Home Info Centre Denial of access: what is it and why is it important?
Denial of access: what is it and why is it important?

Denial of access: what is it and why is it important?

30 Oct 2019 7 mins read

Access: DENIED!… What now? As a landlord or property manager, at some point you may find you are unable to access the rental property you own or manage. Whether it’s because the property has been damaged or the tenant is refusing to leave, it is important to know what to do when put in this situation. 

Have you ever seen the phrase ‘denial of access’ in a landlord insurance policy and wondered what it meant? In a nut shell, it provides the policyholder with the opportunity to recoup lost rent when they are not able to access the rental property. Not all insurance policies have this as a standard inclusion, BUT it is standard in EBM RentCover Ultra, Platinum and ShortTerm products.

Here are two scenarios where claims can be submitted for loss of rent when denial of access occurs:

  1. when the tenant refuses to vacate the premises and they’ve been served with a lawful order for eviction or possession; or
  2. as a result of an insured event which leaves the property uninhabitable.
Let’s dig deeper…

If a tenant has been told to move out and isn’t budging, then it’s very unlikely they are paying rent. In these circumstances, no money is coming in from those living at the property and as a landlord or property manager, you can’t get another tenant in either. 

When a tenant is refusing to leave, and the property is protected by landlord insurance, claims can often be submitted for loss of rent due to denial of access. The proviso is that the tenant must have been lawfully evicted. This means that, before a claim can be submitted under this section of the policy, the tenant must have been issued with a termination notice (this is the case at EBM RentCover, however other landlord insurance providers may insist the tenant has to have been served with an order by a court or tribunal for eviction or possession before you can claim). 

EBM RentCover provides up to 52 weeks’ protection for loss of rent when a tenant refuses to leave the property and a court order is required for possession. A claim can be submitted for the period from when the notice to vacate was given to the time possession of the property is handed back.

Evicting the tenant

First, it’s important to lawfully evict tenants following the procedure set out in the relevant state or territory legislation. The process may vary slightly by state/territory, but in general make sure to:

  • give written notice to vacate;
  • follow the right procedure (tribunals have been known to throw out a landlord’s case just because they didn’t get the process right);
  • check the right forms have been used.
When the tenants just won’t leave

So all the right things have been done, and the tenant is still digging their heels in and refusing to leave. The next step is to get the law involved and apply for a court order. 

If the court/tribunal agrees the tenant should leave, a warrant of possession will be made. This will highlight the date the tenants have to vacate. Before the warrant is handed to the tenants, check how to go about it, as the process varies in each state. For example, in Victoria, the police need to accompany the property manager and/or landlord to the property to issue the warrant.

If the tenant still won’t leave, an eviction order will need to be sought. This order means the bailiff or sheriff will step in to evict the tenant. 

  • Once the warrant of possession or an eviction order has been given to the tenant, the locks can be changed by a locksmith. The insurance may also over the cost of replacing the locks if this is ordered by the court (EBM RentCover provides up to $250 cover when a tenant is evicted by the sheriff of bailiff and the locks need to be changed).
  • If the tenant isn’t there when the locks are being changed, their possessions may be legally required to be placed in storage for a certain amount of time. The amount of time varies so check with the relevant body in your state (Fair Trading or Consumer Affairs).
  • Conduct a final property inspection. Outgoing condition reports, with supporting photos and videos, can be used if a claim for damage on the insurance is needed to be made once the tenant has vacated.

It might be possible to retain the bond to cover some lost rent, so submit an application to the local tenancy authority to request access to the refund. Once the tenant is out of the property, submit a claim with the landlord insurance provider. 

The other scenario where denial of access comes into play is when the property can’t be occupied…

Say an insured event (like a fire, flood, cyclone or storm) badly damages a property and it is not possible to be accessed. Or, maybe the weather event damages surrounding property and again leaves the landlord or property manager with no access to the home. The damage is so bad that the emergency services or government authority states the property can’t be occupied. This means the tenants can’t live there until the danger is gone or damage is fixed. And if the tenant can’t live there, they won’t be paying rent during that time. 

If the right landlord insurance policy is in place, a claim for loss of rent due to denial of access from an insured event may be submitted. At EBM RentCover, we provide up to 52 weeks’ cover in this situation.  

When the property can’t be lived in at all

If a property has been so badly damaged that it is unsafe or unfit to live in, it may be possible end the lease by giving the tenant an official Notice to Vacate, on the grounds the tenancy agreement is ‘frustrated’. What does this mean? Well, a tenancy agreement is frustrated when the tenancy agreement can’t be fulfilled (and is not a fault of the landlord or tenant). So if the property can’t be lived in, either the landlord/property manager or the tenant can legally end the tenancy, so long as the rules set out in your state’s Residential Tenancies Act are followed.

Once the tenant has vacated, a claim for loss of rent due to denial of access can be put in to cover the period from when the property was unable to be occupied to the time that it could be again.

When the property can’t be lived in for a while

If the property has been damaged, but that damage can be repaired, the tenants won’t be able to live there while it’s being repaired and will need to live elsewhere for a while. And while they aren’t living there, they won’t be paying rent.  

TIP: Although you usually wouldn’t have an obligation to help tenants find another place to live, it may be something you want to help them out with. But as it’s unlikely insurance will cover the cost of any alternative accommodation, be cautious about offering to pay. Usually you’ll only be able to claim the loss of rent for the period when access to the property was denied.

At EBM RentCover we aim to work with clients to minimise the emotional and financial stress associated with making an insurance claim. While we hope our policyholders and their agents never run into trouble, if they do, we’ll be there.

Main photo by Joost Crop on Unsplash

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 661 662 if you have any questions. 

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