property Agent and tenant) to inspect the property together contained in the Residential Tenancy Act 1997. Neither is there reference to a formal outgoing Condition Report being required.

Good management practice suggests that the documenting of a final inspection, ie. bond inspection, with reference to the completed Condition Report prior to the commencement of the tenancy, should be carried out It is at this point, the bond inspection, that most disputes or conflicts regarding the bond refund can be managed or even avoided altogether.

Pre-vacating inspections are a form of management practice within offices. They are

conducted in the presence of the tenants, at the property, enabling Property Managers to inspect and point out items requiring attention to bring the property up to a standard whereby the security deposit could be refunded without delay to the tenant. Again, this practice helps to avoid conflict at the termination of Residential Tenancy Agreements.

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Bond Refunds

There are a number of considerations that you need to be aware of in relation to bond refunds. These include:

Payment by a supplier (eg Anglicare/Colony 47) - There is provision to repay the bond to the supplier rather than the tenant. You need to be aware of the agency’s contribution at the commencement of the tenancy when completing a bond refund.

On termination of the agreement, the Property Agent/property owner is to complete their part of the Bond Claim Form and give it to the tenant within 3 working days. The tenant/s and also Anglicare/Colony 47 are to complete their part of the form which is then faxed to the RDA to enable disbursement of the bond.

If the tenant/s, property owner/Property Agent and Anglicare/Colony 47 agree then the bond will be paid out as soon as possible ie in 76 hours. If there is no agreement then it will go to dispute resolution

Bond Disputes

The bond refund is a relatively straightforward procedure if the full bond is to be refunded or the tenant agrees to the forfeit of part or the entire bond when the property owner is entitled to it. The question of entitlement is the area that creates the conflict and it is for this reason that the Condition Report must be carried out with attention to detail and accuracy. Basically property owners are entitled to recover the following costs from bonds:

Cleaning of the property to bring it back to the condition it was in at the commencement of the tenancy. (Based on the observations noted on the entry Condition Report). This includes the cost of carpet cleaning and pest (flea) control as directed in the Residential Tenancy Agreement;

Repairs and maintenance resulting from tenant neglect or damage. (The costs of repairs required as a result of normal wear and tear are not recoverable from the bond monies);

Payment of rent owed up until handover day. (That is the day the possession of the property was handed over to the property owner/Property Agent). If property owner and tenant fail to reach agreement on the bond refund, the Residential Tenancy Agreement allows for the tenant to apply to the Residential Tenancy Commissioner to determine the dispute. The Commissioner only deals with the dispute in relation to the amount of bond paid.

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Property owner’s right to compensation

In the event that the bond is insufficient to cover the costs incurred by the property owner, he/she may be entitled to compensation. This can be claimed for damage or loss, including loss of rent, caused by a tenant breaching the terms of the Residential Tenancy Agreement. If the tenant has not vacated the premises after receiving Notice to do so, or if the property owner justifiably believes that the tenant owes them money in excess of the bond, the property owner/Property Agent may apply to the Magistrates Court which may order the tenant to pay compensation. When a tenant abandons the premises, the tenant must compensate the property owner for any loss including the loss of rent. A property owner is not entitled to compensation when reasonable steps could have been taken to avoid the loss. In other words, if a property owner knows that a tenant has abandoned the property and takes no steps to seek a Notice declaring abandonment and prepare to re-rent the property, they cannot later make a claim on the tenant for all of the lost rent.

Recovery of possession of a property

Abandoned Premises- Section 47 -

If the property owner /Property Agents believes a property has been abandoned, then they are permitted to enter the premises, Section 56(2)(iv) to verify this.

A Magistrate will make an order under Section 46 relating to abandonment by a tenant of the residential premises if the property owner has satisfied the conditions of the “what is recognised as abandonment”, ie.

The tenant has ceased to occupy the premises;

A Notices of Termination has not been served in respect of the premises;

A Notice to Vacate has not been served in respect of the premises.

Of course, if the tenant has already been issued with a Notice to Vacate for un-remedied arrears or another breach, then the Property Agent is not required to issue another termination Notice – this is not considered an abandonment. If the tenant does not dispute the abandonment Notice within the 7 day period, they are taken to have abandoned the property.

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Goods left behind at a property

A Tenant’s personal possessions may be left abandoned at the property in a variety of different situations including abandonment of the property. There are strict guidelines included in the Act for the handling of these abandoned possessions by either the property owner or Property Agent. In the case of goods, the procedure is a little more complicated. The property owner or Property Agent is authorised to sell or dispose of the goods if:

They appear to the owner to have no value; They appear to have a value less than the prescribed amount.

