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Property Manager Contract Termination WA

Discussion in 'Property Management' started by chibs, 30th Apr, 2016.

  1. chibs

    chibs Active Member

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    Hi all,

    I have recently notified my Property Manager that I want to terminate my contract with them as we are moving to self manage. After this, she gave me a call asking why I terminate. As I wanted to be nice, I stated my main reasons for wanting to terminate (such as wanting to reduce management fees etc). She then proceeded to tell me that my contract with them expires in March 2017 and if I break, I am liable to a sum equivalent of 50% of the Management Fee for the unexpired period of the Term.

    I have now found my contract to look for the exact term.

    This agreement may be terminated by:
    3.1.1. The owner if the agent fails to substantially perform its obligations under this Agreement and such failure continues for 28 days after written notice complaining of such failure is given by the Owner to the agent; or
    3.1.2 The Owner without giving prior notice should the Agent have been guilty of a fundamental breach of the terms of this agreement; or
    3.1.3 the Agent giving not less than 28 days notice in writing to the Owner

    In the event that this Agreement is wrongfully terminated by the Owner during the Term, the Owner will pay to the Agent as and by way of liquidated damages a sum equivalent to 50% of the Management Fee which would otherwise be payable to the Agent for the unexpired period of the Term. The Owner agrees that payment of the liquidated damages in this clause is a fair and reasonable pre-estimate of the damages likely to be sustained by the Agent if this Agreement is terminated prior to the expiry of the Term and reflects the real loss or damage likely to be suffered by the Agent.

    So truth be told, that there have been a few instances that triggered me to terminate the agreement. Among others:
    1. When a new tenant signed up, I wasn't informed (unless I ask) and was never given a copy of the residential tenancy agreement. I have no idea when the tenant moves in and when their lease ends
    2. There was a recent incident where they have carried out an unauthorised repair. I have specifically asked them to firstly send me a photo and the next thing I know they have deducted repair fee from my rent. This is a non maintenance item, to be exact they asked an electrician to remove and uninstall an old reticulation system that no longer works. I have since let them know that I want a written authorisation for non essential repairs.
    3. Not too long ago, the aircon stopped working, the PM called an electrician only to find there is nothing wrong with the aircon. The circuit tripped and I am charged for the repair.
    4. The PM has often sided with tenants by asking me (sometimes to the point of pressuring) to carry out items that are not urgent, non essential, and non necessary.
    5. When old tenants leave, I didn't receive a copy of final condition report.

    Can someone advise me if I have a case to terminate the agreement based on these arguments ? Or is it futile to challenge and best to just continue until the term ended ?

    Sorry about the long post and thanks for reading.
     
    Last edited: 30th Apr, 2016
  2. thatbum

    thatbum Well-Known Member

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    I'm guessing you haven't given them a written notice to the PM of them substantially failing to perform their obligations yet?
     
  3. Xenia

    Xenia Adelaide Property Manager Business Member

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    You will not be able to terminate a management agreement on those grounds.

    Repairs and maintenance is carried out as huge part of property management.

    NOT conducting repairs and maintenance. Ie ignoring an electrical fault leading to damage to a property and/or compensation to the tenant for maintenance not done, is a breach of management. But getting things fixed is not. They have ignored your instructions not their obligations to manage the property.

    Not sending leases, poor communication about move in dates is a pain in the backside but not a breach. Failing to lease a property by ignoring enquiries, failing to do open inspections IS a breach but getting everything done and then not keeping the landlord informed is not.

    Their customer service skills can be improved for sure but you can't end a managent agreement on those grounds.

    If they are asking for 50% of the remaining contract value, it may be cheaper to pay it out than wait the term which will be 100%. - unless I misread that part.
     
    MTR and sanj like this.
  4. chibs

    chibs Active Member

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    @thatbum resident lawyer :p, you'd be the first person to go to regarding this.

    I haven't told them the reasons in such details, but I have sent them an email about the unauthorised repair when I saw the invoice. I have expressed my annoyance as well when they call someone to fix a tripped circuit, although in that email I have placed the blame on the tenants for not doing reasonable efforts to troubleshoot. In the end the cost is split in half between me and tenants.

    Should I send them a written notice with all my complaints with the risk of damaging my working relationship with them ? If I can't terminate, they'll still be managing my IP for the next 9 months...
     
  5. chibs

    chibs Active Member

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    @Xenia Thanks Xenia, you'd know this as an expert PM. My options are to let them continue managing until the term ends or to challenge them (but I'll need a good ground)

    I read about Agent's obligation in the contract. You're right, there is nothing written in the contract about having to send reports to landlords. The only term I can probably use to challenge them is this:

    Unless specified otherwise, the Agent will at the expense of the Owner, effect any maintenance or repairs to the Premises as deemed necessary by the Agent, without notice to the Owner, provided that the cost in any case does not exceed the amount specified in the contract.

