Tenant leaves early + can I protect against costs?

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  • Tenant leaves early + can I protect against costs?

    Tenants is leaving early
    1. I have an unfortunate situation. Tenant signed a one year contract and he has not paid this month's rent. He is giving notice to quit. Tenant says use deposit as the rent. He is barely two months into his tenancy. He says he is relocating to part of UK.

    2. I am not happy about him breaking the rental contract. I did a provide a new carpets and few extras that he requested, this was because he pursuaded me that he would stay a long time. The carpets that were there were neither new nor old.

    3. I have advertised for a new tenant privately, but I have asked for letting agents to look for a new tenant. But who is liable for re-letting costs? (Originally this tenant came to me directly). I have unhappily agreed for him to go, but I stated that he should cover any losses. The agency has already found a new tenant. I will incur letting costs, plus costs like having to re-change the locks and deposit protection..... So can I ask to pay for this?

    4. How to I recover the monies owned? I don't think he will not leave me a forwarding address. He does not want to pay the re-letting costs. Is there anything I can do right now?. How do I track him down once he has gone? Is this something I can get from his employers? (his employers have another branch in the town is relocating to).

    I just feel this tenant has used me to get temporary accomodation.... But what has annoyed is the extra expense e.g. carpets.


    How can I protect myself in the future?
    1. To protect in the future, can I add clauses in the contract to cover upgrades which are specific to a tenant e.g. for instance, If sometimes have to change the beds e.g. provide twin beds instead of double bed.

    2. Sometimes, tenants ask for a discount. However, can I link a discount only if they stay the term of the rental contract, otherwise they have to pay the higher rent?.

    3. Also, what costs can I resonably put in the AST where the contract is broken early?. I suspect courts may only agree to costs to cover up until a new tenant is found?

  • #2
    A. When did the fixed term begin?
    B. When will it end (in theory)?
    C. Did you obtain an employer's reference for T?
    D. Did you obtain a Guarantor for T?
    E. Putting 'cost clawback' provisions in an AST is pointless and suggests that you will accept early surrender. It's better to rely on the AST in negotiations with such T, leaving you free to drive the best surrender deal reasonably achievable.
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

    Comment


    • #3
      Thanks...

      A. When did the fixed term begin? January 2010
      B. When will it end (in theory)? January 2011 (with break clause six months)
      C. Did you obtain an employer's reference for T? Yes and tenant referencing was okay
      D. Did you obtain a Guarantor for T? No.

      Is there any was to catch him before he does a disappearing act?

      Comment


      • #4
        Originally posted by rajeshk4u View Post
        3. I have advertised for a new tenant privately, but I have asked for letting agents to look for a new tenant. But who is liable for re-letting costs? (Originally this tenant came to me directly). I have unhappily agreed for him to go, but I stated that he should cover any losses. The agency has already found a new tenant. I will incur letting costs, plus costs like having to re-change the locks and deposit protection..... So can I ask to pay for this?
        You can ask for whatever you like as a condition of accepting an early surrender. If T refuses, don't accept a surrender. The alternative for the T is that you pursue him for the rent for the whole of the fixed term (or up until the date a new tenancy commences).

        4. How to I recover the monies owned? I don't think he will not leave me a forwarding address. He does not want to pay the re-letting costs. Is there anything I can do right now?. How do I track him down once he has gone? Is this something I can get from his employers? (his employers have another branch in the town is relocating to).
        First, you track down the tenant (which a tracing agent can do, find one who offers a no-find-no-fee service). Can cost as little as £75.

        Then, you send a letter before action detailing monies owed, and giving a deadline to pay. If you don't receive payment, you issue a county court claim (if you only have the T's employer's address, you'll probably have to serve the claim using a process server). If the claim is less than £5,000 then it will be allocated to the small claims track, which is designed to be user-friendly for litigants-in-person (i.e. you don't need to use a solicitor). Advisable to buy a book on Small Claims procedure, there are a few on Amazon.


        How can I protect myself in the future?
        1. To protect in the future, can I add clauses in the contract to cover upgrades which are specific to a tenant e.g. for instance, If sometimes have to change the beds e.g. provide twin beds instead of double bed.

        2. Sometimes, tenants ask for a discount. However, can I link a discount only if they stay the term of the rental contract, otherwise they have to pay the higher rent?.

        3. Also, what costs can I resonably put in the AST where the contract is broken early?. I suspect courts may only agree to costs to cover up until a new tenant is found?
        As Jeffrey says, all this is pointless. You already have a contract binding T to pay you rent for a fixed term; that's the only enforceable contract you need.

        Protect yourself by
        • using an agent who is a member of a professional body such as ARLA
        • getting a guarantor if necessary
        • carrying out thorough credit/reference checks
        • taking a deposit equivalent to 6 weeks' rent
        • ruthlessly pursuing and enforcing debts
        • serving notice at the earliest opportunity if things go bad
        • not agreeing an early surrender unless the T agrees to cover all your costs and rent up to the date of any new tenancy

        Comment


        • #5
          If the tenant leaves owing rent you have two choices:

          1. Maintain the tenancy.

          2. Forfeit the tenancy.

          There is no in between.

          If you choose to maintain the tenancy then each instalment of rent becomes payable as provided in the agreement. You cannot ask for the balance of rent up to the end of the term.

          If you choose to forfeit that puts an end to the tenant's obligations and no rent is payable for any period after the date of forfeiture. You cannot take back effective control of the property without forfeiting. If the tenant has left and the property is being marketed as available then you will be deemed to have taken back control.

          Comment


          • #6
            Originally posted by rajeshk4u View Post
            B. When will it end (in theory)? January 2011 (with break clause six months)
            Break clause: can either party use it, or only L, or only T?
            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
            4. *- Contact info: click on my name (blue-highlight link).

