Tenancy Agreement FAQ - Australia-NT

Tenancy Agreement FAQ - Australia-NTTenancy Agreement FAQ - Australia-NTGeneralWhat is meant by Governing Law?The Governing Law will be the jurisdiction in which the property is located. It may or may bedrngnislage coincide with the jurisdiction in which the parties reside. The Residential Tenancy Agreement will be governed by the laws of the jurisdiction where the property is located. Why isnt a verbal residential tenancy agreement sufficient?The problem with oral agreements is that they can be difficult to enforce. If a dispute arose, a court would have to hear evidence and decide whose version of the truth to accept. If there is a written agreement, courts will generally be obligated to uphold the terms of the written agreement even if they dont agree with them. What is addressed in a residential tenancy agreement?A Residential Tenancy Agreement typically addresses the following the type of property being let the address of the property being let the term of the tenancy and whethe r the tenancy is fixed or periodic the amount of rent payable, how often and when the rent should be paid and the provisions of any bond.In addition, a residential tenancy agreement may also identify the following taxes that are payable by the tenant landlord improvements and signing incentives tenant improvements and signing incentives landlord and tenant repair obligations, who will pay for what utilities whether the tenant can assign or sublet the property bedrngnisice provisions for termination of the tenancy and insurance provisions.What makes a residential tenancy agreement different from a commercial property lease?A residential tenancy agreement is a tenancy agreement for your home. Governments have recognised the sanctity of the home and have extended increased protections to tenants by enacting laws ensuring a minimum set of rights for tenants. A Residential Tenancy Agreement cannot take away these basic tenant rights. The PartiesWho are the parties to the tenancy agreemen t?The parties to a tenancy agreement are the lessor, also called the landlord, and the lessee, also called the tenant. The lessor owns the property and allows the lessee to use the property in exchange for monetary payments called rent. Who is the landlords werber?The landlords agent may be anyone who looks after the property for the landlord. An agent may be the landlords friend, a landlords family member or a landlords real estate agent. Landlords are usually held responsible for their agents actions. What does ACN mean?Under the Corporations Act 2001, every company in Australia is issued with a unique, nine-digit number. This number is referred to as an Australian Company Number (ACN) and must be shown on a range of documents. The purpose of the ACN is to ensure adequate identification of companies when transacting business. New companies are issued with numbers by the Australian Securities Investments Commission (ASIC) upon registration. What are the landlords obligations?The l andlords obligations are defined by the terms and conditions contained in the tenancy agreement and the laws specific to where the property is located. The most important obligations of the landlord include providing the tenant access to the property and allowing the tenant peaceful enjoyment of the property. The legal owner of the property also has obligations to maintain the property to minimum standards. What are the tenants obligations?The tenants obligations are defined by this tenancy agreement and the laws specific to where the property is located. The most important obligations of the tenant are to pay rent on time and not to cause damage to the premises.What if I dont know one partys name or contact information?A blank space will be provided in the form that can be filled in later if you are missing information about one of the parties. We recommend, however, that you attempt to make the contract as complete as possible, for greater certainty. Does the tenancy agreement spe cify anything regarding the tenants conduct?Yes, the tenancy agreement specifies that the tenant must notify the landlord if repairs or maintenance are required notify the landlord of any damage or potential damage to the premises and notify the landlord if premises are to be vacant for more than 30 days.Additionally, the tenant must not maintain the premises in an unreasonably dirty condition cause or allow damage to the premises use the premises for any illegal purpose cause or permit a nuisance cause interference with the reasonable peace or privacy of another person within the vicinity and alter the premises without written consent of the landlord.What happens if I breach a term of the tenancy agreement?If you breach a term of the tenancy agreement you are responsible for correcting it. If you are the tenant, this may involve you paying money to fix any problems caused by yourself or your guests. If you do not voluntarily pay to correct the breach you can be sued for damages sus tained as a result of the breach and/or possibly evicted by the landlord.The PremisesWho can live in the premises?Only tenants and people listed as occupants may reside in the premises. The landlord must be informed and approve of any change to the list of permitted tenants. Children born or adopted while the tenant lives in the premises are automatically added to the tenancy agreement as occupants. Also, each jurisdiction may restrict the number of tenants/occupants in the premises if that number violates health or safety standards for housing. Health and safety standards are typically expressed as 1 person per X sq. metre. The standard varies from jurisdiction to jurisdiction so if you are concerned, check with your local housing/public health authority. What is a basement suite and how does