Am I being too harsh?

Discussion in 'Property Management' started by pwnitat0r, 23rd Oct, 2017.

Join Australia's most dynamic and respected property investment community
  1. pwnitat0r

    pwnitat0r Well-Known Member

    Joined:
    27th Nov, 2016
    Posts:
    323
    Location:
    Sydney
    Received an email from the PM saying lease is expired and since it's now on periodic they recommend a new 12 month lease.

    However, I know there is a current lease until mid-2018... I know this because I asked and nagged for this lease to be signed and have a copy.

    I am annoyed that they don't seem to know we have a current lease. I figured this would be easily available from our record or system software.

    Time to switch?
     
  2. Hodor

    Hodor Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,238
    Location:
    Homeless
    That's really poor. Have to question what you are paying them for and how they are performing other duties.

    I'll say next, however, if it was actually me I give people a chance for better or worse. Big softy I guess.
     
  3. pwnitat0r

    pwnitat0r Well-Known Member

    Joined:
    27th Nov, 2016
    Posts:
    323
    Location:
    Sydney
    Same company that paid for stuff I didn't approve - Approved quote for $140, agent paid invoice for $471

    But I was the one who followed up on a new lease before the first one expired, then I had to chase them for weeks to get a signed copy.

    I know we all make mistakes, but they weren't aware the lease was going to expire and now they don't know we have a current lease.

    Circa 10% management fees for what!?
     
  4. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

    Joined:
    1st Jul, 2015
    Posts:
    1,874
    Location:
    Australia
    It's poor but could just be an administrative error with lease expiration entry into the management software.

    What I'd be more concerned about is that they let it go into periodic without having a management strategy for preventing this and knowing about it/seeking your intentions earlier.
     
    bob shovel, Kat, JacM and 1 other person like this.
  5. Owlet

    Owlet Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    757
    Location:
    VIC
    It could be that they didn't follow up on the lease renewal and didn't get the tenants to sign. They are just chasing now. Got caught with similar recently - Last communication was that tenants were resigning for 12mths - 3 months later I receive notice that they are vacating in Dec. The PM was shocked when contacted by our new PM for our file - so he rang me to find out why we moved :confused:
     
  6. Pumpkin

    Pumpkin Well-Known Member

    Joined:
    26th Jun, 2015
    Posts:
    1,342
    Location:
    Brisbane
    Are there more stories about this PM? Wondering whether this is an isolated case or have they been consistently failing in other aspects....You’d be the best person to know....
     
  7. dmb1978

    dmb1978 Well-Known Member

    Joined:
    5th Nov, 2015
    Posts:
    353
    Location:
    ACT
    Sorry to hijack the thread but how do you stop it going into periodic if the tenant doesn't want to sign a new lease. In the ACT we are only left with the 26 week notice unless you want to sell or move back in. Unless you give them the notice 6 months into 12 month lease you cannot make them leave at the end of the lease and the same rules apply going into periodic.
     
  8. Tom Rivera

    Tom Rivera Property Manager Business Member

    Joined:
    1st Jul, 2015
    Posts:
    2,719
    Location:
    South East Queensland
    I'm pretty sure the property is in QLD having read that other thread a while back, but correct me if I'm wrong.

    There’s a couple of things going wrong here.

    1. Total failure of record keeping systems. When a lease is renewed, it takes ten seconds to enter the new lease details into whichever trust software we use and that keeps track of everything. The lease then gets physically/electronically filed and sent to owner/tenant.

    It sounds like the PM has just failed to enter the details correctly and emailed you without checking, which is a pretty good sign they’re either seriously overworked or just not paying attention.

    I’m assuming it’s just a data entry failure, but the lease is the single most important document in the tenancy for obvious reasons, so if they’ve lost it as well, that’s negligent.


    2. Also concerning is that they don’t have any procedures for ensuring fixed term leases are renewed WELL before they expire, and that they think it’s okay to casually email you for a renewal once the lease has already expired. Very poor systems and training.

    Best practice is generally considered to be receiving owner instructions 10-12 weeks prior to renewal. The tenant is then given the two-week period between 8-10 weeks to renew. If there are delays, the agent should send a courtesy Form 12 Notice to Leave without grounds at two months out to ensure that the tenant cannot control the situation and force themselves onto a periodic lease. Periodic leases aren’t the end of the world, but you do lose control over the tenancy situation (tenants can vacate with two weeks’ notice at any time- imagine that over Christmas) and most insurers won’t cover arrears without a fixed term lease.
    _______________________________________________________________________

    Many people would have changed agencies for lesser errors, and as someone who has made their fair share of mistakes over his career (as has everyone), I applaud you for giving your agent the benefit of the doubt.

