PMs review your Residential Tenancy Agreements

29 May 2015
EAC
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An agent leased and managed a residential property which was divided into three separate self contained units.

The development provided a swimming pool and a lock up garage, for the use of all three occupants, the power for which was not separately metered but included in the metered supply for Unit3.  To compensate the tenant for this the Residential Tenancy Agreement contained the following special condition to give effect to this arrangement:

“Factored into the rent is the tenant’s obligation to pay for electricity to run the pool pump and garage roller door which the tenant acknowledges is included on this circuit.”

The tenants were made aware of these circumstances and signed the tenancy agreement with the clause included.

The tenants vacated the premises following an end of fixed term termination notice served by the landlord and, after receiving advice, lodged an application with the Tribunal for compensation for the electricity payments made where the premises were not separately metered.

At the Tribunal all parties agreed that the electricity payments made by the tenant during her occupancy totalled $2715.98 and further acknowledged that the substantial part of the amount related to her occupancy.

The Tribunal member noted that S.38 of the Residential Tenancy Act, 2010 (the Act) required a tenant to pay electricity charges IF the premises were separately metered and S.40 provided that a landlord MUST pay for the supply of electricity at residential premises if they are not separately metered AND, most importantly S.219 of the Act provides that:

CONTRACTING OUT PROHIBITED

(1) A term of any residential tenancy agreement , contract or other agreement is void to the extent that it purports to exclude, limit or modify the operation of this Act or the regulations or has the effect of excluding, limiting or modifying the operation of this Act or the regulations.

Moral of the story:

Agents and their clients must not enter such agreements, even if all the parties agree, and client’s should be warned that by so doing they will run the risk of having to refund to the tenant the full cost of all electricity used during the tenant’s occupancy.

Property Managers should review their rent rolls to ensure that they have no similar arrangements in place in any property they manage.

This article is a reflection of just one of the matters that the  EAC Agency Practice Helpline can assist EAC Member with.  Are you an EAC Member?  Join today!

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