The risk of informal agreements… It must be in writing!

When things go wrong, they can go terribly wrong

It often starts out with all parties having the best of intentions.

A landlord who is on friendly terms with their tenant verbally agrees to a new pet, or consents to a room being painted, or out of compassion says that it is okay for the tenant to catch up on rent – without consulting the property manager.

These types of situations are more common than you may think and are fraught with danger if you don’t ensure that it is in writing.

There was a recent court case between Jemmeson and Fisher where the landlord verbally consented directly to their tenant that they could have access to a closed storeroom so the tenant’s son could play the drums.  They also asked the landlord if they could paint and carpet the room.  Without informing the agent, the landlord paid the tenant in cash for the paint and carpet.

Some months later the landlord visited the property and noticed that the tenants had turned the room into a functional bedroom by undertaking major structural repairs of inserting windows, removing doors and inserting a skylight.

The landlord was distressed and contacted their property manager. The property manager gave two options:

1) The tenant had breached the agreement and a notice of termination could be served, or 2) The issue could be dealt with at the end of the tenancy whereby the tenant would have to leave the property in the same condition (allowing for fair wear and tear) as it was at the commencement.

The landlord could not afford to have the property vacant so he allowed the tenants to stay.

Shortly after, due to health reasons, the landlord had to move back into the property and asked the tenants to restore the property to its former condition.  Why? The alterations the tenants had made did not comply with council regulations, which he believed devalued the property and made it difficult to sell.

The tenant had a completely different mindset and wanted to be further compensated for the substantial renovations.

The matter went to court and lucky for this landlord the court member (drawing on his many years of experience, which included the building division of the tribunal) understood that although the room was technically in better condition it did not comply with council requirements.  Instead of the landlord’s $3,454 rectification claim, the tenant was ordered to pay $1200 in damages.

The moral of the story…

·      Always let your property manager communicate with your tenants

·      Always get all agreements in writing

You may have the best intentions when speaking with your tenant; however, your property manager is experienced in foreseeing the possible consequences on what can go wrong. ■

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