A property owner/Property Agent may apply to the Magistrate for an order permitting the sale of the goods for the best price reasonably obtainable if they appear to have a value equal to or more than the prescribed amount. It is a requirement that the owner verify by a Statutory Declaration the means of disposal of any goods under Section 48 Subsection (1)(a) The proceeds from the sale may be used:

Firstly, in the payment of any debt owed by the tenant to the owner;

Secondly, in the payment of the reasonable costs of the sale;

Thirdly, any balance to be kept in an interest bearing account for the tenant for a period of 6 months.

If a tenant does not claim any proceeds of the sale within 6 months, the proceeds become the property of the Commissioner. Any additional money owing to the property owner for rent or other costs incurred by the tenant may be claimed in the normal manner by a Compensation claim to the Magistrates Court.

In practice, one way to handle the situation of goods left is to get a second hand dealer (or perhaps two) to come and appraise the goods, inventory them and give you a written valuation. This will allow you to decide on whether the goods are required to be stored and later auctioned. If the goods are sold, then it is imperative to keep detailed records of how long they were stored, where they were stored, how the auction was advertised and conducted, what each piece of furniture was sold for, the total amount of money raised and how it was disbursed. In the event that the Property Agent or property owner is required to account for the process at some future date, this information will not only be invaluable but necessary.

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Learning Activity 5

5.1 In relation to breaches of agreements, there are a number of options that the Magistrates Court has in making a ruling. If a Property Consultant continually entered a premise without issuing the correct Entry Notice what rulings could a Magistrates make? 5.2 If the tenant did not agree with the Bond Claim what action could they take?

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Resource Unit Review

The purpose of this Unit was to enable you to understand the legal requirements placed on Property Agents/property owners and tenants when entering into Residential Tenancy Agreements and the processes to be used for the resolution of residential disputes.

Whilst we have not covered every aspect of the legislation in this Unit, we have identified the major aspects, which impact on your role as an Assistant Property Manager. At the outset we gave you some guidelines for using and interpreting the Act, and encouraged you to use it as an important ongoing resource.

We looked in detail at Residential Tenancy Agreements, highlighting the essential terms and conditions and the rights and obligations of both parties. We identified the importance of your role during tenancies in ensuring that all legal responsibilities are adhered to -particularly in areas such as maintenance, inspections and right of entry to the premises.

We focussed on the procedures involved when either party breaches the Residential Tenancy Agreement and identified the rights of each party in disputing these actions and the importance of conciliation in attempting to resolve disputes, rather than resorting to the Magistrates Court.

We have studied in some detail the requirements of the Residential Tenancy Act 1997 in conjunction with a Property Agent's legal responsibilities contained in the Property Agents and Land Transactions Act 2005 as well as Anti-Discrimination and Privacy Legislation. This has been done to make you more knowledgeable in your day to day practice as an Assistant Property Manager or Property Consultant and more professional in your dealings with property owners, tenants and Property Managers. You should also now have a greater appreciation for the diversity of situations, which might arise in your role.

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Glossary

A glossary of the most commonly used terms in property management can be found in: A Glossary of Terms used in Real Estate Practice and Valuation Practice, F. Trimboli, 2nd edition, REIA, 1995, and The Residential Tenancy Act 1997, Section 3 Or in conjunction with preliminary reading materials and learning materials supplied in the REIT Property Consultants’ and Assistant Property Managers’ course.

References

Residential Tenancy Act 1997, Government Printer Tasmania. Trimboli, F. 1995. A Glossary of Terms used in Real Estate and Valuation Practice. 2nd edition. REIA

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Suggested Answers to Learning Activities

Learning Activity 1

Anti Discrimination Legislation 2. To comply with the requirements of Anti Discrimination Legislation and to support the

fact that due, care, skill and diligence had been applied to the tenancy process. This supports the fact that the Property Agent acted in the Client’s best interests.

3. To confirm that the client is satisfied with all the terms of the tenancy offer, eg rent,

tenancy term and start date. Also the Property Agent is being professional and keeping the client fully informed of all developments.

4. If all the other criteria for tenancy selection had been meet the Property Agent would

need to go over Anti Discrimination Legislation, document the conversation and seek the client’s written instructions or alternatively write to the client with relevant information included and seek the client’s instructions.

5. Instructions to to Act. In a secure file either in a lockable filing cabinet or a suspended

file in a lockable filing room.

