Replacement tenant clause

Question from Joanna updated on 6th March 2019:

We rented a room for our son in Dunedin for University this year. At the time we were not sure how long we needed the room for, so the landlady gave us a fixed tenancy agreement ending 31 December 2018.

She hand wrote in section 4, insert other terms of this agreement: “costs up to one week rent if tenant wants replacement tenant and landlord finds them or has to”. The above was supposed to allow us to give notice sooner.

However, when we advised a leaving date and that we would pay one weeks rent for her to find another tenant, we received the following response:

CONTRACT STATES 'PARTIES AGREE - COSTS UP TO 1 WEEK RENT IF TENANT WANTS REPLACEMENT TENANT'. MEANS THAT IF YOU WANT ME FIND A NEW TENANT LET ME KNOW AND YOU MAY BE LIABLE FOR COSTS UP TO $175. IF NEW TENANT NOT FOUND YOU CONTINUE WITH RENT..

I believe her to be incorrect, as she wrote “costs up to one week rent if tenant wants replacement tenant and landlord finds them or has to”. Who is correct please?

Our expert Jennifer Sykes responded:

When parties to a tenancy agreement agree to a fixed-term agreement – neither party can give notice to end the agreement before the end date in the tenancy agreement. Fixed-term tenancy agreements can only be ended by mutual agreement between the landlord and tenant named on the tenancy agreement or by the Tenancy Tribunal. A tenancy agreement may include a provision prohibiting the tenant from assigning, subletting or parting with possession of the premises during the term of the tenancy.

However, in the absence of such a provision the tenant may, with the prior written consent of the landlord and in accordance with any conditions attached to that consent, assign, sublet or part with possession of the premises. The landlord’s consent must not be withheld unreasonably and the landlord must not attach any unreasonable conditions to it. An assignment is where a tenant (the assignor) arranges for someone else (the assignee) to become the tenant in the assignor’s place. The assignor usually then has nothing more to do with the tenancy.

The clause inserted in the tenancy agreement may have been intended by the landlord to apply to circumstances where there is an assignment of the tenancy sought by a tenant and reasonable expenses are incurred, such as advertising costs. The current tenant would generally remain liable for the rent until a replacement tenant is confirmed as an assignee. If either party is unable to reach an agreement or the tenant believes they were misled by the wording in the tenancy agreement, you could apply to the Tenancy Tribunal to have the matter resolved.

For more on the rights and responsibilities of landlords and tenants, go to www.tenancy.govt.nz or subscribe to our e-newsletter Tenancy Matters here

The Ministry of Business, Innovation and Employment provides information and guidance on building law and compliance, services including weathertight homes, and advice for tenants and landlords.

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