Lease Renewal without Authorisation

Hi all,

Long time viewer and first time poster here.
I've run into a situation with my agent in brisbane where they have renewed the lease with my tenant without asking or consulting me.

About 1 month out from lease expiry i recieved an email that the lease was renewed and unfortunatley without a rental increase (i was looking to increase the rent to market price given the current rental demand in qld).

The property manager has acknowledged they made an error on their end by issuing it to the tenant and not the owner (myself). They have tried to get the tenant to resign the lease with a higher rental amount however the tenant spoke to the rental governing body and what they signed can continue to stay.

Unfortunatley for me, i am now left out and financially disadvantaged due to this (approx 2k).

They offered me approx $350 as a form of compensation however i declined on their offer and requested they pay me close to 2k in loss of rental. I provided them reasons why i should be compensated that amount e.g. the market price annualised, 8 other rented property prices with the same characteristics as my property (justifying the market price), vacancy rates being 0.7%, no other property for rent like mine on real estate.com right now etc.

My next plan is to speak to the general manager or director/princpal of the RE to resolve this.

I was just wondering if anyone has gone through a situation like mine and what they ended up doing? What was the end outcome for you?
Is fair trading the only governing body to assist me?
For those who havnt been in my situation, what would you do?

I really dont want to be the one to lose out in this scenario as i did nothing wrong, nor did the tenant.

 

Yes agent should pay for sure whatever the rental difference should be over the lease period. Very strange that they are even disputing the number given the significant error.

 

I am a Big Picture Person: how have they been this whole time as your PM? Surely you can’t judge on one incident. They have offered compensation which is rare and commendable (I’ve seen heaps who’d never ever admitted their fault). Sometimes in life people focus on one issue but might have omitted other multiple areas….

 

Big picture is fine but not compensating for a clear mistake shows lack of character. Its not making the mistake that the issue as everyone makes mistakes but the lack of proper rectification.

 

Yes they stuffed up, but I also am very surprised they admitted it or even offered compensation.

Perhaps accept their offer as well as suggesting they not charge PM fees for "x" months to make up for it. If they agree to the $350, but don't agree with the fee discount, then take the compo and then change PMs.

 

Given its a very clear error on their behalf, I would first be asking how they came to the $350 figure.

As an agency owner I also understand that $2k is a lot of compensation in one go, so I would be looking to make this up over time eg $500 compensation now, heavily reduced management fee for next x years, no letting fee on next tenancy etc so that it would be approx $2k but could be spread out (especially if their management is decent).

 

Thankyou all for your response.

Good to know im not over reacting or being demanding.

Its been going on for a few weeks now and im waiting to here back from them (likely ill have to chase them up).

The real estate agent has been great so far, just this issue.

I'm just hoping they are honest and accountable for their actions.

 

I dunno, I like having leases & find many agents do not keep up with the market.

I would not be asking them for the complete difference in any potential max market rent, but something and no fees & no fees to re sign new tenant.

I also would be having a conversation to tenant, because if they took that stance when it is a clear error, they would be out as soon as I could get them out. I would not tell them that, but that is what they would be doing, signing a def eviction when lease comes to end.

 

They might not have continued the tenancy with the higher rent anyway.

 

That is neither here nor there on the matter. The tenat is just taking advantage. The PM would not likely want them either after this.

 

...how are they "taking advantage"?

 

I wonder what would have happened if you were planning to sell the home and did not want to have another fixed term lease...
I would like to understand from the agency owner what process failure occurred as this is a very significant issue in a very critical process that needs to be followed properly. Like what's in place to stop in happening again?
Our agents don't ever send us a lease document one month out from the end of the lease, they send us an email about 3-4 months from the end of the lease to ask us what they would like them to do with the upcoming end of lease period approaching. We then have back and forth emails about the market rent and tenant situation and make a decision on our next steps. Or in some cases the tenants request an extension of their fixed term and that starts the ball rolling. (one did once 9 months before the end).
Then if that decision was to up the rent or offer a fixed lease ,they prepare the documents and they can sign on our behalf - then they send us the signed copy of the lease.
Sometimes agencies also charge a fee to prepare a new lease document so might be worth checking if that has applies.
A removal or reduction of the fees when you have to lease to new tenants might be a reasonable option to negotiate. Mind you that might mean they do the same again to avoid this situation...
I hope it's not a situation where they know the tenants and have mislead you. I dont expect so but it does seem quite strange that they would make this error (unless they dont have the right systems/processes in place) and I would question their general competence. I would be asking how many properties the agent is managing and also do a thorough check of the last inspection report (good to join yourself next time) and making sure your interests (and that of the tenants are being managed properly).

 

Owners really need to read through their Appointment to Act and take an interest in the document they're signing and agreeing to, and also, the part where you can literally specify specific instructions (Section 4 in the Qld Form 6 for example), which might include all re-leasing must be run past them first etc. and anything else (don't assume and don't assume the Agent is assuming or has a crystal ball either - they may think they're being proactive by getting things done without you asking/following up, where's you might have the complete opposite view).

As an example, extracts from my Form 6 (additional) Terms and Conditions:






This is Section 4 out of the Form 6 I talked about above:


The intended application is this \/ - which is rare that the client is not contactable but has happened in the past, (not to go and sign up new fixed terms without even saying boo etc):

 

...they know it is a mistake, they sought advice = taking advantage. This is not an argument about legal rights.

Not a wise move either way IMO

 

My experience over decades, is it is hard to get PMs to actually always have a lease, I have raised this ad nausea and the reasons why.

So I would accept the OPs version that it was a mistake by them, personally, I would not be unhappy if it was done and I was not contactable and is only 6 months.

Does not change that it was an error tho...

 

Most of my owners for example share that same prerogative, it's only the ones that want to snap sell on a dime that have an issue with it or those owners that have been absent/not-contactable for half a decade then show up out of the blue. Also, if your Agent isn't getting you max rent or knows how far you can push the current tenants and economically it's better to leave them in place at what might seem like reduced expectation in your eyes because you're not seeing the bigger picture, just change Agents if you're not happy.

 

I do not get my knickers in a knot too quick, I look at the big picture, as someone said, overall agent performance, tenant attitude etc.

Trying to squeeze everything out of every relationship may not work as well as taking all into consideration.

Lucky for me I know a shocking PM pretty quickly. Some clearly struggle for varied reasons, hope it all helps the OP.

 

Why don’t you find out what will not cost them money out of their pocket and try for that?

You have quantified your losses as 2k, they have offered $350, so you are 1650 away.

How much would your lease renewal have been? I’ll say, one week $400. Ask for that not to be paid. (You would have paid that if they did resign on the higher value)

Now you are $1250 away.

Ask for a period of no pm fees, that will align with $1250 in value.

You might find by the end of the lease, you will effectively be in the position as you would have been. (Maybe better because you haven’t had any lost rental income from the old tenant moving out and the place sitting vacant for a period of time)

You have also kept your tenant (hopefully they are good)

You have shown the pm that you are reasonable (hopefully the pm is also good)

But because you are only getting a $350 compo payment out of pocket, the agent may be more willing to accept and you all move on happily

 

Thanks for this, ill consider this when i have a chat to them