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Agents indemnity and liability

Discussion in 'Legal Issues' started by Abooking, 15th Oct, 2015.

  1. Abooking

    Abooking Well-Known Member

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    I read on the somersoft forum ages ago that one should delete the clause below that is in a standard NSW Exclusive management agency agreement:

    ''AGENTS INDEMNITY AND LIABILITY:
    The Principal will hold and keep indemnified the Agent against all actions, suits, proceedings, claims, demands, costs and expenses whatsoever which may be taken or made against the Agent in the course of or aiising out of the proper performance or exercise of any of the powers, duties or authorities of the Agent under this agreement.''

    Im about to sign a new agreement with a new agent and wanted to know what the reasons are for having that clause deleted. What are some examples of potential liability against an agent? Should I delete it and initial it after crossing it out?
     
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Bear in mind that most PI insurers of REAs will want the agreement to stand as is. No REA in his right mind will countersign that agreement (unless desperate, trusting or stupid).
     
  3. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    An example of this could be, that an intending purchaser inspecting a property at an Open for Inspection and who may injure themselves, say falling through a rotten decking board, might seek to sue both the selling agent and the vendor for their injury. This clause means that the vendor keeps the agent covered in this eventuality.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Under the law of agency the agent is basically you. They are acting on your behalf so should not really be liable for any action, unless they have breached their duties.

    There was one court case where the agent hired a handyman who put in glass which was not up to standard. Tenant was awarded abotu $800k due to this negligence contributing to their hand being cut when the window attacked the tenant's fist. Agent was deemed liable for about 75% of this with the owner 25%.

    I suppose this is what they are trying to avoid.
     
  5. Abooking

    Abooking Well-Known Member

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    In the NSW form, I am the 'principal' and the 'agent' is the managing agent. Thus, I dont agree that I am the agent.

    I have crossed out the clause and will see if they say anything. I think that they will not notice.
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The agent is the agent!

    They are acting for you and legally 'are' you for the purpose of transacting with the tenant
     
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  7. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    If you truly think they will not notice, then I have serious concerns about your agent selection criteria. Surely you want to hire an agent who can handle changes or notice amendments in a contract of sale when they are negotiating a sale for you?
     
  8. HUGH72

    HUGH72 Well-Known Member

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    I am not a solicitor. But...
    I have experienced this first hand with a tenant making a claim. The RE agency's solicitor tried unsuccessfully to use this statement in the management agreement to avoid legal liability in a personal injury claim where they were required to make a settlement contribution.
    Providing the property owner has responded promptly to maintenance requests and kept the property in good condition it appears that owner has delegated their responsibility to the property management company to some degree.
     
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  9. D.T.

    D.T. Adelaide Property Manager Business Member

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    At some point PMs need to reconsider keeping clients who don't do maintenance as it becomes too risky legally.
     
  10. HUGH72

    HUGH72 Well-Known Member

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    Definitely and we have reached a point unfortunately where all instructions need to be confirmed in writing by email. Insurance premiums long term are only going to increase because of this.