How to avoid invalidating a fixed term tenancy agreement
People sometimes ask me how to avoid invalidating a fixed term tenancy agreement.
Did you know you can easily invalidate a fixed term agreement you have with a tenant?
It’s really important to understand how to prevent giving away rights which could result in significant cost to you.
A verbal conversation with your tenant about terms can be enough to legally invalidate a fixed term tenancy.
If you verbally offer tenants in a fixed term tenancy any notice terms at all, you can effectively void the fixed term, and the tenancy will then likely legally be considered periodic.
Two ways we have seen this happen is owners agreeing to let tenants give notice under particular circumstances, like if they buy a house or get a job transfer. Surprisingly, it might not be possible to withdraw a verbal offer especially if the tenants have started to act on it – for example like starting to look for a house to buy.
Interestingly, NZ legislation does not allow for tenants to accidentally give away their rights.
This means for example if you agree with a tenant that you only have to give them a months notice to end a tenancy, and they change their mind later– they can insist on the legal terms (normally 90 days on a periodic tenancy).
To prevent this happening all agreements should be in writing including the tenancy terms and any variations.
You need a strong working knowledge of the Residential Tenancies Act to understand what you can and can’t do.
Equally important is to maintain a professional relationship with the tenant.
If you become their friend , popping in for tea, perhaps being invited for dinner etc, it makes it very difficult to be professional if they ask you to let them break their lease.
We use a set of clearly defined processes when a tenant wants to break out of a fixed term tenancy by giving notice.
This means several documents having to be agreed to and signed by the different parties, in the correct order.
Almost all of the time this results in no loss of rent (not even a day!), no additional expenses for re-advertising, and keeping the renewal date in the peak season.
If a landlord accidentally gives away fixed term tenancy rights this can easily result in thousands of dollars lost from a preventable vacancy.
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