this differ from renting a room?Typically, letting a room or a basement suite means you are sharing an accommodation with the landlord. A basement suite is a self-contained dwelling unit compl ete with its own kitchen, bathroom, and living area. Most tenants of a basement suite use a separate entrance to enter the house than the rest of the occupants. If you rent a room, you will likely share either the kitchen or bathroom with the landlord. What are body corporate bylaws?A body corporate is the group of all the owners of lots or units which share common property. The body corporate bylaws refer to the set of rules governing the internal management of those lots. The bylaws may specify rules relating to noise, parking, behaviour of guests, pets, garbage disposal and the use of common property. The bylaws are sometimes referred to as a Community Management Statement.Tenancy Agreement TermWhich tenancy agreement term should I use?LawDepot allows you to choose from 2 main types of tenancy agreement terms.Fixed End Date - A tenancy agreement with a fixed end date gives certainty of term for both the landlord and the tenant. It specifies the exact day the tenancy will end. The advantage here is that neither party has to give notice to terminate the tenancy agreement, it simply ends on the specified date. During a fixed term tenancy agreement the landlord cannot increase the rent, or change any other terms of the tenancy agreement unless he specifically reserves the right in the agreement, and the tenant agrees to the changes.Periodic - A periodic tenancy will continue so long as neither party wishes to terminate the tenancy agreement. To terminate the tenancy agreement the landlord and tenant must give notice of their intention to leave as specified by statute. A landlord can raise the rent, or change the terms of the tenancy agreement in these types of agreements by providing proper notice as required by statute. At the end of the notice period the tenant must move out or the landlord can abflug eviction proceedings against them.What happens when a tenant tries to terminate a fixed term tenancy?Typically when a tenant agrees to a fixed term tenancy, usu ally for either 6 months or 1 year, the tenant is agreeing to be responsible for the rent for that period of time. If the tenant vacates the premises prior to the end of the term of the agreement, the tenant will typically still be responsible for payment of rent for the entire length of the lease (provided the tenancy is not in a jurisdiction that allows the tenant to give notice to prematurely end a fixed term tenancy). Typically, if the Landlord is able to re-rent the premises prior to the end of the lease of the breaching tenant, the breaching tenant is no longer required to pay rent as the landlord cannot collect double rent for the premises.In addition, some leases may contain penalty clauses whereby the tenant is required to pay re-rental fees to cover part of the cost of the landlord having to re-rent the premises. However, the amount of the re-rental fee has to be reasonable and must be a pre-estimate of the damages that the Landlord will suffer in having to re-rent the pre mises early.What happens when the tenancy agreement term expires?The expiry of the tenancy agreement does not necessarily terminate the rental arrangement. If a Periodic term is selected, the tenancy agreement will automatically renew based on the same terms as the first tenancy agreement, unless it is varied by giving proper notice as required by statute. So a Periodic monthly tenancy agreement that continues for one year is actually 12 separate, automatically renewing tenancy agreements. The tenancy agreement will continue to renew automatically until one of the parties wishes to terminate the tenancy agreement (by giving proper notice as required by statute).If a Fixed term is selected, the leasing relationship may still continue after expiry if both the landlord and the tenant wish it to. In some jurisdictions, statute dictates that it will become a Periodic term tenancy agreement, usually of the month-to-month variety, though this may vary. In other jurisdictions, the Fixed ter m tenancy agreement may become a tenancy at will or a tenancy at sufferance when it expires, which lasts only as long as both parties wish it to, and is not subject to as much legal protection as a Periodic tenancy agreement. If you wish to terminate all rights under a Fixed term tenancy agreement as soon as the tenancy agreement expires, you must serve proper notice before the end of the tenancy agreement term, in accordance with local statute.RentDoes the landlord have to provide receipts for rent payments?Unless the rental payment is directly being deposited into the landlords account, the landlord must provide a receipt for the payment.Does the landlord have to keep any records of rental payments?Yes, the landlord must keep a written record of all rental payments. The record may be kept in electronic format. At the request of the tenant, the landlord must allow the tenant to view the record. The landlord may be fined a penalty of up $2,200.00 for failing to comply with these req uirements.Can the landlord increase rent?Landlords can increase rent provided the landlord has provided specific terms in the tenancy agreement allowing for rent increases. The tenancy agreement must specify the amount of increase or the method of calculating the increase.Landlords can only increase the rent 6 months after the start of the tenancy or 6 months after the last increase. The landlord must provide at least 30 days notice in writing before increasing the rent.Can a tenant challenge a rent increase?If the tenant disagrees with the rent increase the tenant can apply to the Commissioner of Tenancies for a declaration stating the rent