Real Estate Agency method of payment issue
The Tenants’ Advice Service has from time to time received calls about issues tenants face regarding the method they use to pay their rent. In the past this occurred when a Canberra real estate agent attempted to force tenants in properties they manage to adopt a specific method of paying the rent. While this practice has been around for some time, occasionally it affects a large number of tenants, particularly if there is a change within an agency (such as a merger or change in management).
These particular arrangements require tenants to pay rent to a third party company. That company accepts rent payments from the tenant on the real estate agent’s behalf, and the tenant pays a monthly fee to the company. This has sometimes been presented as the only option by which rent can be paid. Rather than having the option of negotiating the preferred method of payment at the commencement of or during the tenancy, the tenant is told they are locked into one method only.
There is nothing wrong with this type of arrangement existing as an optional payment method. As long as it is made clear to existing and prospective tenants that this method of payment is simply one they can choose to adopt if they wish to, then no problem – some tenants may prefer to use this type of payment method. However, in the way it has been put forward, this practice may be unlawful in a number of different ways.
If you do decide to use this method make sure your direct debits cease when you leave the tenancy
How is the practice unlawful?
The agency in question had said that they would be closing the bank account into which tenants pay rent by direct deposit, so payment by direct deposit would no longer be possible. This is disingenuous at best and illegal at worst. The Agents Act 2003 (ACT) requires: 1) That all money received by an agent on behalf of the principal be held in trust; and 2) That agents maintain a Trust Account at a bank in the Territory. As no real estate agent could close their Trust Account without breaching the Agents Act, it is possible that these real estate agents are deliberately misinforming tenants in order to make it appear that they have no choice but to adopt the new payment method.
– The Residential Tenancies Act
For all tenants, section 15(1) of the Residential Tenancies Act 1997 says that a lessor (or their agent) may not require or accept anything but rent or a bond in consideration for granting a lease. Arguably the fact that the tenant is required to enter into a contract with a third party breaches this section. Note – this argument has not been tested in the ACT Civil and Administrative Tribunal.
— Australian Consumer Law
It is also possible that effectively forcing tenants to sign a contract with a third party constitutes a breach of the Competition and Consumer ACT 2010. The Australian Competition and Consumer Commission and the ACT Office of Regulatory Services (Fair Trading) both investigate breaches of the ACL. You can contact the ACCC on 1300 302 502 and the ACT OFT on 6207 3000.
For current tenants
For people who have ongoing tenancy agreements, any attempt by a real estate agent to force a change to the established payment method will be unlawful.
Clause 26 of the Standard Residential Tenancy Terms indicates that the method of rent payment may be changed if the parties agree to do so. Without such agreement the change cannot take place – it is a basic principle of contract law that one party has no power to unilaterally change a term of a contract that is ongoing.
The established method of rent payment will either be set out in the tenancy agreement, or if not, it can be inferred from the conduct of the parties (for example, if you have been paying your rent via internet transfer for six months and these payments have always been accepted, then that is clearly the established method of payment).
HOWEVER: If you are an ongoing tenant in this situation, you need to carefully think through what you are going to do.
If the real estate agent physically prevents you from paying rent via the established method (for example, by closing a bank account) and you refuse to use a different means, then your rent will fall into arrears. This would allow the agent to serve you with a Notice to Remedy, a Notice to Vacate, and then apply to the ACT Civil and Administrative Tribunal for a Termination and Possession Order.
While it may be very unlikely that the Tribunal would order your eviction once you explain the circumstances, it is certainly possible. To reduce the chances of the Tribunal Member ordering termination, evidence that you have the funds to cover all of the arrears (e.g. a bank statement) would be helpful, as would copies of correspondence from you to the agent where you point out that while you want to pay your rent as required, their breach of the agreement prevents you from doing so.
The alternative to this would be to apply to the Tribunal as soon as the real estate agent prevents you from paying rent by the established method. You could apply for an Order that would force the agent to comply with the agreement – this is called an Order of ‘Performance’ (Section 83(b) of the Act gives the Tribunal the power to make this kind of Order). The advantage of this tactic is that it may resolve the situation before it reaches the point where you risk eviction.
You can use our sample letter Change to Rent Payment Method as a guide for responding to your agent.