Powered by MOMENTUM MEDIA
realestatebusiness logo

Breaking news and updates daily. Subscribe to our Newsletter!

Home of the REB Top 100 Agents
Breaking news and updates daily. Subscribe to our newsletter

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

‘See you in court’: Why landlords need legal expenses cover

By Sharon Fox-Slater
10 November 2020 | 1 minute read
Why landlords need legal expenses cover

Rent going unpaid is all too often a problem for landlords and property managers, writes Sharon Fox-Slater.

When such problems arise during a tenancy, they can quickly escalate and wind up in court, which is a time-consuming process that can end with the landlord having to pay unexpected legal bills. 

Legal action may be the last path landlords and agents want to go down, but sometimes it’s inevitable. When a tenancy has turned pear-shaped and eviction/legal proceedings are the only recourse left to recoup loss of rent, the provision for “legal expenses” in some landlord insurance policies quickly comes into its own.

Advertisement
Advertisement

If the tenants are not paying their rent, it is often necessary to go through the formalities of a legal eviction. This is usually a requirement in the landlord insurance policy before you can make a claim for lost rent. After serving a notice seeking possession of the property, the next action is applying to the court for a possession order. Legal proceedings are not only stressful for everyone involved but can be expensive and time-consuming.

When an insurance company refers to “legal expenses”, they are talking about something very specific. They are talking about cover for the expenses a landlord incurs when pursuing the eviction of a tenant or making a legal claim for rental loss through the courts.

Expenses related to legal action and court proceedings to recover unpaid rent often include the engagement of a legal professional (solicitor or lawyer) and reimbursing the property manager for their time and expenses when representing the landlord at court.

The specifics and level of cover vary between insurance providers (and some may not include the cover or only have it as an optional extra), but in general, legal expenses policy provisions can cover three costs:

Legal expenses

The costs associated with engaging a solicitor, lawyer or similar to represent the landlord in court/tribunal for the purpose of eviction or loss of rent claims. This includes application fees (to the tribunal) and warrant of possession fees in the states and territories where they apply.

The policy may cover reasonable legal expenses a landlord incurs when attempting to reduce their loss, or they must organise a legal defence.

It is important to understand that reimbursement for these expenses is conditional on the insurer having accepted a loss of rent claim and that the expenses have been incurred with the insurer’s prior written approval.

The costs will also only be reimbursed if they are incurred for the purpose of reducing the landlord’s loss of rent claim or filing a legal defence while the claim is being investigated.

Representation costs

Where the rental is managed and the landlord incurs costs because of the property manager representing them in court or tribunal to obtain a court order against the tenant, the agent’s representation fees may be reimbursed.

Bailiff/sheriff fees

If a statutory authority (bailiff, sheriff or the like) is engaged by the landlord or property manager to evict a tenant, the costs may be covered. This may even cover costs to change door and/or window locks where the statutory authority ordered the locks to be changed.    

No landlord or agent expects their tenant will default on the rent, but sometimes things don’t go according to plan and the only recourse is via legal proceedings. Without a specialist landlord insurance policy — one that includes legal expenses — the landlord could be faced with thousands of dollars in legal costs. The right cover means they can often recoup those costs. 

Sharon Fox-Slater is the managing director of EBM RentCover.

‘See you in court’: Why landlords need legal expenses cover
Sharon Fox Slater reb
lawyersweekly logo
Rankings
rankings
JUST RELEASED
May 09, 2022

REB Top 50 Women in Real Estate 2022

REB is thrilled to present the Top 50 Women in Real Estate 2022 ranking, which sets t ... LEARN MORE

rankings
JUST RELEASED
May 04, 2022

REB Top 100 Agents 2022

Now in its second decade, the REB Top 100 Agents 2022 rankings are the most revered s ... LEARN MORE

rankings
JUST RELEASED
May 02, 2022

REB Top 50 Agents NSW 2022

Even a pandemic has not put the brakes on the unstoppable property market in NSW, whi ... LEARN MORE

rankings
JUST RELEASED
April 27, 2022

REB Top 50 Agents VIC 2022

The COVID-19 crisis has not deterred the property market in Victoria, which has been ... LEARN MORE

rankings
JUST RELEASED
April 25, 2022

REB Top 50 Agents QLD 2022

As the property market continues to roar in Brisbane and Queensland, the REB Top 50 A ... LEARN MORE

Coming up

rankings rankings

 

Subscribe to our RPM
mailing list

 

Do you have an industry update?

top suburbs

12 month growth
Mirador
103.33%
Bawley Point
98.13%
Walla Walla
90.7%
Byron Bay
86.67%
Kiama Heights
85.93%
Greta
84.14%
Nulkaba
81%
South Hobart
78.78%
Diddillibah
76.25%
Lennox Head
73.98%
SEE AREA REPORTS ON SMART PROPERTY INVESTMENT WEBSITE
Subscribe to Newsletter

Ensure you never miss an issue of the Real Estate Business Bulletin.
Enter your email to receive the latest real estate advice and tools to help you sell.