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Frequently asked questions Pages
What are we talking about?
REIV Information Officers David Dundas and Jim Lourandos, address some of the current common questions from Members.
Jim Lourandos & David Dundas
REIV Information Officers
Arrears – possession before five strikes
When the major changes to the Residential Tenancies Act were introduced many property managers there distressed by the “five strikes rule”, thinking there must be five notices to vacate in a 12-month period on the grounds of arrears before a possession order can be obtained. This is not always the case! Once the notice to vacate is deemed to have been given i.e., the allowance for postage time has expired, an application for a possession order may be made. Where the unpaid rent is not all paid before the termination date in the notice to vacate, VCAT may grant a possession order, although it is not compelled to do so. If the rent is paid before the termination date and it is not the fifth notice in a twelve-month period, the application should be withdrawn as VCAT would be compelled to dismiss it. of such a notice. As soon as the agent is appointed, they should on behalf of the vendor/rental provider give the renter a “Notice of Intention to Sell”. There is no right of entry to show the property to prospective buyers until 14 days after the notice is given.
After receiving the notice of intention to sell the renter may give as little as a 14-day notice of their intention to vacate, irrespective of the end date or the fixed term if there is one. However, they cannot do so if they were informed before entering into the rental agreement of the intention to sell.
So why have the five strikes rule? On the fifth occasion of a notice to vacate in a 12-month period an application for a possession order may proceed even if the renter pays the unpaid rent before the termination date in the notice. Again, the granting of a possession order is not guaranteed but VCAT does have to decide the application.
For more information on this subject see the information sheet “Non-payment of rent and Notices to Vacate” on reiv.com.au
Intention to sell – renter’s right to vacate
Selling agents need to tread carefully when advising the vendors or potential vendors of tenanted residential properties. Some agents have stumbled when it comes to the need for a notice of intention to sell and the consequences For more information see the information sheet “Selling a rented residential property” on reiv.com.au
Price quoting in a changing residential market
In determining the amount buyers are likely prepared to pay for a residential property an agent must wherever possible base the estimate on the sale of three comparable properties. The timeframe in which the sales must have taken place and the distance they can be from the subject property vary according to whether the property is a metropolitan or non-metropolitan area. The estimate must also be reasonable, so if the market is rapidly changing either up or down the price achieved for the comparable properties may not align with what the subject property would be likely to sell for in the current market.
Although, to the knowledge of the Institute, it has not been tested in court it would seem reasonable to adjust the estimate in line with the rapidly moving
trend in the market. In a rapidly rising market, a reasonable estimate might need to be above the amounts comparable properties sold for, and in a rapidly declining market the reasonable estimate might be less than the prices achieved for comparable properties. Particularly in the case of the estimate being lower than the amounts comparable properties sold for, the agent should ensure the file contains evidence of the declining market which justifies the lower estimate. The lack of such evidence could be problematic in the case of an audit by CAV.
For more information see the information sheet “Price quoting when selling residential real estate” on reiv.com.au
The information which a rental provider must provide before entering into a rental agreement is contained in section 30D and regulation 16. Some members have asked whether a fresh disclosure is required in the case of the offer of a further fixed term to an existing renter. Given that the Act requires disclosure “before entering into a residential rental agreement”, and the renter agreeing to take up a new fixed term is a new agreement, a disclosure statement should be given to enable the renter to make an informed decision. The Act does not make specific reference to a disclosure statement in the case of a tenancy becoming periodic following the expiration of a fixed term. Given that the roll over to a periodic arrangement does not involve a decision to enter into a new rental agreement it is assumed that a fresh disclosure statement is not required.
Please note: This is general information and should not be treated as a substitute for reading legislation, regulations and official guidelines, or for seeking legal advice where necessary.
