If a Tenancy Agreement includes clauses that are inconsistent with the Residential Tenancies Act (RTA) and lessens a person’s rights under the Act, those clauses are likely to be unenforceable and have no effect. In some cases, including unenforceable clauses in a Tenancy Agreement is an unlawful act.
Or as a lawyer may state, “You cannot contract out of the Act.”
However, providing the Tenancy Agreement does not include unenforceable clauses and therefore neither the landlord or tenant are contracting out of the RTA at the time of signing, they may reach a mutual agreement during, or at the end of a tenancy that benefits one or both parties. Providing this does not adversely affect a tenant’s rights.An example may be that the landlord gives the tenant 63 days’ notice as they are moving back into the property, which meets the requirements under the RTA for a periodic tenancy. The tenant can then give 28 days’ notice to vacate during that 63-day period if they choose to leave earlier.
However, if the tenant finds a new home sooner, both parties could agree to reduce the notice period required by the tenant, but there would be no legal requirement to do so. A landlord could not have included a clause in the Tenancy Agreement at the commencement that conflicts with the Act, such as reducing the notice period.
Renting to family and friends always seems like a good idea at the time, and there are times when this can and does go well, however when it doesn’t, this can cause friction within families or friendships and is sometimes not worth the ultimate cost. An example of this is a landlord renting to a family member and at the time of signing the tenancy agreement, both parties agreed to a reduced notice period. But when the time came for the landlord to sell the property and they gave the tenant just 28 days’ notice as per the (unenforceable) clause in the Tenancy Agreement, the family member exercised their rights to 90 days’ notice as per the Residential Tenancies Act.
Also, renting out a granny flat or other dwelling under a flatmate or house sharing agreement may fall foul of the law and the RTA will apply if the flatmate is deemed by the Tenancy Tribunal to be a tenant. This will occur if the flatmate does not have access to the main household and share facilities, or if the dwelling is not consented and/ or have a registered change of use with council, regardless of the type of agreement that is signed.
Another example is a landlord that was not performing maintenance in exchange for the tenant paying extremely cheap rent. While this appeared to benefit both landlord and tenant and the tenant had agreed and benefited from a nominal amount of rent for over ten years, the landlord has still breached their obligations to maintain the premises under Section 45 of the RTA. By contracting out of the RTA, the landlord was attempting to evade their obligations which is an unlawful act and can attract penalties payable to the tenant plus compensation. The landlord also risks a work order being issued by the Tenancy Tribunal to perform the required work (up to $100,000) and the tenancy regulator, the Ministry of Business, Innovation and Employment (MBIE) can issue an infringement notice for noncompliance. What seems like a ‘win win’ situation, fast becomes a losing battle for the landlord when the tenant exercises their rights under the RTA.
Landlords cannot include clauses or conditions in Tenancy Agreements that breach the Residential Tenancies Act. Any conditions that are inconsistent with the Act will have no effect. A landlord cannot enforce what is outside the law, and tenants cannot sign away their rights.