The Aussie radio and television personality, who is best known as one of the judges on talent show Australia's Got Talent, allegedly broke the rental contract on a Terrey Hills mansion by moving out before the lease was up.
According to The Daily Telegraph, Sandilands moved into Howard Symington's eight-bedroom, 13-bathroom property in October last year, shortly after his split from wife Tamara Jaber. He handed the keys in ten months later despite the lease being a minimum of 18 months.
A friend of the star said that Sandilands will fight Symington in court, adding: "Kyle will claim the air-conditioning didn't work properly, door handles fell off, the septic system was backing up, a ceiling collapsed, lots of the owner's possessions such as cars and jet skis were stored there."
Although Sandilands's manager Andrew Hawkins has refused to comment, representatives for both sides have confirmed that there is a current lease dispute.
Sandilands and Symington are due to appear in Sydney's Consumer Trading and Tenancy Tribunal next Monday.
The DJ recently caused controversy by publicly slamming celebrities such as Megan Gale and Rove McManus and also outraged his radio listeners by making apparent racial slurs when he referred to India as a "s**thole".