Housing Loan details when lodging bonds, Mortgagee repossessions and Illegal drug activity in homes - Real estate industry bulletin 202

This publication is for: 
Licence holdersProperty industry

1 August 2019

In this issue:

  • Housing Loan details when lodging bonds
  • New! Information and resources regarding illegal drug activity in homes
  • How mortgagee repossessions affect your tenants

Housing Loan details when lodging bonds

We have been reviewing loans paid by the Department of Housing (Housing) to agents/landlords to ensure they are lodged with the Bond Administrator.

Out of 400 bonds lodged by real estate agents in 2018, 50% did not contain an amount in the “Department of Housing Amount” field. 

You should include an amount in this field when lodging bond details via Bonds Online to ensure Housing is notified when the tenancy ends and the bond is released. This causes difficulties for Housing in cases where the tenant is still required to repay a portion of the loan. If an agent fails to include an amount in this section, they are in breach of section 29(6) of the Residential Tenancies Act 1987 that states: 

“A person shall not make an entry in a record referred to in subsection (4)(c) that the person knows is false or misleading in a material particular.”

In addition to correctly recording a Housing component, you are also reminded to ensure lodgements accurately reflect the date on which the tenancy is due to commence and the correct date that the agency received the bond from the tenant(s). Failing to appropriately record these details has the potential to also breach rule 6 of the Code of Conduct which requires all licensed and registered persons to act with due care, diligence and skill at all times when acting for a client, in addition to section 29 as outlined above.


New! Information and resources regarding illegal drug activity in homes

Illegal drug activity in residential properties is cause for concern for tenants, owners, property managers and real estate agents alike due to potential health and safety risks to occupants. Illegal drug activity in homes, especially clandestine laboratories (clan labs), cannabis grow houses, and smoke houses, can contribute to damage or contamination from drug or chemical residues. 

The Department of Health guide, Illegal Drug Activity in Homes: Managing Risk  A Guide for Occupants, Landlords, Property Managers and Agents, helps you identify and manage illegal drug contamination in residential properties in order to reduce the risk of exposure to occupants. It’s a great addition to your resource kit!

Consumer Protection regards the non-disclosure of known serious health hazards as a breach of the Real Estate and Business Agents and Sales Representatives Code of Conduct 2016 (the Code).  This includes any harmful chemical residue left at a residential property due to it having been used as a clan lab or grow house.

Under the Code, real estate agents are required to ascertain material facts about any property they list.  While determining what constitutes a material fact may depend on the particular circumstances, a property’s previous use as a clan lab is likely to be a material fact given it may affect a prospective buyer/tenant’s decision to purchase/rent the property.

While you cannot disclose what you don't know, you must take due care in ascertaining material facts about any property or business you sell or rent.

As a general practice, property managers and agents should be alert to any illegal drug activities that may affect a property under their care. 

If you believe or suspect that there has been a clan lab or smoke house at a property you manage or are selling, the Lessor or owner is required to undertake the necessary cleaning before leasing or sale. 

How mortgagee repossessions affect you and your tenants

If the owner of a property you’re managing has failed to keep up with the mortgage payments, the mortgagee may apply to the Supreme Court for possession. At this time the mortgagee may give the tenant notice of the application to repossess the property via Form 17, which could result in a concerned tenant contacting you for more information. 
The process from application to court-ordered possession can be lengthy so the tenancy agreement continues as usual and the property is still subject to your management agreement with the owner.
Once the mortgagee takes possession of the property, the property is no longer under your care.  The mortgagee may choose to terminate the existing residential tenancy agreement and again the tenant may contact you for more information.
If this happens, there are several important things you should know:
The mortgagee must give the tenant at least 30 days’ notice to vacate using Form 14.
The tenant does not pay rent during the 30 day notice period.
The tenant is entitled to be repaid any rent that was paid in advance for that 30 day period and must contact the mortgagee’s representative listed on the Form 14 to make arrangements for any refund. 
The mortgagee can enter the premises during the 30 day period to show it to prospective buyers provided the tenant receives reasonable notice and agrees to the date/time. 
For detailed information, visit our new Mortgagee ending a tenancy page that explains the process, timings and options available to tenants.



Consumer Protection
Last updated 02 Aug 2019

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