05/12/2012

Question: Queensland police recently informed me that a tenant of mine has been manufacturing drugs (ecstasy) on my property. The tenant has now vacated, but acting in good faith, I’ve done everything necessary to make the place fit for a new tenant.

This was quite an expense for me and cost $2,800, so I’ve kept the $1,300 bond. My insurance has refused to cover the shortfall, claiming this isn’t included in my cover, and now I’m considering my choices. Would I be within my rights to seek additional compensation from the tenant? What about from the property management agency I use? It was actually them who “screened” and installed the tenant in the first place. 

Answer: This is a very unfortunate state of affairs that the landlord has been subjected to.

Firstly, if the tenant was conducting criminal acts within the rented premises this would be considered a breach of the lease and cause for the landlord to immediately terminate the lease. However, from the facts it appears that the tenant merely vacated at some point.

Secondly, when a tenant vacates rented premises they have certain obligations placed upon them, such as leaving the premises in the state and condition in which it was in at the time the lease commenced. If the tenant has breached this obligation then the bond monies may be used to attend to any repairs required to the premises. From the facts it appears that the premises were left in a state of disarray. It also appears from the facts that the landlord has been able to keep the entire bond monies to assist with such damage and repairs which has only gone so far to meeting the cost and expense of the damage sustained.

In so far as the insurance cover is concerned, the terms of the relevant policy would need to be reviewed to answer why the insurance policy does not cover the damage. It may have something to do with how the insurance company perceived the actions of the landlord and whether or not it might have negated any liability. A property owner usually has the liability of taking reasonable care to protect their home.

The question then is left: Can the tenant seek additional compensation from the tenant? Possibly, a claim can be filed in the Queensland Civil and Administrative Tribunal, which is commonly known as CAT. However, like with any claim, the person who is suing, (in this case the landlord) must have sufficient evidence to prove that the party to whom the claim is made against (i.e. the tenant) caused such damage and loss to occur and be able to quantify such damage reasonably.

To pursue the property management agency would be very difficult unless it could be proved that they acted recklessly and negligently by not screening the tenants at all, and were aware of the tenant’s intentions of the use of the premises. To prove that would be challenging, to say the least. Sometimes a tenant can be very good at disguising an undesirable past. Agencies should always check the Tenancy Databases which are available through privately owned companies. Even then, a tenant may appear as an unblemished tenant.

  • Answer provided by Despina Priala, Priala Legal

Disclaimer: The information in this article is of a general nature only and should not be relied upon as legal advice. You should seek advice for your particular circumstances before entering into any transaction.