Property manager arranged incorrect lease period

I recently provided instructions to the property manager of one of my IPs to arrange a 6 month lease or alternatively allow the tenant to remain month - to - month. This is because I am considering selling mid next year and want to have the flexibility to offer vacant possession / do any repairs or minor renovation prior to sale.

The property manager advised this week that they had signed the tenants up to a 12 month lease. I immediately flagged my concern and pointed out this was not what I had agreed.

The response received was:

“Regarding now the 12-month lease that’s fine if you were to sell the property still the tenants can be given notice though keep in mind the tenants can give a minimum of 2 weeks’ notice themselves once the property is for sale regardless of a month to month lease or fixed term.

We can monitor the situation as we get closer to the selling period and advise accordingly.”

I fully appreciate that the tenant can elect to terminate a fixed term lease when the property is being sold. The issue is it’s up to the tenant - I can’t force them to leave, which means I can’t guarantee vacant possession on sale.

It appears I am stuck with the lease period so my thoughts were to revisit the situation mid-next year and if I want to proceed to sell early, advise the property manager it is up to them to arrange vacant possession (through offering the tenants compensation / alternative property etc).

What do people think?

 

Since there isn't currently an issue, I would wait until there was and not worry about it.

 

The tenants can fully hold accountable the 12 month lease.

 

Was it a genuine error or did the PM just go ahead against your instructions?

It would be a serious concern to me if the PM acted contrary to a clear direction.
Marg

 

I think it was a genuine error but not sure how when I had stated 6 months in writing...

Bit underwhelmed the advice is to kick the issue down the road and nothing can be done now. But if that’s really it then I’ll be looking to the PM to resolve any problems it presents next year.

 

It’s a difficult one because it’s a signed deal and unfortunately he is locked into a 12 month contract with the tenant.

I don’t agree with The property manager statement saying that it’s all good and the tenant can just give two weeks notice, that does not fix anything and doesn’t take away from the fact that this is a major stuff up And the landlords instructions were not followed correctly

The property manager can try and negotiate with the tenant explain the situation to them and try and get them to sign a six month lease and recind the Original contract but that is at the tenants discretion.

It will also open up a can of worms because now the tenant knows that the landlord has intentions to sell the property and I have certain legal rights in relation to that which may not be in favour of the landlord.

The best thing that parkzilla can do is to work out a fair compensation back from the agent.

Work out a fair monitory loss in relation to the delay of the sale that has been caused by the property being tenanted for a further six months and ask for that in compensation from the agent.

 

Off course the situation matters but trying to work out the property managers intentions or integrity or trust or capability or lack of detail or competency is just time wasting, emotional and not a space I want to work in.

It is what it is, handle the situation.

 

Exactly
Once you put it for sale and get a genuine buyer who wants to settle in 3 months, you can get the agent to make good the situation by paying the tenant to leave 3 months earlier or whatever the case may be.

I would be holding them responsible to put it right, it’s not just ok because the tenant can give notice - they might not.

 

Whenever one of my PMs make a mistake (intentional or non-intentional), I make them aware immediately in writing that they have made a mistake and that I will hold them liable for any/all consequences.

I am in the property investment business and they are in the property management business and I pay them well for providing that service.

This is how professional businesses operate.

I must admit that, over the last 25 years, I have only ever had a couple of instances of a PM making a mistake and there has never been any repeat offenders .

 

No its not. The agency has possiblly breach contractual and fiduciary duties and could be liable for any loss suffered by the landlord.

 

I agree

But the result and the obligation is the same whether it is intentional or a mistake. So it does not matter what the motive of the agent was, the result has to be handled the same.

It’s like my landlords who want an explanation of why tenants are in arrears, it dosent matter, they are in arrears and we need to breach them no matter what reason there is behind it.

 

Anyway I deleted that comment, it was in relation to someone trying to say that one motive was worse than another one and I just want to look at the end result irrespective of whether it was an accident or intentional or the pm was drunk or whatever. That part of it is zero concern to me.

It was misunderstood for do nothing - can’t be bothered explaining, deleted, gone!

 

You could force the issue - in NSW, the tenant may leave without penalty should you list the property within ??? (I can't recall how many weeks of signing a lease if the owner then puts it up for sale). Once listed, advertised & tenant moved on, withdraw the property holding the agent liable for all of those costs (legals, listing, contract preparation etc) provided of course you have evidence of giving the instruction to the agent.

 

I know of a tenant who was paid $50,000 to vacate early, $25,000 from the vendor and $25,000 from the purchaser.

I know the purchaser. I couldn’t believe they coughed up $25K. I would have left the tenant stay, let the lease expire and then moved it. Ah well!!!

He kept the wife happy .

 

I wouldn't wait and see, might as well deal with the situation now. If nothing else to make the agent aware of their mistake and ensure they fix it before it's been so long and the agent just assumed it was okay.

Speak to the agent and make them fix their error. At the end of the day once the lease is signed it is binding and the tenant doesn't have to change the agreement, but I'd be holding the agent accountable now and in 6 months time if you do go to sell the property make them cough up per your agreement made now.

 

Personally I would be asking the tenant what it would take ($$$) to get them to mutually terminate the lease agreement now and exchange it for a 6 month one.

Then, make the PM pay the cost.