Signing A Lease? There Are Some Things You Need To Know Before You Do

SO YOU’VE SUCCESSFULLY advertised a property and now have a prospective tenant keen to make it their home. However, before finalising the most important step in the tenancy process, both parties would benefit from having regard to the following.

contractFirstly, what’s a lease?

In the context of residential tenancy, a lease (or residential tenancy agreement) is a binding legal contract wherein the owner (or their agent) of a property grants a tenant a right to exclusive residence of that property in exchange for the payment of rent.

Such leases are governed by a specific Act and Regulation. As with any legal agreement, both parties to a lease must consider their rights and responsibilities, and any other matters that may affect them.

Rights and Responsibilities

A lease does not need to be in any specific form. However, the Residential Tenancies Authority does provide a template that includes all the standard terms required by law.

Using this template for leases is particularly sensible, considering there can be hefty penalties for attempting to restrict or exclude the operation of the Act. This might be why sometimes your agent is unable to add a condition of your choosing into the lease.

It follows that a prospective tenant should carefully read each of the standard terms, such as those relating to bond, rent, rules of entry, repair, requirements for notice and termination and so forth, so they are clear on what their own obligations under the lease are.

Any prospective tenant should also pay particular attention to their obligations to act in good faith and ensure they treat the property well during their tenancy.

A tenant must also be provided with a copy of the signed lease, and the lessor must retain the original for their record.

Any cost incurred in drafting the agreement must be borne by the lessor.

Practical Considerations

There are also many other factors that each party needs to consider.

Special terms

A tenant should be aware of any applicable ‘special terms’ in the lease and what effect they may have on them. These can include matters relating to whether pets are allowed on the premises, who pays for pest control and carpet cleaning and when this obligation arises, and any other terms that may be specific to a property.

For example, if a prospective tenant has a dog, and there is a term expressly prohibiting pets on properties without the approval of the lessor, then it would be wise for the tenant to broach the topic prior to signing and see if an arrangement can be made to accommodate both parties’ interests, rather than risking a potential dispute down the track.

Similarly, if a property has a pool, it will require maintenance. The question is, who will bear the cost? Usually, it will be borne by the tenant. Again, this is an example of the various considerations that need to be made prior to agreeing to enter into a lease.

Background checks

For lessors, perhaps the most important consideration prior to signing a lease is the assessment of the prospective tenant.

house keysWhilst it is not compulsory, it is certainly prudent to inquire into the TICA tenancy database to see if there are any adverse recordings made against the prospective tenant. Of particular concern are those tenants who are in arrears, have willfully damaged or neglected property, or have otherwise had their tenancies terminated for other significant breaches.

It is also important that, in the absence of any such adverse finding, the lessor obtain sufficient information from the prospective tenant as to their ability to meet their rent obligations. This information can include evidence of employment, payslips and references. A prospective tenant must in those circumstances respond truthfully and not provide false or misleading information to the lessor.

Lessors should also take particular care to ensure that their reasons for rejecting a tenancy application do not breach relevant anti-discrimination legislation.

By being fully aware of each other’s rights, responsibilities and circumstances, both parties are in a better position to enter into a tenancy agreement that will last its term.

The information expressed in the article above is for general information purposes only; it is not advice nor intended to be. Any person interested in making a decision as to whether to sign a lease or not should seek proper independent advice.

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