When should new tenants sign their lease

This has been a topic of debate for many years; When a new tenant rents a property from you, and pays the initial rent to secure it, when do you have them sign the lease?

View 1: You have them sign the lease straight away, regardless of when the lease starts, to ensure they have made a commitment to the property.

View 2: You wait until the day the lease starts and the new tenant collects the keys, as the property may be tenanted when they are approved and you can’t guarantee handover if the old tenant doesn’t vacate on time.

and go…

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It’s a tricky one - we have found a compromise that seems to work for us. We get the tenancy agreement signed up as soon as we can to confirm the tenancy, but we always leave 2 working days between a tenant vacating and the new tenancy starting. This leaves time to clear up any nasty surprised left over from the previous tenancy, complete eg cleaning and maintenance, record a new ongoing property condition report and ensure the home is completely ready for new tenants, starting off their tenancy on the right foot. It does mean there is always a 2 day vacancy for the owner, but that is usually the maximum vacancy. it also removes a lot of stress for our Property Managers!

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We do the same thing but we actually allow a 3 day vacancy ourselves.
Generally we have the new tenant sign within 24 hours of being accepted for the property.
However the exception to the rule would be a tenant that has been given a Notice to Leave and we aren’t entirely sure that they will vacate or not.
For these ones, we don’t even advertise till we know that they will be out. Owners can stress about this but good communication here is key .Once they are advised and understand that we could be in a lot more trouble if we have a new tenant moving in and and old tenant refusing to leave.

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100% agree with the vacancy period between tenancies and we do 3 days as well.

As for signing the lease, in QLD, once the deposit has been paid the property is considered leased and even without the documents in place, it is called ‘an implied tenancy’.

Having said that, in the old days (pre-2020) we would have the tenant attend our office and view an educational video. This provided information and an explanation of how it works when renting from us. In this day and age of digital signing and all that went along with the past 2 years, that educational information has gone by the wayside and bringing with it many questions that could have been eliminated or sorted out when they move in.

So, we are now winding it back to bring back the inhouse video, electronic signing of documents on the day and handover of property.

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If the property still tenanted - not until after the current tenant is vacated. If you were to sign the lease and the other tenant does not move out - there is liability to compensate the tenants that have signed a lease expecting to move in. We always allow 2-3 days between tenancies to get any hangover cleaning or work done.

If the property is vacant - we take a holding deposit if there is a gap of a few weeks otherwise we get the tenant to sign the lease at anytime up to a week before they are due to move in.

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I think this is where my issue is. I’ve always been inclined to adjust the lease signing process depending on the outgoing tenant. If the property is vacant I have the new tenant sign the lease when they pay the deposit. If the vacating tenant is still occupying the property, I don’t have the new tenants sign the lease until they collect the keys and complete induction. The tenants aren’t the only ones signing the lease, the agency is also on behalf of the landlord. With this comes obligations, just like the tenant. One of those obligations is to provide vacant possession of the property on the lease start. If the outgoing tenant doesn’t vacate as scheduled, you have no way of fulfilling the landlord’s obligation leaving them, and the agency, exposed to liability.

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As soon as we send a tenancy lease to the tenant we want the deposit and the signed agreement back within 24 hours. Of course - this is our ideal practice and is completed I would say 90% of the time.

We also allow a 2 day vacancy period - if we foresee problems or know that remedial work is required we extend as per the property but this is all done at the time we sign the tenancy lease.

In 13 years of overseeing leases we may have had 3 instances when the property wasn’t vacant for possession by the ingoing tenant but was sorted very promptly and on all occasions the ingoing tenant had no problem and there were no costs incurred.

For me - the risk of paying a couple of nights hotel accommodation for an ingoing tenant where the is no vacant possession, surely outweighs the possibility of a vacancy period when the tenant changes their mind the day before and no lease is signed.

Not something that is an issue for us, may be different in other areas/regions however.

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I like that you are balancing risk and process. :man_judge:

100% agree with you Julie. Our policy is three days between tenancies, although the PMs use their discretion and could do two days. Our leases are signed within 24 hours of offer, and the bond paid, so that we can secure the tenancy and remove it from advertising.

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We get the agreement signed as soon as possible - ideally within 24 hours. Leaving it longer would mean potentially missing out on a different good tenant. We like to get commitment from the new tenant. We have a 2 working day vacancy between occupants. We have more trouble getting owners to vacate their houses on time than tenants! It is quite tight but owners appreciate that we are working to keep their vacancy rate to an absolute minimum. I would agree that if the problem ever arose, the cost of a night or two’s accommodation outweighs not getting the signed agreement. Touch wood - we have never had to find alternative accommodation.

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