Hello,
Seeking some guidance here as to what the obligations are for a Property Manager and what remedies I may have via a statutory authority regarding a failure in duty of care.
I have a property manager who let my property to a young male. I repeatedly requested a copy of the young males application which I have never received. After 6 months I had to prompt this agent to do a property inspection which I accompanied him to. I found the house to be in reasonable condition with only a broken smoke alarm but the gardens needed attention. I arranged for a quote to be submitted and asked the agent to ensure the gardens were repaired, this was not done. Some 6 months later I had to request the agent to perform another inspection. This time I was unable to attend the property. I had to request a copy of the condition report 3 times before one was forthcoming, the report indicated that the house was 'messy' but no damage and etc. The tenants gave 28 days notice in February this year, they vacated on 6th March. When I inspected the house it was in a disgusting state, every surface in every room was filthy, they have damaged the carpet, the ducted vacumning system, the videophone (intercom), caused water damage to the base of the bathroom vanity as well as the base of the cupboard under the kitchen sink, they have left water damage to the skirting board behind the fridge, there are numerous documents, rubbish, food, rotting materials and personal items left in the house and garage. The garden is completely overgrown to the point where structural damage has been caused to the house.
I have had a conversation with the agent questioning him as to how this could happen. His attitude is that "you have insurance, claim on it". As yet the tenant has not signed over his bond and I am unsure if this will occur without VCAT intervention. Quotes for repairs to the house come in around the $2K mark, the property is currently unlet due to its state (it was a prestige property when let) and will remain unlet for up to 4 weeks resulting in loss of income on my part.
I hold the property manager responsible for the outcomes and am seeking some guidance as to how to approach this situation. I have checked the REIV website and performed google searches but have been unable to locate any information which details what property managers duty of care and responsibilities are.
I am preparing to issue a letter of demand once the property is relet to claim the loss of income from the property manager which I anticipate is around a months rent.
I am very very interested in hearing from others who have knowledge of my rights, who I can consult with to understand my rights and what remedies are available to me other than making an insurance claim.
In anticipation
Leharna
Hi Leharna,welcome to the forum.My alarm bells would have been ringing way before 6mths for a property inspection.My property manager does checks every 17 wks and any questions i have things i ask for are promptly replied to.It can be difficult to find a good one.Obviously you're in vic and a property manager does have a duty of care and responsibilities.REIQ inqld would be much the same.But not sure of the legal implications in your case.May have to consult a specialist solicitor who deals in that area.Good luck Al
The Law Society can give you names of specialists in certain areas. Few lawyers like the Residential Tenancies Act area because it pays poorly and usually involves tenants with no recoverable assets, however in your situation, it may be a Real Estate Agent as the target.
Dept Fair Trading in each state should be able to advise you how to proceed through them to ask DFT to address the problem against the REA whom they have licensed, and who have legal obligations and penalties under the Stock & Station Agents Act.
DFT are powerful if they decide to act, and can summon all docs from the REA to assess their actions under the act, and audit their agency and trust accounts while they're at it.Depends on all the fine relevant details in these things and the laws of the state you're in, the devil's in the details.
Not sure if it's the same in every state though. You would most likely need to pay whatever it takes to fix the property immediately to mitigate losses, get it rented again, then you have a clear figure of your losses in $$'s, and can claim, but talk to your insurance company first so you can proceed under their instructions with insurance cover still in place.
I sympathise with your anger n frustration at what sounds like a negligent PM.
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Yet another good argument to take on the roll / responsibility yourself. I get a much better result looking after my investments – no will care like you. Not only care for your property but care for your tenant. The tenant being the factor that can make property investments a good / bad asset class. I have great tenants that all look after my properties well, but the respect is mutual.
The process also puts more dollars in your pocket, long term tenants, nil malicious damage, and a well maintained property,
I haven't got a website for this topic but if I did I would call it "enjoy the rewards of managing property yourself saving you time".Interesting post … definitely food for thought in this case.
I manage my own properties, so I'm with Number 8 on this … I also agree with TheCrest on the issues of legal action.
If I were to consider legal action against a property manager for duty of care, I would start with the Real Estate Institute in your state as they are the State authority who deals with real estate matters and the licensing of. Failing that, try the Real Estate Institute of Australia for some advice.
Having said, that Consumer Affairs deals with tenant and landlord issues and should have some advice on your rights in that area.
Have a look at the authority you signed when you retained the PM and make sure that you've upheld your part of that agreement. Get everything that happened in writing … NOW … if you haven't already done so. It's so easy to forget bits along the way. Hopefully, you've put your concerns in writing to the PM. Keep all documentation relating to your dealings with them.
Lastly, look to a solicitor for some advice. Most of them will let you know straight up whether you have a case. Look for one who deals in real estate issues, tenant problems and you'll be less likely to waste your time.
Good luck. Let us know how you get on.
Number 8, I do have a website centred around managing your own investment property. I'll try to post something shortly on your suggestion of how to Enjoy the Rewards of Managing Property Yourself Saving you Time" so if you've got any ideas you think I should cover, please ping me an email.
