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Exclusive management Contract Termination

Discussion in 'Property Management' started by eskander, 18th Feb, 2016.

  1. eskander

    eskander Well-Known Member

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    So I decided to terminate my contract with my PM due to the PM not doing his job.
    Management contract (exclusive management authority in VIC) had nothing about penalties for breaking the 1 year contract (I had 8 months left), only that it was a 1 year contract.

    When I informed them I was terminating it they said there would be a penalty which they would calculate and get back to me. This ended up being 4 months worth of management fees. I told them there was nothing in contract stating this but was informed that it is standard procedure to charge a fee like this and that their legal team had checked and it was fine (might be complete b.s, who knows)

    Any PMs, agents, investors have any experience or knowledge about this? Particularly in VIC.
    TIA
     
  2. Xenia

    Xenia Adelaide Property Manager Business Member

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    Yes they are right, if you terminate pre term they are entitled to the fees they would have recieved should the contract been allowed to run its course.

    If there is a breach of contract then diffetent story.
     
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  3. eskander

    eskander Well-Known Member

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    Thanks @Xenia
     
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  4. Shazi

    Shazi Member

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    if you had a dispute with them and they didn't attend in a timely manner and you have got the documentations, you will have a chance .
     
  5. Waldo

    Waldo Well-Known Member

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    Hi Xenia - what is required to show a breach of contract?

    The idea of exclusive management periods seem a little weird to me - most people I know only leave a PM because they are unhappy with the service provided. If they can then get out of the management agreement by simply listing the things the PM isn't doing, it seems pointless having it in the first place?

    Obviously it would still be helpful for people who want to change to self management or people selling the properties. These days I try at all costs to avoid extended management contracts - if they do a good job they can keep the management. If not well they're possibly breaching the contract anyway?

    Curious on your thoughts.
     
  6. thatbum

    thatbum Well-Known Member

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    This is a legal question and depends largely on the circumstances. At common law, a breach must be a type serious enough to justify termination.
     
  7. Xenia

    Xenia Adelaide Property Manager Business Member

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    A breach of contract is not fulfilling the management contract. We have clients that have been successful in ending fixed term contracts with agents (and transferring over to us) on breaches such as - failing to serve breach notices to tenants, maintenance not reported to landlords (tenants have told them directly) and the worst one last week - failing to disburse funds to landlords - yes an agency actually held rent for about 5 months and required a legal notice to give the landlords their rent money that a tenant was paying, they even had no idea where the tenant was up to in paying rent. Fixed term or not, if an agent clearly stuffs up like that then it is a breach.

    What is not a breach but common complaints from landlords
    maintenance was arranged
    communication problems
    charged a fee (that was within the terms of the contract)
    Increased rent/did not increase rent
    allowed another person in the property that is not on the lease
    accepted a new lease
    did not warn landlords early enough that a tenant was vacating etc...

    We were once managing a property for an old Italian lady who was previously self managing. The tenant paid 6 months of rent upfront which was forwarded to her in the first month.
    Her second month statement said $0 - tenant was still ahead 5 months. She looked in her bank and saw that nothing was in there so she walked into our office and screamed the place down swearing at everyone in Italian and demanding that we give her property back - which we did.

    Her logic, even though the tenant paid 6 months in advance, they still need to pay every fortnight and the 6 months was hers to disburse back later if they were a good tenant - like a bond that she gets to keep as a cash advance. She just could not get her head around the fact that it was paid 6 months in advance so the tenant does not owe anything for 6 months.

    I had a landlord write a letter to the tenant that we needed to give him about - how to properly use an electric kettle in a furnished property, because she was sick and tired of replacing the kettle every year. We took that property from $450/week to $650/week by styling and furnishing and presenting it to a corporate market and she was focused on a $10 kettle.

    In another furnished property the landlord was giving me instructions for the tenant that they need to wipe their hands on the bath towels in a different place each time so that the towels wear out evenly and not in one spot - warning signs of a control freak right there, I did not take on this management - got out of there as fast as I could.

    You just never know what is going to trip people and not all of it is mismanagement.
     
  8. eskander

    eskander Well-Known Member

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    LOL @ the towel one @Xenia
     
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  9. Lil Skater

    Lil Skater Well-Known Member Business Member

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    Chiming in as the only Vic agent so far.

    There's no contract term. Only exclusive management for LEASING the property. Once it's leased, there is no fixed term.

    So in short, it's BS. Tell them to get stuffed and move to someone that knows what they're doing.
     
  10. eskander

    eskander Well-Known Member

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    Hi @Lil Skater
    The contract did state a period of 365 days. Learnt my lesson I guess.
     
  11. Lil Skater

    Lil Skater Well-Known Member Business Member

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    Honestly, demand the file back and move on. It's not a legally binding clause IMO.

    As above, regardless of what they've put there is no exclusive period on a leased property.

    I'd be taking your business elsewhere quick smart.
     
    Last edited by a moderator: 17th Mar, 2016
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