Termination of Leases under the ADVO Laws

If you haven’t heard of the amendments to the Residential Tenancies Act 2010 (RTA), which will give tenants a free pass from obligations under the Residential Tenancies Agreement, you must have been hiding under a rock. On 28th February 2019, a tenant who is a victim of domestic violence will be able to terminate a Residential Tenancy Agreement immediately without penalty.

The amendment provides that a person who is a victim of domestic violence, including their child, is immediately released from their obligations under the Residential Tenancies Agreement without penalty provided that:

  1. The victim serves on the Landlord/Agent the termination in the prescribed form;
  2. The domestic violence is proven by attaching one of the following:
  3. Evidence of a conviction by the perpetrator;
  4. An injunction from the Family Court of Australia;
  5. An interim or permanent apprehended domestic violence order against the perpetrator;
  6. A letter from a Medical Practitioner setting out that the person is a victim of domestic violence.

Fair Trading has produced a fact sheet setting out all the requirements that relate to the amendment. All landlords or agents should carefully read this notification. Link

Governments should protect weaker parties against violence, the threat of violence or the fear of violence. Those who are truly the victims of domestic violence should be able to remove themselves from points of danger immediately.

The intentions behind this legislation are completely valid. Unfortunately, two things often happen with this type of legislation:

  • It always goes too far and provides too many leniencies;
  • There is always punishment inflicted on the innocent party, that being the landlord.

Apart from some flaws in the limitations in the attached documents, persons who hold convictions, injunctions or apprehended domestic violence orders, is sufficient evidence for a person to be released from the point of danger. The medical practitioners however create an extraordinarily low bar; provided the practitioner signs the standard prescribed form that requires only two things, the person has a free pass from obligations under the Residential Tenancies Agreement. Those two things are:

  • The Practioner has consulted with the victim;
  • The victim appears to be the victim of domestic violence.

To place faith in the profession which is been found guilty of freely prescribing drugs which cause addiction, is tempting fate. There is always a doctor who will complete a form that gives the tenant what they seek. Remember, domestic violence is not just about committing an act of violence; it’s about threat, abuse, intimidation or offensive behaviour. This particular part of the legislation will become a field day for the professional tenant.

Spare a thought for the landlord who relies on rent to pay the mortgage for often their largest investment. For some strange unidentifiable reason, governments believe that the only persons who own an investment property are those who are wealthy. Many of these properties are bought by self-funded retirees and rely on the income to fund their retirement. Taking away that ability will place the pressure back on the government purse to fund the persons retirement. These circumstances may lead to the punishment of an innocent landlord who has done nothing wrong. The victim can leave without penalty, the co-tenants who haven’t perpetrated the offence have a two week grace period, the co-tenants can apply also to terminate the agreement, and the perpetrator is left to pay the rent.  If a prudent agent how has determined a person’s capacity to pay the rent as being the accumulation of the income of all the tenants, are suddenly left with a person who is incapable of paying the rent, ultimately, the perpetrator will be punished by falling into arrears and being terminated under the Agreement.

There are many more view points that we can have regarding the defects with this regulation but opposing it or becoming disgruntled does not assist our landlords. The industry needs to get its shit together and find a way to best defend your landlord.

A couple of things we need to do before the 28th February 2019;

  1. Inform your Landlords; considering the impact on the landlord, you need to provide advice to your landlords regarding the new legislation. It is our suggestion that you send them a copy of Fair Trading publication so that Fair Trading becomes the carrier of bad news and not yourself. The moment the new laws commence, we believe that people will move immediately to take advantage of these new laws. Don’t leave yourself open to an influx of termination notices before you appraise your landlords of the problem. By advising your landlord, it shows that you are across the issues.
  2. Malicious injury; Leverage had cause last year to speak to a non-bank mortgagee who provides 100% finance. His advice is that, there were no more defaults at 60% loan value ratio to 100% loan value ratio. He said however, their greatest problem was in family law disputes. He said that where a relationship broke down and led to a mortgage not being paid, considerable damage was done to the property. What this information provides to us is that, where there is domestic violence, usually becomes malicious injury to the property. It is important that all property managers check the landlords insurance policies to ensure that they have malicious injury cover. If some of your landlords don’t, you should suggest rent cover insurance; Leverage has attempted to make contact with a number of landlord rent cover insurers regarding ADVO terminations. EBM aka rent cover are the only ones who have written back to us regarding clear information. EBM have identified that they have an ADVO option and this could be selected by your landlords. We suggest two things:
    a. You contact your insurer to identify whether they have ADVO cover and how it is taken up;
    b. Advise all your clients to take up the ADVO option.
  3. Application forms; although the legislation prevents the recording of ADVO terminations and/or giving out information regarding ADVO terminations, there is nothing stopping a prospective agent from seeking information regarding whether a person has ever terminated a Residential Tenancies Agreement on the basis of an ADVO termination. The question could be;
    • Have you at any time in the past two years terminated a Residential Tenancy Agreement on the basis of an Apprehended Domestic Violence?

You are not certain of everyone replying accurately, but it is an attempt to protect your Landlord’s interest.

  1. Tenant Ledgers; Staff should be trained in reading a Tenants Ledger. It can become very clear from a tenants ledger that monies, which were normally paid on time, suddenly weren’t paid at all. One of the questions that can then be posed to an agent is whether the penalties under the Residential Tenancy Agreement were ever chased. If you receive a negative answer, you’ll know why.
  2. Termination; when receiving a termination notice from a victim of domestic violence, you could have a form in your office which essentially acts as an acknowledgment, and the form should include the following:
    • Name of the DVO
    • Name of the Perpetrator
    • An acknowledgment that they have terminated under the Domestic violence provisions of the Residential Tenancy Act 2010
    • A confirmation that all co-tenants and the perpetrator have been served with notices of the Residential Tenancies Act.
  3. Special conditions; We have considered a number of different options for special conditions to be included in the Residential Tenancies Agreement. We see no value in any special conditions that will assist the landlord. Please note that, it is dangerous to include any special conditions because at this stage, we don’ know how the landlord insurers are going to deal with the domestic violence. Before developing any special conditions we need two things;
    a. Determine how big the problem is;
    b. See how the insurers deal with the DVO’s.

Before the critic’s get to me about not supporting these laws, I want to reiterate:

We agree with the domestic violence amendments!

We don’t agree with a doctors certificate, which can be obtained too easily by persons who are not victims of domestic violence!

Irrespective of this view point, these rules are here to stay and we must adapt to them to manage an effective rent roll.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

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