is excessive. The Commissioner will only grant such declarations in limited circumstances (e.g. if it is higher than the general level of rents for comparable premises or if the level of services available to the tenant have been reduced).NoticeHow much notice do I need to give to terminate a tenancy?In most jurisdictions, there is a minimum per iod of notice required by statute. The tenancy agreement can specify a notice period longer than the legal minimum, but it cannot specify a period shorter than the legal minimum. If it does, the legal minimum notice will still be required. You should consult the governing statute for these legal minimums as they will vary according to jurisdiction and the type and length of the tenancy agreement. What is notice to enter?A landlord usually does not have the right to enter a rented apartment suite unless there is an emergency, for example a fire or gas leak, or unless the landlord gives the tenant proper notice as defined by statute. So long as the proper notice is given, a tenant cannot refuse entry to a landlord. What should I do if I do not want to renew my tenancy agreement?You must provide proper notice to the landlord that you do not intend to renew the tenancy agreement, before the tenancy agreement expires. Notice must be given a certain amount of time before the tenancy agree ment expires, as dictated by statute in your jurisdiction. This amount of time is called the notice period. Typically, the notice period is one month for leases with a term of one month or less, and two or three months for leases with a term of more than one month, but this will vary according to the jurisdiction. You should consult the governing statute for the jurisdiction the property is located in to find out the required notice period for your tenancy agreement. What is the minimum amount of notice to be given when terminating a tenancy?In Northern Territory, when a fixed term tenancy is about to come to an end, either party can give 14 days notice to end the tenancy. The notice can be served up to and including the last day of the fixed term. Notice must comply with section 101 of the Residential Tenancies Act.If a landlord wishes to terminate a periodic tenancy, the landlord must provide 42 days written notice in accordance with section 101 of the Residential Tenancies Act. I f a tenant wishes to terminate a periodic tenancy, the tenant must provide 14 days written notice in accordance with section 101 of the Residential Tenancies Act.Bond and DepositsWhat is a bond/security deposit?A bond/security deposit is a sum of money the tenant pays to the landlord to guarantee that the tenant will fulfill all obligations under the tenancy agreement. The landlord holds the security deposit in trust for the term of the tenancy agreement to ensure that the tenant does not default on the terms of the tenancy agreement or otherwise damage the property. Should the tenant damage the property (normal wear and tear excluded) or if the Tenant has not paid rent, the landlord is entitled to recover the amount owing from the security deposit. Usually the tenant must provide the landlord with the security deposit at the start of the tenancy agreement term. At the end of the tenancy agreement term, the tenant will receive the deposit back minus any deductions for repairs/restor ation.Please note in some jurisdictions, a landlord is not allowed to ask for a security deposit. In other jurisdictions, a landlord may require both a security deposit and other types of deposits (for example, a pet damage deposit). You should review the governing legislation for the location of the property to make sure the type of deposit is allowable. What is the maximum amount of bond/security deposit?In Northern Territory, the maximum security deposit that a landlord can ask for is the equivalent of four weeks rent. When a security deposit is paid by cash, cheque or credit card, the landlord must immediately give the tenant a receipt. When can the landlord deduct from the bond/security deposit?The landlord can deduct from the bond/security deposit when the tenancy ends and the tenant owes the landlord money for either unpaid rent or damage to the premises. The landlord generally cannot deduct for reasonable wear and tear on the premises, (i.e. wear and tear that occurs just fr om living in the premises). The landlord can deduct for stains on the carpet or countertops, large holes in the wall, and missing appliances and other such things that are beyond reasonable wear and tear. Condition ReportWhat is a condition report?Prior to moving in, the tenant and the landlord should walk through the premises and write down any existing damage. This written account is called a condition report. The landlord and tenant should both get a copy of this report. It is also a good idea to take photographs or a video of the condition of the premises. This will assist in interpretation of the a condition report if there is a dispute at the end of the tenancy.In some jurisdictions, a condition report is also required upon moving out, as a condition for the landlord to make a claim against the tenants security deposit/bond.Why do I need a condition report?A condition report will help to prove what damage was caused by the tenant for purposes of deducting the amount to fix the damage from the bond. What needs to be considered when filling out a condition report?The following should be considered when filling out a condition report The landlord should provide the tenant with a copy of a completed and signed condition report within three days of the tenant taking possession of the premises. The condition report must be completed in the presence of the tenant (unless it is not practical to do so, or if the tenant does not appear at the agreed time). Within 5 