VIC Can Trustee Claw Back Rent from Landlord?

[Macaque]

How can you require a refund once you have paid?

You might be entitled to a refund depending on the terms if the landlord ended the lease. Once the right to use has been granted then as far as the landlord is concerned full consideration has been given. If the tenant abandons the property what right do they have for a refund?

The same as if I pay a deposit to buy a house and I become bankrupt and cannot complete the purchase. Are you saying the trustee could clawback the deposit from the vendor?

 

[Rob Legat - SBPL]

As I said, if the lease was suddenly ended.

Full consideration is not given the moment the lease is entered into. If the tenant suddenly vacates, the landlord is entitled to damages for lost rent until the property is re-let, but has a duty to mitigate by seeking a new tenant. If one is obtained, they are not entitled to 'double rent'.

Paying a deposit on a house is completely different.

Argue however you want, but if a bankruptcy trustee thinks that the payment has been made in an effort to defeat creditors then they will likely act accordingly. In the outlined circumstances, pre-paying your rent would probably make the trustee look closer.

 

[Macaque]

But that is not the situation I am describing. Perhaps I didn't make it clear. In this case the lease is for 2 years and the lease specifies a 2 year payment up front. It is not a prepayment.

In that case grant of the right to use for two years is full consideration.

What right does the tenant have to demand a refund? If there is no right to refund then there must have been full consideration.

 

[Rob Legat - SBPL]

It is a prepayment. As you originally said, you're paying "rent in advance". I'm not even touching on what your particular state's residential tenancy legislation may provide in that situation.

If you think it'll work, good luck to you. You'll need it.

 

[Macaque]

It would only be a prepayment if payments were say fortnightly.

And I believe I restated that it is a single payment above, not rent in advance.

 

[Rob Legat - SBPL]

You're not understanding what I'm saying. Even if the agreement provided for a 'single payment', as you say, it would still be considered a prepayment or rent in advance because you're paying up front for a something that you cannot currently 'take'. The reason leases allow for payment in periodical increments is due to practicality. It would be completely unworkable to have to make rental payments every day/hour/minute etc.

You may find that such an agreement is illegal in any case. For example, in Queensland, a residential lease cannot require more than 1 month prepayment of rent (and is usually restricted to a maximum of 2 weeks).

 

[Macaque]

It's not me the money will be clawed back from, it's the landlord, and from the landlord's viewpoint the right to use has already been sold and full consideration given.

Are you suggesting that the trustee would have the power to seize assets from the landlord and evict the tenant? That would seem to me to be an onerous effect on the landlord who has not done anything wrong.

Can you cite a case where this has happened?

Also there is no absolute limitation of prepayment in Victoria.

 

[Macaque]

and the tenancy act in Victoria has no provision for termination by a trustee.

 

[Tim W]

Victorian residential tenancy legislation
is irrelevant to the administration of a bankruptcy.

Also, there's no point in talking about a "refund".
It isn't a refund because the money isn't coming back to the person who paid it.
Money clawed back is typically remitted to the trustee.

Further, it would be extraordinary indeed for a court to accept
that paying a residential lease two years up front
was anything other than an attempt to conceal cash from the trustee.

 

[Macaque]

Victorian residential tenancy legislation
is irrelevant to the administration of a bankruptcy.

Not so. It contains provisions for termination of a lease in the case where a landlord is bankrupt.

Also, there's no point in talking about a "refund".
It isn't a refund because the money isn't coming back to the person who paid it.

Not saying that it does. It is relevant to the question of the whole payment being consideration at the time of payment.

it would be extraordinary indeed for a court to accept
that paying a residential lease two years up front
was anything other than an attempt to conceal cash from the trustee.

That's not the question. The question is whether the landlord can rely on the whole payment being consideration which the transferee has to prove.