Here’s a question from Don, ‘My tenant and I signed a tenancy agreement, and he paid one week’s rent in advance, but the day before moving in, he pulled out of the agreement. How much rent can I recoup, and what happens next?’
When a tenant bails at the last minute, it can be incredibly distressing and disruptive for the landlord. Don’t worry, I’ve got you. Let’s take things one step at a time!
Is there a tenancy?
This is a crucial distinction. If no tenancy has been established, the tenant isn’t legally obligated to Don and could even request a refund of the rent. However, if a tenancy does exist, Don can rely on legal protections to mitigate his opportunity cost.
In this case, yes, there is a tenancy. According to the Residential Tenancies Act (RTA), a tenancy is defined, in part, as “the right to occupy the premises (whether exclusively or otherwise) in consideration for rent.” The tenancy agreement grants the tenant the right to occupy, and the one week’s rent paid in advance is consideration. The only way for the tenant to move on is to terminate the tenancy.
Tenancy type matters
Termination unfolds differently depending on the type of tenancy.
Fixed term tenancy
If the tenancy is fixed-term, the tenant has to explore early termination with Don’s consent or apply to the Tribunal for termination:
If Don consents to early termination, the tenancy will terminate on an agreed-upon date. Under s44A, Don is entitled to be reimbursed for any reasonable expenses incurred due to the early termination. The question Don has to ask himself is, ‘Would I be spending this money if the tenancy is not terminated early?’...