            Comment


            • #7
              If the tenant leaves owing rent you have two choices:

              1. Maintain the tenancy.

              2. Forfeit the tenancy.

              There is no in between.

              If you choose to maintain the tenancy then each instalment of rent becomes payable as provided in the agreement. You cannot ask for the balance of rent up to the end of the term.

              If you choose to forfeit that puts an end to the tenant's obligations and no rent is payable for any period after the date of forfeiture. You cannot take back effective control of the property without forfeiting. If the tenant has left and the property is being marketed as available then you will be deemed to have taken back control.
              I am confused here. So what you are saying there is "There is no in between". So the only way for me to get back the re-letting fees, is if the tenant agrees to surrender on my terms. Given that he is not cooperative and he has told me he will not pay the re-letting costs.

              It does not leave me much choice, since in reality even if I take him to Court, to make him liable for the entire rent until the end of the tenancy, there is no way he can afford to pay for two properties.

              So I guess the law is deficient in my particular circumstance?


              Break clause: can either party use it, or only L, or only T?
              My mistake, in this AST there is no break clause. Straight one year contract.

              Comment


              • #8
                Originally posted by rajeshk4u View Post
                I am confused here. So what you are saying there is "There is no in between". So the only way for me to get back the re-letting fees, is if the tenant agrees to surrender on my terms. Given that he is not cooperative and he has told me he will not pay the re-letting costs.

                It does not leave me much choice, since in reality even if I take him to Court, to make him liable for the entire rent until the end of the tenancy, there is no way he can afford to pay for two properties.

                So I guess the law is deficient in my particular circumstance?

                My mistake, in this AST there is no break clause. Straight one year contract.
                The tenancy agreement may have a clause in it that makes the tenant liable for the landlords reasonable costs if the tenant breaches the agreement. Re-letting might cover that. With regard to rent, the obvious thing to do is to mitigate the loss by re-advertising. Once a new tenant moves in, he starts paying the rent, with the former tenants tenancy surrendered and his liability ending then.

                Comment


                • #9
                  also, if you relet at a lower price the outgoing T (who effectively owns the tenure of the property until expiry of fixed term) is liable for this loss.

                  I have exactly the same position & after the good advice from here realized the T is the one who has to do all the running as it is he who is breaking his contract.

                  Its pointless being miffed when you have a legally enforcable contract. Tenants will continue to treat yr property like a hotel at 12 month fixed term prices until they seek legal advice.

                  Its probably best your T hears it from a solicitor not you, I explained verbally & in writing & I fear my T has selective interpretation. As soon as a solicitor advised them they found the money.

                  Good luck

                  Comment


                  • #10
                    Originally posted by rajeshk4u View Post
                    I am confused here. So what you are saying there is "There is no in between". So the only way for me to get back the re-letting fees, is if the tenant agrees to surrender on my terms. Given that he is not cooperative and he has told me he will not pay the re-letting costs.

                    It does not leave me much choice, since in reality even if I take him to Court, to make him liable for the entire rent until the end of the tenancy, there is no way he can afford to pay for two properties.

                    So I guess the law is deficient in my particular circumstance?
                    I do not think the law is deficient. As I said, you have a choice. If you maintain the tenancy you will be entitled to rent up to the end of the fixed term and the question of a reletting fee will be irrelevant. You simply have to decide which is the best option for you.

                    Comment


                    • #11
                      I have gone down the 'forfeiture' route. For me maintaining the tenancy is a great risk since I have to rely on the courts and looking at this guy he spends everything he gets, so has no savings, plus there is no way he can pay for two rents. (I think if was a professional tenant, things would be different...)

                      E. Putting 'cost clawback' provisions in an AST is pointless and suggests that you will accept early surrender. It's better to rely on the AST in negotiations with such T, leaving you free to drive the best surrender deal reasonably achievable.
                      At the moment because I opted for forfeiture I am not entitled to re-letting fees, lock change etc.... So, for me the 'third way' is better. I feel that it is better to write a costs clawback provisions into the AST, and perhaps I can add a clause of two months rent as penalty, to discourage forfeiture.

                      Also, the I am trying to recoup some of the rent owned and also damage to the furniture. What is the best way of proceeding?. Should I issue a small claims against the tenant at my property (even though he does not live there). Or can I use his work address (I think he may have switched branches?).

                      Or do I wait until he would have registed with a local council before trying to track him down? (unless debt tracing agencies have access to utility records etc...).

                      Comment


                      • #12
                        However, note that a clause stipulating a penalty unrelated to true losses caused is often held to be unenforceable.
                        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                        4. *- Contact info: click on my name (blue-highlight link).

                        Comment


                        • #13
                          Originally posted by rajeshk4u View Post
                          I have gone down the 'forfeiture' route. For me maintaining the tenancy is a great risk since I have to rely on the courts and looking at this guy he spends everything he gets, so has no savings, plus there is no way he can pay for two rents. (I think if was a professional tenant, things would be different...)



                          At the moment because I opted for forfeiture I am not entitled to re-letting fees, lock change etc.... So, for me the 'third way' is better. I feel that it is better to write a costs clawback provisions into the AST, and perhaps I can add a clause of two months rent as penalty, to discourage forfeiture.

                          Also, the I am trying to recoup some of the rent owned and also damage to the furniture. What is the best way of proceeding?. Should I issue a small claims against the tenant at my property (even though he does not live there). Or can I use his work address (I think he may have switched branches?).

                          Or do I wait until he would have registed with a local council before trying to track him down? (unless debt tracing agencies have access to utility records etc...).
                          You can serve it at the last known addres (your property?) for an almost guaranteed win - but you may have difficulty enforcing it.

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