    They have called in an electrician to execute 3 repair items. 2 of them I have authorised, 1 I have not(to remove and disconnect a retic controller). Now the total invoice for this exceeds the amount specified in the contract, but it is a combined invoice. I have no idea whether the item I haven't authorised exceeds the specified amount. I would have thought remove and disconnect a retic controller is not an urgent or even a necessary repair....and maybe I can use this ground to terminate ?

    If I can't dispute them, then I have no choice but to continue the contract. Yes, I'll have to pay 100% but at least I get management service from them.

    Thanks again for the advice.
     
    Last edited: 30th Apr, 2016
  6. sanj

    sanj Well-Known Member

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    You have option 3, to pay them the 50% you're legally obliged to if you want to terminate now.

    I cannot stress enough that a significant % of issues brought up on PC could be resolved or possibly could have been prevented if people read their contracts prior.

    please for the love of God everyone just read the paperwork.
     
  7. thatbum

    thatbum Well-Known Member

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    Yes probably. I suppose there's the risk of pissing them off, but it does give you an argument to terminate in 28 days time.
     
  8. chibs

    chibs Active Member

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    @sanj Gee, people are so free with other people's money these days. And I'd like to challenge you if you still remember the terms and conditions of a once off contract that you signed 4 years back.

    The last time I check, money is a legal tender you use in exchange for either goods or services. In my case, I am not getting the services I am paying for. Hence my reason for wanting to terminate and self manage. I actually spent time on top of money, e.g. to chase up monthly statement they once forgot to send. I can't fathom why I am obliged to compensate when they are not meeting their obligation in the first instance.
     
  9. Xenia

    Xenia Adelaide Property Manager Business Member

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    This one is not entirely a contract issue @sanj she is fed up with lack of communication from the pm.
     
  10. chibs

    chibs Active Member

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    It must be the long post. I'd be confused too :p
     
  11. sanj

    sanj Well-Known Member

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    Yeah im aware of that but reading the contract beforehand wouldve meant knowing the 50% fee might be payable should the PMs incompetence not be shown, which might have meant more strongly worded emails when each incident occurred.

    the more knowledge anyone has about a particular situation means the greater chance of an informed decision being made and the right steps being taken.

    2nd half of post was also speaking more generally about the importance of reading contracts, not just in this situation and it was in no way a dig at the OP.
     
  12. sanj

    sanj Well-Known Member

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    I suspect you might have misinterpreted my tone/intent.

    it isnt about remembering what was agreed to 4 years ago. in this case I'm suggesting that when your PM started to stuff up or when you started considering getting rid of them, that the appropriate action then would have been to pull out the contract and work out where you stood and what the possible outcomes were.

    it is in no way a personal comment about or to you, I just think it's relevant for some people reading this thread because it is a regular theme across various threads in this forum where someone's difficulties could have been avoided or reduced haD more upfront DD been done, often in the form of working out legal standing.

    there's a reason why people like @Terry_w and @thatbum , both of whom are pretty competent lawyers to say the least, often ask "what does your contract say".

    also I don't quite get your first comment about people being free with others money, im just suggesting what an option is, not telling you to take it. you've said you can't fathom why you might still be legally obliged, im answering your question and if you didn't get upset and focused you might fight him yourself fathoming the situation even if you don't agree with it.

    whats fair and what's legal are often 2 separate things entirely. it sounds like it wouldn't be fair if you had to pay torture PM the 50% being asked but it is entirely possible you might be legally obliged to.
     
  13. chibs

    chibs Active Member

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    @sanj I might have misinterpreted and I apologize for that. Yes, there are 2 perspectives, the legal perspective and my perspective. I read your answer after my reply to Xenia implying I prefer to continue the contract rather than paying the penalty, hence the misunderstanding.

    I agree that appropriate action can be taken if I am aware of my legal obligation. Xenia is correct though in saying that it is a communication issue. My idea of a PM's responsibility is different from their obligations under the law.

    So, I wrote a written complaint about a recent unauthorised repair they carried out. My PM called today and she was apologetic. After hearing her explanation, it turned to be a small issue that I would have agreed to anyway if only they discussed it with me. Apparently we have a fussy tenant, the PM got a little bit pressured by a demand the tenant made, made a spur of the moment decision to make the repair in my best interest, and forgot to tell me about it afterwards.

    I feel that even though PMs are not obliged to communicate their actions, it is nice to receive updates on major events as I am entrusting a house in their care. When I first engaged them 4 yrs back, they seem better at communicating. I would receive calls when an application is received or when a tenant is not renewing. They probably have more houses to manage now and become too busy to send updates.

    But anyway, I decided to continue the management contract with them until it elapses. I am doing so willingly as they have helped me in the past and because they are nice people. Or maybe just because I feel better after hearing their side of the story.