business days of receiving the copy of the condition report the tenant can eitheraccept the report by signing and returning it to the landlord ormark any changes thought to be appropriate and return it to the landlord.If the tenant takes no action then they are deemed to have accepted the report. If a tenant modifies a condition report and gives it back to the landlord, the landlord may within 5 business daysaccept the report by initialing the modifications and returning a copy to the tenantreach an agr eement with the tenant as to the contents of the report and accept the report by having both parties initial all modifications that are accepted by them orapply to the Commissioner of Tenancies to resolve the problem.If the landlord takes no action within the 5 business days and the tenant doesnt apply to the Commissioner of Tenancies to resolve the problem, the landlord is taken to have accepted the condition report as modified by the tenant. Both the tenant and the landlord should keep a copy of the condition report in a safe place, as it will be used as conclusive evidence of the condition of the premises at the commencement of the tenancy.Additional TermsCan I add any additional terms to the tenancy agreement?You can add additional terms provided those new terms do not contradict the Residential Tenancies Act 1999. A landlord faces a penalty of up to $11 000.00 for attempting to exclude, modify or restrict the operation of the Act. Also, a tenancy agreement which is inconsistent with the Act is not valid with respect to those inconsistencies.MiscellaneousWhat is an assignment and how does it differ from a sublease?Assignments and subleases both occur when the tenant gives his/her rights under the tenancy agreement to a third party. A sublease or an assignment typically requires the consent of the landlord. An assignment occurs when the tenant gives to a third party all of his or her remaining rights under a tenancy agreement for the entire term of the tenancy agreement. If a tenant assigns property and the landlord consents to the assignment, that tenant no longer has any rights to the property nor any obligations to the landlord. In a sublease the tenant can transfer a portion of the leased space (e.g. a room in a house) or a portion of the tenancy (e.g. for 5 of the remaining 6 months of the tenancy agreement) to a third party. The original tenant retains whatever rights under the tenancy agreement he or she has that were not transferred to the third par ty, and also retains most of his or her obligations under the tenancy agreement. The original tenant can still sue and be sued by the landlord for lease violations. What are signing incentives?Signing incentives are bonuses the landlord gives to the tenant, typically for either signing a tenancy agreement or signing a fixed term tenancy agreement. They may include free months rent, or a rent decrease for the months of the fixed term tenancy. If the tenant breaches the tenancy agreement, these incentives may have to be paid back to the landlord. Why do tenants need insurance? Doesnt the landlord already have it?While the landlord typically has insurance, it usually covers only the landlords assets and liabilities. If you want coverage for your personal belongings or for your own negligence, you need to have renters insurance. What coverage you want should be discussed with an insurance agent.What is meant by the Act?The Act refers to the legislation governing residential tenancy agr eements in your jurisdiction. After you select the schauplatz of Property when you are filling out the Tenancy Agreement Details, you will see a link beneath your selection to the governing legislation for the jurisdiction you have selected. It is not necessary to specifically state the name of the Act in your contract, as the relevant legislation is satisfactorily identified by the severability clause of your tenancy agreement. What does the clause other charges will be treated as rental arrears mean?Some rental contracts contain payments other than rental payments. For example the tenant may be required to pay utilities bills, or NSF charges, late fees or other charges.If these charges are not paid by the tenant, the landlord may treat these unpaid amounts as non-payments of rent and start eviction proceedings against the tenant for non-payment of rent. If this clause was not in the contract, the landlord could not treat a failure to pay these bills as a non-payment of rent and co uld not start and eviction process as quickly (or at all in some cases).What happens if I sign a tenancy agreement but cannot move in or take possession?When you sign a tenancy agreement, you are promising under contract that you will pay rent to the landlord. This is a legal obligation that courts take seriously. You may be liable to the landlord for loss of revenue that the landlord suffers as a result of you not paying the rent, even if you have a good reason for not being able to take possession. In some situations it may be less costly for you to simply take possession and immediately serve notice that you will be vacating as soon as the notice period expires - it may sometimes be better to pay for one or two months rent than to go to court and be forced to pay more.Because this is a complicated situation, you may wish to contact a qualified lawyer in your jurisdiction, especially if large sums of money are involved. You should inform your landlord immediately of the situation, so it cannot later be claimed that the landlord suffered losses as a result of not knowing that you were not going to move in. You may also wish to contact your local Residential Tenancies Board or government agency who oversees landlord/tenant disputes to find out the extent of your liability, which may or may not be limited by statute.