Offering to sell a managed rental property to tenant without agent

Hi there

We have a rental property in Tasmania that is managed by a local real estate agent since we purchased it 3.5 years ago. The current tenants have been there for 2 years and have signed a 12 months continuation of the lease which expires Feb 2017.

My first question is if we wanted to sell the property to the tenant and the current tenant wanted to buy the property without going through an agent would the property management agent have any rights to commission on sale price?

Secondly if tenant and owner wish to cancel the lease and tenant buys property would the agent have any claim for their lost property management fees up to the end of the lease, and if so, is this payable by tenant, or jointly by owner and tenant, or solely by us? Would they be entitled to 100% or a lesser percentage of their monthly commission?

Thanks for any suggestions

Have a good day

warek

 

what does your agreement with your PM say? start by reading that because some agreements state that a commission is paid to the PM if the tenant buys the property

with your 2nd question, it could go a few ways. again, start by reading your agreement with them.

ultimately as an absolute worse case scenario even if you had to pay the PM it wouldn't be a massive amount and u can take it into account when negotiating a price. if they are indeed entitleD to compensation then it would be you who owes it to them and not the tenant as you engaged their services not the tenant.

 

Property manager would have no rights to commission on the sale itself.

They might have rights to chase up foregone commission from you but given you've had it 3.5 years its unlikely. The lost commission would usually only be for whatever notice period is specified in your contract - 60 days is common here but might be different in Tasmania.

 

Ive seen some agreements in perth in the past where the PM had a clause in there entitling them to commission on a sale to tenant, naturally I struck that out

 

If a property is sold and you no longer have ownership of that property it is automatically the end of that property management agreement. That's why we sign up new owners on new agreements when properties are sold.

 

commission on what? % of sale?

 

yup. I remember her trying to justify it to me and me wondering if one of us was on drugs cos

 

Most people wouldn't notice it I guess? Never seen someone put that here.

 

interesting that they would put that in there.

 

No the property manager cannot claim any commission. Even if there was something in the agreement, you can terminate it and then sell privately to the tenant without the agent knowing.

No you wouldn't need to pay any commission after the end of the lease. If you and the tenant agree to terminate the lease, then the property manager's job ends with it unless instructed to find a new tenant. In any scenario, if the lease has been terminated and no rent is being collected the agent commission will always be 0.

The notice period is for changing agents with a lease in place. This way they can charge you the commission they would have otherwise been entitled to if you don't give the required notice.

 

Thank you to all of the people that replied, very useful.

Have a good day

warek

 

As you rightly would. Anyone who accepts a rental contract with a clause like that in it is a goose.

So many predators exist in this industry because so many people are born victims.

 

Hi Warek

Indeed check your MA with the agency. We've sold successfully and privately to our own tenants on an IP in Sydney some years ago. Minimum fuss. All negotiating done by phone and both parties 100% happy. Not only saved money on selling agent fees (due to two willing parties) but also no vacancy period, property styling or marketing $$$ eating into our profits. Good luck!