Cheers
MichelleThanks to everyone who got in contact to discuss the situation. A follow up on the outcomes to date. There is NO STATUTE LAW that specifies any duty of care for agents performing property management.The agreement that you sign with the agent for property management is the only document which the agents performance can be legally measured against. In my instance this document had nothing specified in it other than the collection and remittace of rent. Under Victorian civil and consumer affairs laws, there are no remedies available to investment property owners for anything other than failure to pay rent. by tenants The law is geared towards only holding the tenant responsible and the remedy for tenant breaches is fundamentally being able to claim the bond with documented substantiation of costs incurred and doesnt allow you to claim rental income lost (you could take this action against the tenant or even the agent but you would need to pursue this privately eg to sue).
In the end, the tenant forfeited the bond and I managed to do alot of the clean and repair work myself with the help of my partner which meant that the bond money ended up covering some of the rental income lost – though of course this assumes that my partner and I come for free….
End of the day, lesson is, make sure your property management agreement stipulates the role and responsibilities of the agent and if they are unwilling to contract to making regular inspections and following up on maintenance work to be done then I reccommend you shift property managers. There are some good ones out there, they are just difficult to find.
The industry has so many problems, which wont be attended to until demand in the sector dies off, then they will be forced to evolve or they will perish. The forces of demand and supply will eventually lead to a change in the industry but that seems to be years off yet.
Cheers
Leharna
Hi Leharna
The law covering the actions of PMs sounds unbelievably toothless in Victoria.
I'm in NSW, and here it's got teeth.
Just for the information of us Forumites, can you please tell us :The source of your first paragraph about the law ?
Which Govt Dept licences PMs in Vic ?
Under what Act are PMs licenced ?Sorry you had such a low yield outcome, it sucks cleaning up and fixing up after scum trash n run, not to mention the loss of well-deserved income, interest, time etc. and aggravation to selves and jobs. Hope it's your first and last, ever.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Thanks for the follow-up Leharna. I'm sorry you had to go through it but great that you've posted it so that we can all learn from those lessons.
thecrest, I'm interested in answers to your own questions …
Which Govt Dept licences PMs in NSW?
Under what Act are PMs licenced ?I live in WA. Property Managers are registered under the Real Estate and Business Agents Supervisory Board (REBA).
PMs are governed under the Real Estate and Business Agents Act 1978 and the Code of Conduct for
Agents and Sales Representatives (REBA).According to the REBA "You and Your Property Manager Guide", the Code of Conduct specifies:
The Code of Conduct for Agents and Sales Representatives sets out standards of practice for all agents and their sales representatives, including property managers in Western Australia. These requirements protect you by promoting and enforcing appropriate standards of conduct in the marketplace.
A number of these standards refer to the Written Authority, which is a legally binding contract between you (the principal) and the licensed real estate agency. The Written Authority authorises a registered property manager to manage your property for you.
The responsibilities of agents and property managers under the Code of Conduct include requirements to:
• act in your best interests, except where it would be unreasonable or improper to do so;
• follow your instructions, except where it would be unreasonable or improper to do so;
• act fairly and honestly;
• exercise skill, care and diligence;
• disclose in writing if any supplier of goods or services (such as cleaners, carpenters etc) recommended to you has a ‘significant relationship, connection or affinity’ with the agency;
• promptly provide information to you about expenses paid on your behalf;
• not knowingly mislead or deceive any parties in negotiations or a transaction;
• not engage in harsh or unconscionable conduct;
• not use or disclose any confidential information obtained while acting for you unless permitted to do so by law;
• not advertise or offer for lease a property for an amount, or terms, different from that authorised by you;
• not seek payment to others on your behalf for fees that exceed the amount agreed in the Written Authority, or is not initialled in the Written Authority; and
• not seek any payment of a fee that is unjust in light of the Written Authority and other circumstances.
The Code of Conduct requires that property managers and their unregistered assistants be supervised by the licensed real estate agent in charge of the agency at all times.
This, of course, doesn't cover the exact problem that Leharna had with her PM, however, the guide goes on further to say this:
Negotiate, then get it in writing! As with any business transaction, it is important that you are clear in your own mind what exactly you require concerning the management of your rental property.
Some questions you should ask yourself about the management of the property include:
• How promptly do you wish to be told if your tenant is behind with the rent?
• Do you want to be consulted before any repairs or maintenance are carried out, no matter how small? Or would you prefer to be contacted only when the amount exceeds a set limit?
• How often do you want property inspections carried out on your property?
• For how long do you wish to engage the real estate agency, known as the period of agency?
• Do you wish to be involved each time a tenant is selected?
Any provisions, like the ones detailed above, need to be agreed in writing preferably in the Written Authority. The Written Authority that you sign to authorise a real estate agency to manage your property for you is a legally binding contract. This means that both you and the real estate agency are obliged to fulfil the requirements of the Written Authority. The Written Authority can vary between agencies, so it is important that you read the contract carefully.
I think this here is the lesson we can learn from Leharna's experience. Get it in writing and don't be afraid to negotiate your terms with the PM; then you'll have recourse if its not done.
Cheers
Michelle
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