Agents behaving badly - rent arrears and CTTT costs...

Tenants beware - real estate agents don't always get it right!

(Real Estate Agent School - not as easy as you might think.)

We've recently heard of some tenants receiving notices of termination for rent arrears that include threats of obtaining costs for eviction proceedings in the Consumer, Trader & Tenancy Tribunal (CTTT).

That this would happen once is alarming enough, but numerous instances occuring simultaneously across different parts of NSW smacks of an emerging industry practice. A dodgy one, at that. Let's hope not, but just to be sure, let's all be on the look-out for it...

The letters read something like this:

... You are in breach of your lease and we hereby give you notice of termination under section 88 of the Residential Tenancies Act.

We have lodged an application for termination with the CTTT. Costs for the application are $36 and we will hold you responsible for this cost regardless of whether or not we have to proceed with this application.

Should a hearing become necessary, we will seek further costs in the CTTT - including our preparation costs and our attendance fees of $xx.xx per hour.

You can only avoid termination by paying the rent or entering into an agreed payment plan within 7 days.

There are a few implications here that ought to be promptly addressed.

Implication 1 - real estate agents can easily obtain costs orders in the CTTT...

Implication 2 - tenants can be held responsible for real estate agents' CTTT application fees - even where the matter is resolved without having to attend a hearing...

Implication 3 - tenants cannot avoid termination for arrears unless they do exactly as the real estate agent tells them...
The view from the Brown Couch is, as you would expect, somewhat different. Let's look at each of these implications in turn:

1. Under the Consumer, Trader and Tenancy Tribunal Act 2001, parties to any proceedings are required to cover their own costs. The Tribunal does have the power to order one party to pay the others' costs, but only in matters where there are "exceptional circumstances" that would warrant it. In general terms, costs are difficult to obtain, and it is usually not even worth asking for them...

2. The Residential Tenancies Act 2010 stipulates that tenants can only be required to make certain types of payment to the landlord under their residential tenancy agreement. These are bond and rent, and in many instances charges for water consumption. Requiring a tenant to pay a CTTT application fee, absent a difficult-to-obtain CTTT costs order, would be in breach of the law, and could leave a landlord liable for a $2,200 fine.

3. Tenants should not rely on the advice of a real estate agent. Agents are, after all, there to work for the landlord, not the tenant. Don't be fooled or intimidated into leaving the property without a CTTT hearing - particularly if you disagree with the arrears claimed, or if you've made an offer to pay by installments that the landlord wont agree to. It's always a good idea to get advice from a Tenants' Advocate before deciding what to do.

Taking all of this into account - real estate agents who hand out this kind of notice of termination are perhaps putting themselves in harm's way. The information included with the notice may be seen as misleading or even unconscionable, and a complaint to Fair Trading could be made on this basis. Contact your local Tenants' Advice service for more information about making such a complaint.