Learning Activity 2

1. Abandoned, agent, commencement day, commissioner, condition report, court, dispute, early vacation, essential service, grey water, holding fee, notice of termination, notice to vacate, owner, payment, payment period, rent, residential premises, residential tenancy agreement, security deposit, suitable repairer, tenancy tenant

2. In Tasmania it is illegal for someone under the age of 18 to sign legal documents. No the

agreement would not be enforceable

3. Yes it is appropriate to use the standard Residential Tenancy Agreement so that the tenants are aware of their rights and obligations under the Residential Tenancy Act. It would also set out the terms of the Residential Tenancy Agreement in the Schedule of the Agreement

4. Commercial Leasing and Boarding Houses

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Learning Activity 3

1. Check to make sure that all forms have been correctly completed

2. A copy of the current Residential Tenancy Agreement, 2 copies of the Condition Report, Recipt for rent and bond, Body Corporate Laws, The Rental Guide

3. Conflict situations can arise on the finalisation of the tenancy in respect to the bond. Increased vacancy periods whilst the dispute is being handled and possible increased to the Property Owner. Also increased litigation exposure to the Property Agent due to undetected maintenance faults or claims being made against the Client.

4. A fixed term tenancy

5. In Accordance with Section 29 of the Act the tenant must complete a Bond Lodgement Form and either pay the Bond to Service Tasmania or pay directly to the Agent depending on the Agent’s instruction

6. The Commissioner’s office determines disputes arising in relation to the disbursement of bonds.

Learning Activity 4

1. Refer to Section 56 (3) of the Residential Tenancy Act 1997 As the inspection has already been conducted, it would be good business practice to apologise to the tenant, explain how the inspection advice Notice was delivered (or where it was placed at the property), then refer to the relevant Act section. Perhaps the Property Consultant should at this point discuss how any further inspections would be carried out and where the advice Notices would be placed in future.

2. Section 41 of the Act deals with termination of agreements by the Magistrates Court,

know as Order of Termination. Under this Section the answer would be No. It would be expected that the Assistant Property Manager proved that he/she complied with the requirements of the Act in Section 56.

Learning Activity 5

1. If it was proven the Court could make an order to terminate the tenancy, make an order to pay compensation to the tenant or make an order for the Property Agent/Property owner to refrain from the conduct.

2. Section 29 refers to disputes concerning the return of the security deposit.

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Exclusive Property Management Agreement

Authority to act as Managing Agent

PREMISES TO BE MANAGED: .........................................................................................................................................................

TO: ......................................................................................................................................................................................................

(hereinafter called "The Agent")

of .........................................................................................................................................................................................................

OWNER ..............................................................................................................................................................................................

ADDRESS ..........................................................................................................................................................................................

Phone (home) .......................................... Phone (business) .............................................. Fax .............................................

Mobile .............................................................. Email ......................................................................................................................

POWER OF ATTORNEY or EMERGENCY CONTACT: ....................................................................................................................

Address ..............................................................................................................................................................................................

Phone .................................................................................................................................................................................................

I/We being authorised to do so, hereby instruct the agent to act as my/our Managing Agent

on a Sole and Exclusive basis in respect of the following property:

1. THE PROPERTY is to be let:

and at a rental rate of $ ........................................................................ or thereabouts per ...........................................................

for a preferred term of ................................................... (length of time) .............................................. (Commencement Date)

The property will be available for an anticipated term of ....................................................................................................................

2. SECURITY DEPOSITS: a security deposit is payable for four weeks rent and if you receive from the tenant a security deposit you are to lodge the security deposit with the Rental Deposit Authority within 3 days of receipt.

3. ADVERTISING: You are authorised to advertise the property at our expense to a maximum of:

4. DISBURSEMENTS: Please pay on my/our behalf: Council Rates Unit Levies

Land Tax Insurance

and remit the net balance (after deductions of your fees and expenses) on a monthly basis

or Bank Credit of ........................................................................................................................................................................

Branch (BSB No.) ............................................. Account No. .......................................................................................

Of the ...................................................................................................................................................................................... Or AGENT to hold all funds in trust. If at any time the proposed disbursements should be in excess of the monies to be collected then I/We agree to pay such excess as requested by the Agent.

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5. REPAIRS AND OTHER OUTGOINGS: You are authorised to carry out all necessary repairs not exceeding the cost of $ ......... for any such maintenance matter and in the event that you are unable to contact me/us or my/our emergency contact, you are

authorised to attend to emergency repairs at your discretion.

