My wife and I own a few IP’s in Perth. So I’m not sure, but this problem may only be a WA issue.
The Water Corporation in WA (unlike other utilities) holds the owner liable for all water consumption at their IP’s as well as normal water rates. So, even though tenants pay for their water consumption, the way the process works is that the owner pays the Water Corp first and the tenant re-imburses the owner.
However, because the property manager’s contract says that the management fee is calculated on “gross collections” (instead of just rent), 9.35% of what the tenant pays as re-imbursement for water consumption is taken as management fee, and the owner receives about 90% of it. So essentially, owners end up paying approximately an extra 10% of the tenant’s water consumption every time the Water Corp issue a bill.
I’m wondering whether anyone knew if anything can be done about this “lost” 10%?
HJ72
It sounds like a Real estate agent rip off. Negotiate this out of your contract with the agent.
The last time I went through a REIWA standard management contract with the PM sitting across the table – 5 years ago – this sector on “gross collections” was one of the first to get scrubbed out.
All of the other REIWA standard clauses also got scrubbed, especially section 10 regarding terminating the PM’s services. Always scrub that one, as I think section (iii) says that despite cancelling a PM’s appointment, the Owner shall reimburse the PM for all future lost earnings for the remainder of the contract…yeah right…
Time spent going through the “standard” contract is time well spent to avoid problems such as you describe. Whenever I hear or read the word ‘standard’, my radar is immediately on full alert…right after that word is said or written is exactly where you are getting shafted.
However, because the property manager’s contract says that the management fee is calculated on “gross collections” (instead of just rent), 9.35% of what the tenant pays as re-imbursement for water consumption is taken as management fee, and the owner receives about 90% of it.Can’t honestly say I’ve come accross this before. If you are stuck for the moment with this contract, then simply don’t get the REA to collect the money. There is a service provider, I believe it is called ‘Easy pay’ that collects money on your behalf. It should be tax deductible, too, as it is a service for making money. It would be a bandaid solution right now, so you might not want to do for ever, but you can also get them to collect your rent! Wouldn’t leave much Gross Collection for the PM to get 9.35% for. 9.35% of $0 is still $0, hehehe[satan]. Not sure if it’d work, but it was fun thinking about it anyway!
Dazzling Posted – 07/12/2005 : 00:55:18
Time spent going through the “standard” contract is time well spent to avoid problems such as you describe. Whenever I hear or read the word ‘standard’, my radar is immediately on full alert…right after that word is said or written is exactly where you are getting shafted.Thanx again Dazz! I am about to embark on one of these ‘Journeys’ so I will keep an eye out for these! Just received the PM Documentation the other day. So far the REA has been very professional and I am very pleased with the whole thing! It still pays to be dilligent, though!
Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas Edison
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