In The Know - Property Management
5 June 2019
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Unenforceable clauses in Tenancy Agreements
It is still quite common for owners of investment properties to ask property managers to add clauses to their Tenancy Agreements that are at odds with the Residential Tenancies Act.
You can’t write clauses into tenancy agreements that conflict with the Act. The Tenancy Tribunal may consider such clauses to be unenforceable – meaning they have no effect and in some cases these clauses may amount to an unlawful act. As professional property managers you need to be able to explain to your clients the reasons why these clauses cannot be used.
Generally clauses likely to be unenforceable are clauses that:
- ask a tenant to do more than the Act requires them to do
- try to remove or reduce the tenant’s rights or give the landlord more rights
- evade the requirements of the Act.
Below are some common examples of clauses that would not be enforceable.
| Clauses likely to be deemed unenforceable | Reason why |
|---|---|
| Carpets must be professionally cleaned at the end of the tenancy. | A tenant only has to leave the premises in a reasonably clean and tidy condition. Tenants do not have to leave the carpets in a professionally cleaned state. |
| Tenants must replace stove elements, fuses and tap washers as they wear out. | A landlord is responsible for maintaining the premises in a reasonable state of repair. |
| Tenants must give more than 21 days written notice to end a periodic (on-going) agreement. | Under the Act, the tenant only needs to give at least 21 days written notice to end this type of agreement. |
| A tenant must pay 4 weeks bond plus 2 weeks extra bond for the landlord allowing a dog. | The law only allows a maximum of the equivalent of 4 weeks rent as a bond. |
Case Update: Failing to pay rent
Both the property management company and tenant applied to the Tenancy Tribunal. The tenant later withdrew her application. The company applied for termination of the tenancy, rent arrears and a refund of the bond.
Law:
Under Section 55 and 56(2) of the Residential Tenancies Act 1986, the Tenancy Tribunal can terminate a tenancy where rent is at least 21 days overdue as at the hearing date.
Application:
The company evidenced that the tenant failed to pay rent for over three weeks and failed to pay water rates.
Finding:
The Tribunal, accordingly, terminated the tenancy and ordered that $1,000.00 be paid to the company from the bond.
The parties agreed that $1,100.00 from the bond would remain at the Bond Centre until after the final inspection and only then, would the parties discuss and if agreed, sign a final bond refund form.
You can find the full decision here.
Christchurch Workshop: Understanding Resilience
Tuesday 9 July, The Tannery, Christchurch
As a Property Manager, do you sometimes feel STRESSED, TIME-PRESSURED and UNDER THE PUMP? Then this workshop is for you!
By understanding resilience you can become better informed about, and aware of, how to cope with the pressures of working life.
NV = 2 hours
2019 RPM Conference - Thriving in Changing Times
Friday 2 August, Hilton Hotel Auckland
This not-to-be missed Property Management Conference is hosted by Simon McKinney and filled with a great line-up of speakers such as Lisa O’Neill, Dr Annette Beautrais, Steve Watson, Lisa Gerrard and Sheree Nicholas.
Breakout sessions will be available for Property Managers and Business Owners.
Registration includes Cocktail Networking Drinks where the winner of the ‘2019 Recognition of Contribution to the Property Management Industry’ will be announced.
REINZ Residential Rental Review - April 2019
The April REINZ Residential Rental Review is now available here.