6. INSURANCE COVER

Company Policy No. Due Date

Buildings .......................................................................................................................................................................

Contents .......................................................................................................................................................................

Public Liability .......................................................................................................................................................................

7. AGENTS AUTHORITY

THE AGENT is authorised to:

(i) Select tenants and sign Tenancy Agreements for the premises on my/our behalf.

(ii) Receive rents due and issue receipts for monies collected.

(iii) Exercise the owners rights to terminate tenancies or leases, serve notices and issue notices to quit.

(iv) Carry out all necessary proceedings for the eviction of tenants.

(v) Recover any monies due in respect to the management of the said premises.

(vi) Re-let at the end of each tenancy in the event of a vacancy.

(vii) Advertise the availability for rental or lease of the said premises.

(viii) Hire and discharge on my/our behalf all labour and employees necessary for the proper maintenance of the said property.

(ix) Carry out all urgent and necessary repairs without my/our prior authority.

(x) Pay on my/our behalf all outgoings as herein specified.

a) Letting Fee % ........................................................................................................................................................

b) Management Fee $ ...................................................................... / ................................ % of Gross Collections:

Applicable GST: ........................................................................................................................................................

c) Postage & cheque charge $ ................................................................. per ..........................................................................

d) Other ........................................................................................................................................................

........................................................................................................................................................

and such other fees as prescribed by regulation under the provision of the Property Agents and Land Transactions Act 2005. TRAIN

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8. GENERAL INFORMATION AND OTHER INSTRUCTIONS

(EG. NOMINATED REPAIRERS, PLUMBERS, ELECTRICIANS, BUILDERS, ETC)

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.......................................................................................................................................................

.......................................................................................................................................................

.......................................................................................................................................................

.......................................................................................................................................................

.......................................................................................................................................................

.......................................................................................................................................................

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.......................................................................................................................................................

9. I/We indemnify you and agree to keep you indemnified against all claims, suits, demands and costs (including legal costs) brought against you by third parties or incurred by you in the course of lawfully discharging your obligations under this Agreement.

10. All amounts for fees, commission and charges are exclusive of any tax to be introduced on amounts payable on the supply of goods, real property, services or any other thing supplied in connection with this agreement ("GST"). If GST is payable by the agent on a supply of services to be made under this agreement then any amount payable for fees, charges and costs shall be increased by the amount of any GST (or any other such amount permitted by law) payable by the agent with respect to such supply. 11. If you own property as at 1 July each year, that is not your Principal Place of Residence and is not used for Primary Production purposes, you may have to pay land tax. This tax is applied in accordance with the Land Tax Act 2000.

12. This Agreement may be terminated by either party on 30 days’ written notice sent by ordinary pre-paid post to the last known address of the other party. Notwithstanding any such termination I/We agree to pay all advertising and other expenses authorized by me/us prior to the giving of such notice and all commission and other fees referable to the period prior to the expiration of the 30 day notice period.

PRIVACY ACT (COMMONWEALTH) 1988 - COLLECTION NOTICE

The Agent uses personal information collected from the Principal (landlord) to act as the Principals agent and to perform their obligations under this

Agreement. The Agent may also use such information collected to promote the services of the Agent and/or seek potential clients. The Agent may

disclose such information, by use of the internet or otherwise, to other parties including potential tenants, clients of the Agent both existing and

potential, parties engaged to evaluate the property, solicitors, trades people, bodies corporate, financial institutions, media organisations,

government and statutory bodies and third parties as required by law. Unless you advise the Agent to the contrary, the Agent may also disclose

such information to The Real Estate Institute of Tasmania Ltd (REIT) for the purpose of documenting all leasing data in the area for the benefit of its

members as part of membership services and for others in the property or related industries, and so as to assist them in continuing to provide the

best possible service to their clients. In providing this information, you agree to its use, unless you advise the Agent differently. The privacy policy of

the REIT can be viewed on its website www.reit.com.au. The Agent will only disclose information in this way to other parties as required to perform

their duties under this Agreement, to achieve the purposes specified above or as otherwise allowed under the Privacy Act. If the Principal would like

to access this information, they can do so by contacting the Agent at the address and contact numbers contained in this Agreement or the REIT on

(03) 62234769. The Principal can also correct this information if it is inaccurate, incomplete or out of date. Real estate and tax law requires some of

this information to be collected. If the information is not provided, the Agent may not be able to act effectively on the Principals behalf or at all.

I/We acknowledge that I/We have read and understood the contents of the Privacy Collection Notice.

Signature date

Signature date

Signature of Agent date

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