Insurance Claim Lost For Loss Of Rent – Please Help

EBM Insurance company Reply:
The documentation supplied establishes the tenant fell into arrears immediately after occupying the property in August 2014. Multiple Termination notices were issued between September 2014 and November 2015. Despite the tenants consistently remaining in arrears and never becoming up to date, termination through the courts was not applied for until March 2016. At this hearing the tenants were given a court ordered payment plan, which advised they needed to make a payment on 31/03/16 otherwise they would need to vacate the property on 01/04/16. This payment was not made and the tenant did not vacate the property. However an application to relist the matter at court was not made until 30/06/16, despite the tenant only making payments sporadically throughout the remainder of the tenancy.

Under the terms of the policy as soon as you are aware of any circumstances that are likely to result in a claim you must take all reasonable precautions to prevent further loss. By not issuing termination notices in a timely manner, not applying for termination through the courts until 2 years after the arrears issue began, and not applying to court to relist the application when the tenant failed to meet the payment plan we have been significantly prejudiced by the failure to mitigate the loss. In this instance the prejudice is so great we have reduced the claim to 6 weeks loss of rent only.

When a section of the policy is exhausted 3 months, or more, is remaining on the cover period, a reinstatement fee of $6.00 per month is charged. In this instance, the 6 weeks retenancy needs to be reinstated for any future claims within this renewal period. As such we have charged a reinstatement fee for the remaining 9 months.

Managing Agent Reply to above insurer comments:
It might be worth appealing but I’m not sure that it will get anywhere. The appeal might even produce a smaller payment.
We did give them(tenants) a few chances on the back of promises of lump sum payments but the policy documentation is not very clear on that.

Personal view:
In the past tenant has made one bulk payment of around $5000 to cover up the arrears and I thought agent is chasing tennants regularly and we are going to receive the payment but in the end we made a claim for over $8000 and EBM is just paying for 6 weeks.
From the EBM reply, its clearly management agents fault but agent is not acknowledging he has done wrong.
Do we have any solution to minimise the losses in the above case?
Property is located in Adelaide, South Australia
Property is rented @275/week

 

If your loss is around $7,500 or so, that is significant. Perhaps remind the PM your financial loss was as a result of their breach of professional duty. You can make a claim successfully against the PM's professional indemnity policy.

 

Sorry to hear about your issues and I hope you do find a more palatable outcome by taking on the PM/REA for their part in your financial loss.

As to their response, I believe the EBM policy is fairly clear that in that you "must take all reasonable precautions to prevent further" and by the PM not taking action and giving the tenant chance after chance rather than follow due procedure as allowed under the SA Rental Tenancy Act they have in deed failed in their duty to act in the best interest of their client, being you the landlord.

Unfortunately this is a kindly reminder to all landlords to ensure their PMs act swiftly in these matter in the landlords interests and not to keep acting as the "gullible nice guy" to useless tenants with never ending sob stories.

Good luck.

 

So they were in arrears shortly after moving in in August 2014 and multiple termination notices were issued up to November 2015 and you didnt go to tribunal until March 2016.

Im going to presume that you had a 12 month lease. So why did you renew the lease?

 

Wow how did it go on that long? Is there more to the story not mentioned here?

Always issue stuff the day you're able, not "wait and see". All the payment promises in the world don't mean **** if they don't follow through on them. Better to have the paperwork in order - even if they do pay, as you can demonstrate a history at tribunal for a more favourable outcome.

All the screening in the world doesn't prevent a tenant who wants to stop paying. Insurance / bond wouldn't exist if everyone was perfect - but to get access to them you need a PM who'll follow the legislation to the letter.

 

You must have been aware of what was going on. In an ideal world we could sit back and rely on the PM to take care of everything, but that is not often the case.

You simply must check the bank every month/fortnight to see what is coming in, and with any shortfall immediately get in touch with the PM.

We learned the hard way. We had a simply brilliant PM who looked after our interests superbly. Things went pear shaped when (as we later found out) the PM became involved in a messy divorce and at the same time a tenant stopped paying, and it took us a couple of months to realise. Luckily for us the arrears were recovered but after that we always checked each month.
Marg

 

I cant believe you let the tenant live in there, I don't know what SA tenancy laws are but at worst case you just issue them notice to vacate for no reason being 120 days here in VIC.

EBM haven't done anything wrong the fault lies with your PM and yourself tbh.

Get the 8 weeks from EBM and the rest from the PM or their insurance and change PM FFS, might be a bit over the top but this was incompetence at its finest...

 

We don't have one of those here - either wait til end of lease in a fixed situation or 90 days if periodic.

Agree with the rest though. Get them out and put a paying tenant in.

 

The 120 day notice doesn't break the fix term lease same rules as your 90 day.

Good to see that SA is more up with the times as I feel 120 days is an overkill but 90 days seems reasonable.

 

While there are disconnects between tenancy laws, tribunal decisions and insurance policy terms & conditions, this went on way too long. Remember an insurance company is a business... and businesses don't like to lose money. Your PM should be issuing notices you're entitled to issue... immediately upon being eligible to do so.

 

1. Thanks for all the valuable responses.
2. Currently tenants are evicted and property is cleaned and trying to find a new tenant.
3. Did not take any action on PM, Want to get feedback from the experts before acting.
4. Agree frrom above responses that i have to take the blame but i have been calling agent and following up with emails regularly to PM on the status and every time, i have been getting a story either this week, month etc
5. Since we can't change the past, want to work on next steps
6. If i want to make PM pay for the losses, what should be the exact steps? is it possible to recover any funds from them.
7. Agent started showing to people and still no applications so far, Last week one application received but by the time we approved, they selected other property.
8. Property is located in Greenacres and any one has any recommendations on the local agent