‘Who spilt the red?’ Protecting your property investment over the party period

Christmas and the New Year celebrations are upon us – it’s usually the time we spend with family and friends, relax, and maybe have a wine or two. Most landlords will be more than fine with celebrations within their properties, although within limits.

Even the best tenants can cause accidental damage, which could end up costing you, so to ensure your investment property is covered over this silly season we’ve compiled a quick list of things to consider to keep that red off the carpet, and your money in your pocket.

1.     Use specific wording in the lease agreement

If you feel strongly about controlling large-scale gatherings in your rental property your lease agreement is where you can specify these expectations.

Wording in the lease agreement could cover:

  • A definition of what sort of gatherings are allowed, ie when things get out of control what action will be taken. A blanket ‘No Parties’ will not wash with the Tenancy Tribunal, it is unenforceable, and anyway what defines a party?
  • Illegal activity, such as underage drinking, drugs, and disorderly conduct, will result in action being taken.
  • Excessive amounts of noise is strictly prohibited (excessive usually signaled by when a noise complaint is made)

2.     Take a stern approach if things get out of hand

The issue with this one is that you won’t always know or be in a position to do anything about it, and perhaps nor will your property manager, so it’s important to take action during, or after. When you discover that a destructive party has taken place on your property or is currently in progress, you can take action to ensure that it’ll never happen again, or potentially prevent a disaster before it takes place. You have two options dependent on how serious the situation is:

  1. Call the police (best to use if there is an event out of your capacity to handle, e.g. a big party), and document the events of the evening in the case you need to take any situation to the Tribunal. Getting copies of Police records of the call out will help a lot at the Tribunal
  2. Call Noise Control; or encourage the neighbors to do so. Again, getting their independent version of events in writing is a very worthwhile step for any Tenancy Tribunal actions
  3. Handle it yourself (or through your property manager), and make it clear to the tenant that your visit is an official warning. Again, make sur you write the details of what took place in the case anything related to the situation is elevated to the Tenancy Tribunal.

3.     Get tailored landlord insurance and understand what you’ll need to pay for

A good landlord insurance policy should cover you for both accidental and malicious damage.

Accidental damage is a sudden and unexpected event which might include a broken window or spilling red wine on the carpet. The Residential Tenancies Act states that in these cases the landlords insurance will kick in to cover the cost of replacement – however the excess will come out of your pocket.

Malicious damage, when a tenant damages your property out of spite or ill will, might include holes punched in the walls, kicked in doors, damage to flooring, or even arson – things more likely to happen in an out of control party. This is when the tenant needs insurance, because proof of wilful damage, or proof the tenant was living in a way or acting in a way that would lead to damage i.e. a big party, the tenant would be liable to cover the cost.

If the tenants have a history of disruptive events that you have documented and have given them warnings about in the past, then any damage resulting from a further event could be deemed to be deliberate by a Tribunal adjudicator; and thus costs obtained from the tenants (as well as eviction)

4.     Appoint a property manager to manage this for you incl. regular inspections

The worst thing to come back to you after your holiday break is to find an email or phone call that there has been damage to your investment property – whether it’s an accident or not – it’ll still cost money, time and stress.

By appointing a property manager they’ll be the tenants’ and the neighbours point of call if accidents are to occur and or if further action needs to be taken. You’ll still get the bad news, but you’ll know that it’s been taken care of.

Regular inspections can make it easier for a landlord or property manager to spot if and when any damage has occurred, or if there are any concerns. They are necessary to ensure the lease agreement is being met and the tenant is taking good care of the property. 

Inspections should be conducted before the tenant enters the property, every three to four months depending upon your insurance company requirements, and again after the tenant has vacated.

Nick Phillips