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Tenant breaking lease...dilemma

Discussion in 'Property Management' started by mini2, 2nd May, 2016.

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  1. mini2

    mini2 Well-Known Member

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    So got a phone call from my PM this arvo with the conversation started like "Oh I've got something to tell you about your tenant...no she didn't pass away in your property".

    My current PM and I have some differences and relationship is falling apart. I'm biding my time till July to move on to the next PM. I need to advertise with them NOW if I want the let/advertising fees partially recovered from the current tenant and I can't exactly increase rent either. Should I:

    - let the current tenant go without recovering the let/advertising fees and switch agent
    - get the current PM to whack a for rent sign out the front and recover the let/advertising fees

    I am leaning towards let them out by the end of the month, get someone in to spruce up the place (that's always been the plan since day dot) then get the new PM to sign up a tenant instead of this whole handover thing.

    Thoughts? :confused:
     
  2. thatbum

    thatbum Well-Known Member

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    Is this in NSW? And if so, do you have a set break lease fee in the agreement?

    Btw, legally I don't see a problem in recovering the (pro-rata'd) letting/advertising fees while also switching agents.
     
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  3. D.T.

    D.T. Adelaide Property Manager Business Member

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    If you want tenants to cover your letting / advertising costs, you have to demonstrate mitigating your damages.

    If its in SA I'll show you the formula used for what portion of costs payable based on how long they've been there.

    Based on what proportion they're going to cover (rules vary on this a little between states), you might find it worthwhile to skip that and spruce it up, rent it for more. This is worthwhile if you think it can be rented for more (because if you have ex tenant cover costs you have to rent it for the same).

    Assuming you're out of contract, you can change PM's at any time - it doesn't affect your legal relationship between you and your ex tenants /future tenants. The new one might be able to give you advice on what to spruce up and what rent is achievable in the area now.
     
  4. Xenia

    Xenia Adelaide Property Manager Business Member

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    Get the next pm to take over, they can charge all the relevant lease break costs right away.
    The current pm may be willing to negotiate termination before end of fixed term management contract now that it's vacant.

    Reletting, clean ups, lease breaks, insurance claims are a huge amount of work and they are not going to get the benefit of continued management since you are transferring to another pm in July. See if they agree for you to transfer now - it will not effect lease break charges or any other charges to tenant.

    Don't worry mini2 a bit of a lease break epidemic happening in SA ATM. It's not just your property - all reversible, all good.
     
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  5. Nick Valsamis

    Nick Valsamis Well-Known Member

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    It is likely that you won't be able to change PM without first giving notice, so the best option right now would be to let your current agent advertise and find a replacement tenant first.

    There is no real reason to be letting the tenant go and paying the associated costs of finding a new tenant.
     
  6. mini2

    mini2 Well-Known Member

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    Oh they know about my intentions to change agents for yonks now and it's scheduled to happen sometime in July. So I've asked the question of changing over now allowing the incoming PM to handle the tenant breaking their lease and finding me a new tenant. I won't let them go without them paying for my losses of course.
     
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  7. Nick Valsamis

    Nick Valsamis Well-Known Member

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    Sounds like a good plan if they do let you change agents right now.
     
  8. mini2

    mini2 Well-Known Member

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    All of a sudden they've agreed to it so long I pay an ransom early termination fee...I might just go ahead with it. Life's too short to deal with bad PM's.
     
  9. Nick Valsamis

    Nick Valsamis Well-Known Member

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    How much are they asking for? 3 months worth of commission?
     
  10. Xenia

    Xenia Adelaide Property Manager Business Member

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    Have they given you a payout figure mini2?
     
  11. Dean Collins

    Dean Collins Well-Known Member

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    Why would anyone ever sign a binding contract for a PM??

    None of my existing IP contracts have this (lol just went to check to see if I made a mistake) just 2 weeks cancellation notice.

    Everythings negotiable folks.....if a PM put it to me this was a requirement and wouldn't negotiate then I'd walk.
     
  12. wylie

    wylie Moderator Staff Member

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    I think most people (who aren't on this forum) would just sign the PM contract (because that's what you do - I would have done so if I was using a PM) and wouldn't think about what happens if they don't like the service. They probably assume they can simply leave.

    I have sometimes read something here and quickly gone to the filing cabinet to check I've not made the same mistake. :eek:

    PS. Welcome to the forum. Do you live in New York?
     
  13. D.T.

    D.T. Adelaide Property Manager Business Member

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    Don't be surprised if the PM walks too.