Protection

“See you in court!”

The legal expenses cover offered in EBM RentCover policies may not be well known, but if a landlord needs to go to court, this additional benefit can prove very welcome.

Evicting a tenant is trying, even when the process goes smoothly. It can be downright challenging, if it does not. And if things get messy, there is a good chance that the landlord will wind up in court/tribunal.

Legal proceedings can be costly, so having cover for legal expenses in your landlord insurance policy can certainly help.

At EBM RentCover we offer up to $5,000 in legal expenses when the landlord, or their property manager (as their representative), needs to go to court/tribunal to have a tenant evicted. The policy provisions kick in when the landlord has had to pursue their legal rights to repossess the property that has been let under a tenancy agreement (in other words, a tenant has been issued with a termination notice and refuses to leave).

Expenses that can be claimed

• Court application fees.

• Warrant of possession fee.

• Fees for property manager to attend court, as per costs specified in the management authority.

• Legal fees (if prior written approval is given by us for engagement of a lawyer).

Expenses that cannot be claimed

• Landlord’s time to attend court.

• Property manager’s time to prepare court documents.

• Cost for the property manager to submit an insurance claim.

• Registered post costs.

• Parking fees.

What you need to be aware of

• Legal expenses can only be claimed in relation to a claim for loss of rent.

• Claims can be made for costs incurred to attend court to obtain possession of the property or request a refund of the bond.

• The landlord/property manager must have received legal possession of the property before a claim can be made (e.g. the eviction process needs to be complete before a claim for legal expenses can be made).

• Invoices for costs incurred need to be provided.

• EBM RentCover must give written approval for a lawyer to be engaged, prior to their engagement.

• Fees for the agent to attend court must be reasonable for the time spent in court.

• The payout may be reduced by the balance of any bond monies remaining after deducting clean-up costs or other expenses the policyholder is legally entitled to deduct from the bond monies (or the deposit or booking fees in the case of short-term rentals).

Claim example

The tenant at a rental in Smithfield (NSW) fell into arrears. The landlord followed the legal eviction process and issued a termination notice after the rent was in arrears for 14 days (as per legislated requirements). The tenant was given 14 days to vacate (again as per requirements) but refused to leave at the end of the notice period. The landlord then had to apply to NCAT for a termination and warrant of possession order. The tenant did not comply with the order and was later evicted by a sheriff’s officer, and possession was returned to the landlord.

The landlord’s $5,300 claim included rent default, denial of access, lock replacement (as the eviction had been carried out by a bailiff), and legal expenses. The landlord was able to claim the NCAT application fee, their agent’s attendance fee at tribunal, and the warrant of possession fee. A total of $594 in legal expenses was paid.

NOTE: While this example is based on a property in NSW, the same scenario applies in all other states, as long as the corresponding legislative requirements have been followed.

Claiming for legal expenses

Legal expenses may be claimed in relation to a claim for loss of rent. Claims can only be made once the landlord/property manager has received legal possession of the property (see breach notices and termination notices) and possession is returned to the landlord.

To make a claim the landlord (or agent) needs to supply these documents:

• Copy of lease agreement for the defaulting tenant.

• Copy of tenant’s rental ledger.

• Copy of all notices issued to the tenant related to the claim – for example, breach notices, notices issued to terminate the tenancy, court applications, and any court orders or tribunal orders issued against the tenant.

• Invoice or copy of the landlord ledger showing the cost the landlord incurred for the property manager to attend court or tribunal on their behalf, and a copy of the Managing Agency Agreement.

• Invoice for legal costs incurred for engaging a lawyer.

• Breakdown of bond deductions.

• Copy of lease agreement for new tenant.

It is good idea to get in touch with your landlord insurance provider as soon as you think it is likely that a claim for loss of rent will need to be made. Your insurer can guide you through what needs to be done to help ensure your claim will be valid and the claims process streamlined. It is important that you understand your legal and contractual obligations before evicting your tenant, otherwise it may be an illegal eviction, and any insurance claim could be jeopardised.

The claim example above shows the value in a landlord insurance policy with legal expenses cover. While the costs associated with appearing at tribunal for eviction matters are usually considerably lower than those matters heard before a court (where a lawyer may be engaged), any legal fees are a financial impost most landlords could do without. The $5,000 in legal expenses offered by EBM RentCover helps protect landlords against that financial burden.

If you have any questions about legal expenses cover, please touch base with a member of our Expert Care team – 1800 661 662.

*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 here, contact 1800 661 662 if you have any questions.