Ending PM agreement. Agent trying to charge Re-letting fee?

We are ending a management agreement with an agent and they are trying to make us pay a Re-letting fee when no advertising, no inspections, no new tenant applications and no new lease is being written. I would like some advice as to where we stand with this as I can't understand how they can charge a re-letting fee when no re-letting is taking place and they have been instructed by the owner of the property not to do so.

We wish to take the property back to do a few fix ups/reno then hand to another PM in the future. (lease is ending and tenants are vacating in a couple of weeks)

There is a 60 day notice to terminate in the management agreement and we are happy to pay out the management fees (weekly commission on rent plus admin fee) that the agency would have received during this time and think this is reasonable, much the same as a tenant paying out a lease when vacating a few weeks early. 60 days is double the industry standard so they are getting 30 days extra commission over what most PM's would in this situation.

With no tenants and property handed back to owner the management agreement basically becomes null and void.

Can they legally charge us the weeks rent and lease fee for not actually re-letting?

If you can charge fees for nothing I am about to become very rich and retire

Thanks in advance

 

Don't tell them that you wish to change agencies. The tenants are moving along, so tell them that you need the keys back to fix the place up. They can't charge you for management fees when there is no tenant, so don't let them do this either.

 

Probably not

 

Not if they don't advertise for rent and complete the letting process. What state is it in?

 

NSW

 

Another **** PM

 

You would have to check with the NSW OFT on this but my understanding is that no agreement is null and void until any terms of termination are satisfied. I would assume in this case that would include paying out the management fees and a mutual agreement that it's void. There would probably be specific information you could find on this from the OFT so don't take this as advice.

I struggle to understand how an agency think they can charge a fee for services not provided and I personally would be letting the agency know you're calling the OFT for guidance on this. They won't want to have to deal with them if what they're doing is wrong so that information might be enough to put a stop to it.

Remember also, you only have to pay management fees as a percentage of rent so if there is no rent, there is no management fees and you're liable for nothing. Just take the property back and do the renovations during the 60 day period with the property empty and you won't have to pay out anything. If it's an exclusive agreement though, you won't be able to sign with another agency until the 60 days is up to recommence advertising for new tenants.

 

It all comes down to the terms of the contract.

 

A re letting fee is once the tenant resigns a new lease.

If they haven't signed anything.

They cant charge squat

Unless they reword it to advertising or administration

 

They have worded it a re-letting fee. The problem is they already have the money from the rental income. So it's not like an invoice we can refuse to pay as they hold the funds and are withholding them

Have spoken with fair trading and they advised the agent cannot charge a re-letting fee.

When we advised agent he said fair trading are wrong and he's happy to speak with them.

We have been very reasonable in this by offering to pay out the full commission management fees for the remaining days of the agreement. We understand we must compensate for losses suffered due to ending the agreement early as in contract. The problem is the agent doesn't want to budge and can't see that they will actually be profiteering by charging the full re-let fee as the agency has no costs associated with a re-let.

We can understand paying a partial re-let fee (after costs are deducted such as advertising, opens, tenancy checks, condition reports, administration/stationary/fuel/travel/wage costs) as this would have occurred within the remaining 60 days. Essentially just the profit that would have been made, hence compensating all losses.

Happy to name and shame...

Arnold Property
The Junction Newcastle

Reasons for ending agreement:
Unable to contact outside business hours, very hard when we work business hours too..
Failed to pay Strata bill causing late fees and interest to be charged
Failed to reimburse us for late fees as misunderstood instructions
Dealing with too many PM's/staff in the agency.
High fee's (can get another 2% off commission with new PM and other fees waived)
Fee's not negotiable, don't want our business obviously
Charging for services not provided (re-let fee)
Wouldn't communicate with us about tenants situation. They are having a baby and need a bigger place, have already found a place and are having to pay rent on both! With the same agency mind you. We would have happily (and are) mutually agreeing to end lease a few weeks early to help tenants out as we will easily find new ones and also increase rent up with market.

 

So, take them to Tribunal.

They cannot charge a commission for management when there is no rent coming in. They also cannot charge a re-letting fee if they aren't re-letting the property.