Sometimes the Law just makes you LIE! NCAT finds a way to insight us to lie!

I had the pleasure this week to read a 2013 judgement of the tribunal Szabu -v- Graham Parslo.  I heard of this judgement, but after reading it, the only solution for a property manager is to lie.

This case surrounded Section 100(1)(c) of the Residential Tenancy Act 2010 (“the RTA”).  The RTA requires that a Landlord disclose if they intend to sell the property.  This disclosure must be given in writing prior to the tenant entering the Residential Tenancy Agreement.  

The timeline is important, and I have set this out below:-

  • The lease commenced on 30 July 2012;
  • In January 2013 the landlord decided to put the property on the market;
  • On 15 April, 2013 the property settled;
  • On 30 May 2013, the tenant terminated the agreement.

Section 100(1)(c) of the RTA provides that a tenant can terminate the Residential Tenancy Agreement where the disclosure of sale was not done before the Residential Tenancy Agreement. 

The decision considered two questions:-

  1. How long does the tenant have to issue the Notice of Termination; and
  2. When does the disclosure have to occur.

It was determined by the tribunal that the tenant can issue the notice at anytime during the fixed term period provided the disclosure wasn’t made.  This seems to be valid considering there is no time period within the RTA.  

The strange decision came in paragraph 25 when they said no disclosure was given before the commencement of the agreement.  Of course not, the Landlord hadn’t determined to sell the property until after the agreement commenced.  This decision has been taken to allow all tenants to give a 14-day termination notice in the fixed term agreement whenever the Landlord sells because it wasn’t disclosed.  It seems to us at Leverage that, the Section is meant’ to capture only Landlords who have decided to sell the property prior to the tenancy agreement.

The tribunal has continued to enforce this poor decision.  All property managers need to engage in the following deception.  The landlord needs to provide a written disclosure which states the following:-

“The Landlord discloses that the property may be placed on the market for Sale sometime during the fixed term period”

This may be inserted as a Special Condition to all Residential Tenancy Agreements as a means of ensuring that if the Landlord wants to sell, they are covered by this disclosure.

It would nice if the Legislator and the Courts would give us guidance so that we can properly protect our clients.