It may seem like the perfect solution. But it’s also a giant leap of faith. Moving in with your BFF (or any housemate) sounds exciting and fun, and you know sharing with someone else will help stretch your pay check. Or will it? BFF’s sometimes drop at least the last F, and sometimes both. Co-tenants of any sort fall in love, get a transfer to the mainland, or something else can make them move away. Baxton Property Management in Hobart outlines some of what you might be up against if someone moves out.
Aside from the emotional blow that comes when a co-tenant or sub-tenant moves out before the end of the lease, their departure can also affect where you stand with regard to the lease. If the departing tenant doesn’t co-operate, you could be left carrying sole responsibility for the rent until you can find someone else to move in with you. And you may have to pay for the costs involved in repairing any damages caused by the outgoing tenant.
Co-tenants vs head/sub tenancy
You have two options when signing the lease, but both could ultimately leave one of you high and dry (as well as strapped for cash), until you can find a replacement tenant. If you are careful with the tenancy agreement, there is some protection from the tenancy laws – but who wants to have to go the legal route if the departing tenant doesn’t play the game?
The two lease options available are co-tenancy and head/sub tenancy. Co-tenancy puts both (or all) tenants’ names on the lease. This makes all those who have signed the lease equally responsible for meeting its terms. That may sound like the ideal situation, until you realize that all those who sign it are both jointly and severally liable. This means that if one defaults on the rent, or causes damage, the remaining tenant(s) are responsible for their share as well. And if there’s only one of you left in the house, you are going to have to carry the entire rent (until someone else moves in) as well as taking responsibility for damage you did not do. The principle is that those who are left behind pay, and they must sort out any debts with the one(s) who left.
How do sub-leases work?
Sub-leases operate on a tiered system. Head tenants enter a lease agreement with landlords, property managers or agents. They then organise different lease agreements with each of the sub-tenants. These have nothing to do with the landlord.
A Residential Tenancy Agreement should be used for the sub-lease, with the head tenant taking on the role of landlord in this situation so that it is subject to the usual residential tenancy laws. Rights and obligations are therefore mandated in terms of the law. If another form of agreement is used it will not be covered by the Act, and will instead fall within the gamut of general contract laws.
Sub-leasing is only possible if the head tenant lives on the premises, and provided the landlord agrees – which he or she is likely to do, as consent cannot be withheld unreasonably.
In this case the head-tenant, as the sole holder of the lease with the landlord or agent, gets landed with paying the full rent on time, as well as any costs for repairing damage caused to the property. Each sub-tenant is then responsible for paying their share to the head tenant, who, in turn, must ensure the sub-tenants pay them on time.
When things go right
The co-tenant who leaves technically remains responsible for their share of the rent and damages till the lease expires. He or she can, at least theoretically, be held responsible even after moving out of the premises until their name is removed from the tenancy agreement and replaced with that of an incoming tenant. This should mean that the outgoing tenant continues to meet their obligations, and might even encourage them to help you find a replacement. If that happens, you are home free.
Baxton in Hobart is one of Tasmania’s top specialists when it comes to property management. Their team has 100 years of rental and property management experience between them. That’s why Baxton likes to share relevant information with both tenants and owners. There’s lots available to you on their blog.
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