Kamis, 20 Oktober 2011

Maintaining relations and tenants' alterations

By now we expect you will have received and devoured the latest edition of Fair Trading NSW's monthly e-newsletter on all things residential tenancy, The Letterbox. If you haven't already done so, now is as good a time as any to sign up to have it delivered straight to your inbox.

Each month The Letterbox undertakes to answer questions from tenants and landlords about a particular aspect of NSW's renting laws. We were particularly interested in the current issue, because it covers alterations to premises. We were rather hoping that Fair Trading would mention some of the likely implications for tenants and landlords of the coming rollout of the National Broadband Network... Alas, they did not.

But we did get an interesting little snippet that's caused a bit of a stir over here on The Brown Couch. The Q & A session provides:

What responsibility does the landlord have during the tenancy to maintain alterations made by the tenant?

None. Unless the landlord agrees otherwise, the tenant is responsible for the cost of installing and maintaining any fixtures they add to the premises.

On the face of it, we can't be so sure.

The common law of property says that once a tenant affixes an item to real property it forms part of the 'landlord's inheritance', until such times as it is properly removed by the tenant (ie according to a set of developed rules) [Bain v Brand (1876) 1 App Cas 762]. Put simply, a tenant retains a limited right to remove a fixture that they have added, but while ever it remains affixed it is the property of the landlord.

The Residential Tenancies Act 2010 does not include anything that would unambiguously displace this common law principle, and it offers no clear guidance on the maintenance of tenants' fixtures.

The Act does set out some pretty clear rules about how and when a tenant can install or remove a fixture. Included in these rules are provisions that state:

66(4) A fixture installed by or on behalf of the tenant, or any renovation, alteration or addition to the residential premises by or on behalf of the tenant, is to be at the cost of the tenant, unless the landlord otherwise agrees.

67(3) Despite subsection (1), a tenant is not entitled to remove a fixture without the consent of the landlord if the fixture was installed at the landlord’s expense or the landlord provided the tenant with a benefit equivalent to the cost of the fixture.

These provisions could be interpreted to displace the common law - but for this to be so we'd need to accept a broad definition of the word "cost". If it refers to ongoing costs of upkeep, as well as the one-off cost of installation, then Fair Trading's contention about maintenance responsibilities of tenants' alterations could hold true. But this may be a bit of a stretch, because neither of these provisions contemplate the ongoing maintenance of a fixture - they deal only with installation and removal.

The Act also sets out the landlord's repair obligations - in which the definition of residential premises includes:

everything provided with the premises (whether under the residential tenancy agreement or not) for use by the tenant (s62).

Perhaps this definition displaces the common law, by excluding tenants' fixtures from the definition of 'residential premises'. If this is so, then the landlord's repair obligation would not extend to tenants' fixtures, because the obligation is to maintain the residential premises, as defined to exclude anything the landlord has not provided, in a reasonable state of repair. Accepting this exclusion would require a narrow take on the phrase "provided with the premises" - that is, an alteration made by the tenant, with the landlord's consent, would have to be seen as something that was not "provided with the premises". It is not clear that this interpretation could be universally applied to every conceivable set of potentially relevant circumstances.

There is one thing we can be sure of. The Act says:

63(3) A landlord is not in breach of the obligation to provide and maintain the residential premises in a reasonable state of repair if the state of disrepair is caused by the tenant’s breach of this Part.

Clearly, a tenant who alters premises without first obtaining the approval of the landlord cannot expect the landlord to help out with repairs and maintenance of that alteration...

But what of the tenant who does obtain the landlord's approval? Indeed, how will a landlord respond to a request to alter premises if they believe they may be liable for its upkeep?

The key message from all of this, it seems, is to make sure you reach a complete agreement with your landlord before you make any alterations to your premises. In particular, be clear from the outset whether you intend to one day remove the fixture, or to leave it behind at the end of your tenancy. Because if you are to ultimately make a gift to your landlord, it would be wise to factor in and reach agreement as to who will be responsible for the ongoing upkeep of your alteration during the course of your tenancy.

Which really brings us back to The Letterbox Q & A.

Unless the landlord agrees otherwise, the tenant is responsible for the cost of installing and maintaining any fixtures they add to the premises.

This may simply be a case of Fair Trading taking an optimistic view of the law as it stands. Sure, it's easy to explain, but we bet it's even easier to sell to all those landlords who cried foul when the idea of "no unreasonable refusal for minor alterations" was first raised. If it is as simple as all that, we'll be surprised. Then again, perhaps we're just being picky.

Regardless, it's always a good idea to be clear on what you're agreeing to whenever you set out to alter the status quo.