    It does sound like this isn’t an isolated issue though, so it’s probably time that you get in touch with the business owner and discuss the problems that you’ve had. In many cases you’ll find that this doesn’t make any difference- and that’s your signal to change. Other times, the business owner will make the appropriate changes (e.g. systems, staff, etc.) and the service will improve.
     
    MyPropertyPro likes this.
  9. dmb1978

    dmb1978 Well-Known Member

    Joined:
    5th Nov, 2015
    Posts:
    353
    Location:
    ACT
    Thanks Tom, I wish this was the case for the ACT. The leave without notice is 6 months. Our lease expires end of January next year and we had to give 6 months notice and the earliest we can get the property vacated is early April. It seems ridiculous to have a 12 month lease and then have to give notice at the 6 month mark to ensure your property is vacant at the the end of the lease.
     
    Tom Rivera likes this.
  10. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

    Joined:
    1st Jul, 2015
    Posts:
    1,874
    Location:
    Australia
    Not directly, but there are ways and means of doing it.

    -90 days to lease expiry send out a form seeking landlord instructions for the forthcoming expiry. Send a CMA with it along with a rental recommendation and the form instructions relate to that and other aspects e.g. if they have an intention to sell the property or move back in.

    -60 days to lease expiry send the tenant a termination notice along with a new lease, based on the landlords instructions, giving them 30 days to return the lease (at which time the termination notice is withdrawn), and advised that if they haven't the lease offer will be withdrawn and the termination will stand.

    -30 days to lease expirty if the lease hasn't been returned and depending on any interim conversations with the tenant to seek intentions, withdraw the lease and commence advertising. Usually the lease is return between -60 and -30 though so this only applies if the tenants refuse to return the lease.

    It forces them into making a decision as many are well aware that they can't be forced to sign a new lease but if they don't they're going to have a lot more decisions on their hands. Fostering a good relationship with the tenant is important and most don't take it the wrong way as it is done nicely with the reasoning explained as a protection to the landlord to prevent a periodic lease which is undesirable in most cases. Some tenants fess up and admit they're looking elsewhere - usually the reason they want to enter periodic - so it then gives you control over the advertising process with more time for all tasks and to find a tenant who will also need time themselves.

    Some people might not agree with it, but I'm an investor first and foremost and business is business. I can't afford to let the tenant have control over when my property becomes vacant as that costs me valuable cash flow through vacancy. In my experience, tenants never just move out through spite of the above procedure, it's only a catalyst if they do and they were planning to anyway, probably giving the investor minimal notice and transferring the control to the tenant.

    In many countries, this is standard procedure - in fact, in the UK you get a notice to leave at the commencement of your lease in much the same way. Unfortunately most PMs don't understand property investing and what is truly important in the equation so lease renewals and managing vacancy is often met with a "there's nothing you can do about it" which is false, you just have to play by the rules.

    I hope that answers your question.
     
    dmb1978 likes this.
  11. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

    Joined:
    1st Jul, 2015
    Posts:
    1,874
    Location:
    Australia
    I wrote all this and then saw Tom's reply. Just because you're in the ACT doesn't stop you doing it at the 6 month mark. Again, your PM (or you) just have to have a proactive plan in place. I've had plenty of PMs say "That's not legal in my state" but it is, they just don't read or understand the legislation properly. It works brilliantly and I wouldn't have my properties managed any other way.
     
    Tom Rivera and dmb1978 like this.
  12. Cimbom

    Cimbom Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,568
    Location:
    Back in Canberra!
    Can't you just say you're moving back in anyway? How would the tenants know whether you have or not. It's not like there's a minimum amount of time you have to live there for it to count. Unless I'm mistaken, can't you technically "move back in" for three days and then advertise it for rent again?
     
  13. dmb1978

    dmb1978 Well-Known Member

    Joined:
    5th Nov, 2015
    Posts:
    353
    Location:
    ACT
    Maybe I'm too honest for my own good. Also I'm not in the country so not an option to move in for one day . I just think the 6 month notice is so long and not practical for anyone. We had to give notice at the 6 month mark to ensure the property was vacant at the end of the lease. The legislation isnt very landlord friendly.
     
    Chivaun.Shortis likes this.