PM Error in paying bills

Discussion in 'Property Management' started by legallyblonde, 8th Feb, 2019.

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  1. legallyblonde

    legallyblonde Well-Known Member

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    A friend of mine has a property in the Hobart area, which has recently transitioned from PPOR to IP.
    The property was advertised in December and a tenant was located. The owner arranged for the PM to pay all of the bills out of the rent received.

    The rates were recently due and the PM failed to pay them as there were not available funds in the account. The PM failed to contact the owner to ask for additional funds, instead they simply did not pay the rates and now an interest charge has been incurred. The owner phoned the council to discuss, they said to speak to the PM (since the interest charge is legitimate as the bill is outstanding). The owner is hoping the PM agency will pay for the interest but that is unclear at this stage.

    My opinion is that if they can stuff up something as simple as paying rates within only a few months of obtaining the management... It is a warning sign of errors to come? I am perhaps bias because I self manage, so I expect that when owners are paying for a service they should have the expectation that the PM can manage the most basic tasks such as paying bills (admittedly there are probably admin staff to do this, but it is all part of the PM service I guess).

    I personally self manage because I don't trust anyone to be as diligent as I am.;) But perhaps my expectations are a bit high?

    There are lots of great PMs here (and owners that use PMs) and I am wondering what others think?
     
  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The agent slipped up in communication. How much interest we talking about ? Sounds trivial to chase it to be honest. As owner you gotta focus on whats important. Chasing the PM for postage stamps vs a cooperative relationship.

    The agent role shouldnt be about paying bills. It should be about managing the property, tenant etc
     
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  3. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    Not necessarily but perfectly understandable to be "on guard" after it. Any warning sign for me would relate to the response rather than the error. There needs to be a level of accountability. If I was the principal it would be pretty simple: an apology, cover the interest, and 1 weeks free management for the inconvenience.

    Related to the previous quote as well but it needs to be considered relatively. Stand alone, paying a bill is a basic task. Managing the upload, processing, and payment of hundreds (Possibly thousands) of bills whilst again not necessarily difficult, does increase the likelihood of an error or an oversight. Depending on the size of your portfolio and the size of the agency they may pay as many invoices in a single month as you pay in a decade. I don't intend that as an excuse per se, just a recognition that an agency can get it right 99% of the time, but for the 1% where an error is made in isolation for that owner they wonder how something so basic can be stuffed up.

    - Luke
     
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  4. dabbler

    dabbler Well-Known Member

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    I dunno, I always paid the bills cause I never trusted any of them and did not want it to impede my ability to get credit......I have since change to let some pay bills, a good % seem to stuff it up.....prior to that, a good % stuffed it up by paying things like water when I was just asking for the usage portion from tenant....

    Have I mentioned I think most PM businesses are very poor performers....and I am not talking in regard to knowing legislation, I just mean in regard to the very basics...
     
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  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    This happened to me many years ago and I got a default judgment on my credit file.
     
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  6. SeafordSunshine

    SeafordSunshine Well-Known Member

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    Managing the Managers...

    1. Check that rates have been paid in your statement.
    2.Contact Council and make sure that they have the right address to send it too..
    3.Check your Agency has authority to pay this.
    4 this is a suggestion.. keep a list of when things are due.
    I hope this helps,
    It usually takes a little while for addresses/payments to be smoothed out, and if you are the one
    'carrying the can' ( The bill is in your name). Always always make sure it's been paid on time.
    I hope this helps!
     
  7. dabbler

    dabbler Well-Known Member

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    Good idea, but prob easier to just pay it yourself ?
     
  8. mikey7

    mikey7 Well-Known Member

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    1. Pay it yourself
    2. Done. No worrying, no chasing up, no wasted time.
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Plus points on your credit card and ability to borrow to pay it.
     
  10. marmot

    marmot Well-Known Member

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    I have no idea why you would trust your property manager to pay all your bills for your IP.
    In the era of emails and having online accounts , it makes little sense ,unless you are going overseas for a while or "offgrid".
    Insurance would be a big one not to forget.
    In the case of rates notices you can also question any large increases that seem out of the ordinary.
     
  11. Travelbug

    Travelbug Well-Known Member

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    I used to pay land rates, water, strata, insurance myself but changed after I'd bought 5 properties as I was travelling a bit and had to make sure everything was paid before I went away. I thought they might as well do it. I still do the insurance.
    Only had one problem in 10 years. One agent did not pay strata for 6 months, then late again and again. They paid me the $70 I had been charged in late fees. No issues since.
     
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  12. mikey7

    mikey7 Well-Known Member

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    Set up direct debit? All of my bills are automatic.
     
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  13. dabbler

    dabbler Well-Known Member

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    I think they all cut out points on govt payments ?
     
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  14. SeafordSunshine

    SeafordSunshine Well-Known Member

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    I would pay it myself, but for me, after a while , it's easier for the agent to do it.
    I get an income and expenditure statement at the end of the year and it goes straight to the accountant.
    I an claim on that.
    Easy peasy for me.
    The bills I pay are the ones I can't claim on my tax.
    In a perfect world, I would travel around to nice places and each month some one else would pay my bills, and send me spending money,
    Does that make sense?
     
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  15. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    Something that can also help is utilising email/online bills if the supplier offers that. There are some other benefits other than just making it easier for the PM.

    Some tips when setting it up:

    - don't use your PMs personal email ie. Jill@agent or Jack@agent, send it to either a specific address your agent has set up for this or a generic one (reception@, admin@). That way if you change PM within the agency or they leave you don't have to keep updating the email address.

    - keep (or update) the physical mailing address to your own personal mailing address (assuming you check it regularly). If a payment is missed most suppliers switch to sending reminders/notices/demands by mail. If it is missed this way you will know about it and can follow up.

    - Luke
     
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  16. d_walsh

    d_walsh Well-Known Member

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    Can manage cash flow better if you pay on the due date. No benefit in agent paying bills early.
     
  17. dabbler

    dabbler Well-Known Member

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    Yes, it makes perfect sense.

    So it just depends.....can be various for or against.
     
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  18. Travelbug

    Travelbug Well-Known Member

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    Yes, but for me that still means I have to check accounts to make sure accounts aren't due the day before the rent goes in. All the land rates are due on the same date. That's huge. With the agents paying I don't even look at my accounts for the 3 months I'm away at a time as everything balances.
     
  19. Tom Rivera

    Tom Rivera Property Manager Business Member

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    We would personally cover the extra cost and I agree that it's fair to make the agent responsible for a mistake like this. However, where does that end? Could you argue they should pay for excessive vacancy, or major repairs caused by slack management, etc? I think ultimately it's a similar situation to how business owners have to cop the cost of mistakes from their staff.

    It's definitely something to be a little worried about as far as new management, but it could also be a one off mistake.
     
  20. TMNT

    TMNT Well-Known Member

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    the industry needs more agents like you, who own up and fix their mistake
     

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