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Reimbursement Clause

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Reimbursement Clause

Post by akubigirl » Sat, 20 Jun 2009 11:46 am

Hi Everyone,

We are in the process of signing the 2 years tenancy agreement (for the first time) and were surprised to see the reimbursement clause (paying the landlord the commission he had paid to the agent on the pro-rata basis). Based on what we've found online, the reimbursement clause usually comes with the diplomatic clause. Is this a must?

We feel that the commision to the agent is a tranaction between the landlord and his agent (we don't have to pay the commission) and so we should not be penalized with whatever commission agreement they have.

For those of you that have the 2 years lease with diplomatic clause - can you let us know if you have this reimbursement clause in your agreement?

Any suggestion/comments are greatly appreciated!

Thank you!

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Post by carteki » Sat, 20 Jun 2009 12:17 pm

As the Landlord pays the agent a fee based on finding a person for 24 months and you leave early then the LL will need to pay the agent another fee when a new tenant is found. The re-imbursement clause therefore re-imburses the Landlord for that additional cost.

Elsewhere it is the agent that re-imburses the landlord (as they didn't "earn" the full 24 months worth of commission), not the tenant. Although technically the agent could then recover that money from the tenant.

In this market you actually have some choices as a tenant. Sign a 1 year lease (but risk the rental being much higher in 12 months) or some LL's are even giving 3 year leases (and that way you avoid the rental increase, but more cost if you decide to leave early.

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