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How to deal with your tenants break up?

Friday, September 27, 2019


Sometimes, tenants who jointly sign a tenancy agreement may decide to part ways. When that happens, you would expect at least one of the two to move out of the renta. If one tenant chooses to stay on, how do you handle the tenancy?

You have two options:
  1. In the case of either a fixed term or periodic tenancy: It is on the exiting tenant to obtain a written agreement signed by everyone (i.e. you, the exiting tenant and the remaining tenant(s)) to have his/her name removed from the agreement from an agreed date. You will then complete and submit a change of tenant form. The form requires a declaration from the exiting tenant to make no claim on the bond money. The tidiest fix is to bow out of any private arrangement seeing that the total amount of bond held will not change. 
  2. In the case of a periodic tenancy: You also have the option to treat the termination from one tenant as a termination of the entire tenancy. From there the usual post-tenancy wrap-up (including bond claim/refund) and pre-tenancy checks follow. If you decide you are happy to rent to the remaining tenant then enter into a brand new tenancy agreement (and lodge a new bond). 
But life isn’t always as black and white as the law books would suggest. Which is why we’ve turned to APIA Vice President Peter Lewis for his practical take on best practice solution in this instance (note that Peter refers periodic tenancy in his answer):

The departure of any one of the joint tenants can legally end the tenancy. In my view, it should. Say you have two working tenants each contributing to the rent and one is now exiting. It is not unreasonable to wonder whether the remaining tenant (no matter how great he/she is) can afford the rent on his/her own. The only opportunity to make such an inquiry is to have the joint tenancy terminated before vetting the remaining tenant as if he/she is a ’new’ tenant applicant.

Say the tenancy is terminated. You would carry out a full property inspection on the date of terminating to ensure the any damage is identified and the liability for repair or cost recovery is settled. This will also set a baseline for any new tenancy. Any issues about access to and ownership of the bond deposit should also be settled at this time.
 
You are then left with a technical ‘vacancy’ to fill. You would carry out the standard pre-tenancy check on the remaining tenant. If any other persons age 18+ (such as relatives or friends) are moving into the property to assist, these people should be vetted in the usual way and named as joint tenants in the new tenancy agreement. If, after all of that, you are satisfied, have the new tenancy start from the date the last tenancy had ended.

 

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