Compensation from broken fixed term?
Question from Peter updated on 14th August 2013:
Our tenants ended a fixed term tenancy with two weeks notice. We did not agree for them to move out but they moved out anyway. We searched for a new tenant as we had to pay the mortgage and luckily found one to take over on the day the previous tenants moved out. We want to claim three weeks rent from their bond as compensation, can we do this?
Our expert Alan Bruce responded:
Under the Residential Tenancies Act 1986 (the Act), fixed term tenancies can only be ended early: • By mutual agreement between the landlord and the tenant(s) • If the property undergoes a mortgagee sale, or • In certain circumstances, by the Tenancy Tribunal. Where an agreement to end a fixed-term tenancy cannot be reached, the tenant continues to be responsible for the fixed-term tenancy until either a new tenancy commences, or until the end of the fixed-term (whichever comes sooner). Both parties also have an obligation to mitigate any loss (except where a tenant abandons a property). In this type of situation, it is recommended that landlords notify their tenants of their continuing obligations under the fixed-term (e.g. rent is still to be paid) and if they will be responsible for any reasonable costs associated with re-tenanting the property. Where a property is successfully re-tenanted, the tenant’s obligations in respect of their tenancy (e.g. rent payments) would cease the day prior to a new tenancy commencing. In this particular case, the tenant has a responsibility to pay rent until the new tenant takes over and the landlord can ask for any reasonable costs involved in re-tenanting the property. An example of a reasonable cost would be the fee to re-advertise the property online. It is highly unlikely the landlord would be entitled to any additional rent as the property was re-let the day after the tenant moved out. I suggest you discuss the costs associated with re-tenanting the property with your tenants. If an agreement is not met, you may wish to make an application to the Tenancy Tribunal to have the matter resolved. To discuss your situation further, or for information about ending a fixed term tenancy early, you can visit the Ministry of Business, Innovation & Employment’s website (www.dbh.govt.nz), or call 0800 TENANCY (0800 836 262).
The Ministry of Business, Innovation and Employment provides information and guidance on building law and compliance, services including weathertight homes, and advice for tenants and landlords.