Minister’s Response to REINZ’s Letter concerning Tenancy Tribunal Practice Note 2016/1
Our REINZ(Real Estate Institute NZ) wrote to the Minister for Building and Housing, Hon Dr Nick Smith, in September relaying their concerns regarding the Tenancy Tribunal’s Practice Note. The Practice Note applies the Osaki decision and limits the amount landlords could claim for damage caused by tenants, if the landlord is insured. Dr Smith responded and confirmed that, among other things, a proposal is being considered where tenants will be liable for negligent or careless property damage up to the value of their landlord’s insurance excess, but not exceeding four weeks’ rent.
A recent case where a tenant had a dog, which was a breach of the tenancy agreement, and caused damage to the property, was held liable by the court, after an appeal, and brings further interest to these situations. Here is the situation:
David Russ of Tekoa Trust took his case to court after the Tenancy Tribunal ruled last year that his tenant, Amanda Stewart, was not liable for damage caused by her dogs urinating throughout the Foxton house she rented.
The tribunal based its decision on the landmark “Osaki” court case, in which tenants who accidentally set fire to their rental house did not have to pay for the damage.
Landlords around the country became concerned that if they had insurance, the tenant would not have to pay even in cases of carelessness.
However, the Palmerston North District Court has overturned the tribunal’s decision and ordered Stewart to pay about $3790 in carpet replacement costs, court costs and lost rent.
Judge David Smith said he was “of the view” that the tribunal adjudicator was wrong for concluding the damage was unintentional.
Not only had the tenant breached a no-dog clause in her tenancy agreement, but she had continued to let them in after perhaps a couple of accidents.(Tenancy Services Newsletter).
(Message: Licensee’s must ‘ensure’ purchaser is aware of defect.)
Another case of interest.
This is a CAC (Complaints Assessment Committee) decision concerning the application of Rule 10.7 of the Client Care Rules. The Complainant owned number X (‘Property X’), which is next door to the vendor’s property (‘the Property’). Two days before settlement of the Property, the Complainant informed the listing Licensee that he was in dispute with the vendor over the encroachment of a retaining wall.
The Licensee declined the Complainant’s request to disclose the purchaser’s contact details. On the same day, the Complainant emailed surveying evidence of the retaining wall’s encroachment to the Licensee. Settlement of the Property took place as scheduled but the purchasers were not aware of the encroachment until after settlement.
The Licensee and the Agency responded to the complaint by explaining the steps they had taken after learning of the encroachment. This included emailing the vendor’s husband immediately advising that their solicitor will need to be contacted about the issue, and various telephone calls to follow up. In one call, the vendor’s husband expressed he saw no issues with the wall. The Licensee said she trusted the boundary issue would be passed on to the purchasers.
Decision: The CAC (Complaints Assessment Committee) determined that the Licensee and the Agency had engaged in unsatisfactory conduct. It also found they had breached Rule 10.7 of the Client Care Rules.
The CAC considered that the alleged encroachment was a defect in terms of Rule 10.7. The Licensee and the Agency did not satisfy paragraph (a) of the Rule because they did not obtain evidence through the vendor to prove there was no defect, nor did they satisfy paragraph (b) because they did not ‘ensure’ the purchasers were aware of the wall issue.
(Licensees should bear in mind that in some instances ‘ensuring’ the purchaser is aware of a defect may go beyond merely expecting the vendor would pass on the information.)REINZ.