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Tenant has bounced a cheque and done a runner, Agent wants us to re-pay before engaging Debt Coll...

Discussion in 'Property Management' started by Hamster, 9th Feb, 2016.

  1. Hamster

    Hamster Member

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    Hi all,

    First time poster here, although I was a member of the Somersoft community but have only just managed to get across to the new forum (looks great)!!

    I have a bit of a dilemma, we have a property in QLD and our tenants bounced their last rent cheque in late December before doing a runner in Jan. Unfortunately the agent paid us the rent before the cheque bounced.

    As the tenant owes over a months rent plus has taken the keys, the agent has requested that we pay back the full amount that bounced before they engage the debt collector to recover.

    My question is - is this really our problem and do we need to repay them the amount not honoured by the tenant before engaging the collector (we only paid the annual fee for the debt collection service in Dec)?

    Won't the debt collector will work for both us and the agent hence rendering this request invalid?

    I understand that the agent is out of pocket I'm surprised they would release funds before clearing payment...

    Any advice or feedback would be appreciated, with this property we seem to be constantly outlaying cash for zero return...

    Cheers,

    Hamster
     
    Last edited: 9th Feb, 2016
  2. Biz

    Biz Well-Known Member

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    It's your problem. They are acting as your agent on your behalf so you would have to pay back the money.

    You can try with the debt collector but it will probably cost almost as much as the lost rent. Cut your losses and move on. With people like this you can shake them upside down and you'll be lucky if a ball of fluff falls out.
     
    Last edited: 9th Feb, 2016
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  3. thatbum

    thatbum Well-Known Member

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    Umm what's the debt collector going to do anyway?
     
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  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    I don't understand how they disbursed it before they had it in their account, something is amiss here.

    Just checking - Is it a resi prop or comm?

    If residential then utilise bond and landlord insurance, not debt collectors.

    There's an article on these forums about this already Tenancy Tip Thursday - Tenant has done a runner
     
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  5. Player

    Player Well-Known Member

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    I take it you don't have landlords insurance. Forget the debt collector. Reimburse the agent and maybe go through QCAT if worth your while. Change the locks Find new tenant and get decent landlords cover in place. Stuff like this can happen. Move on. Don't take it personally.
     
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  6. Chilliblue

    Chilliblue Well-Known Member

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    +1 on cut your losses, grab the bond and contact your insurer.

    The reason for requesting the money back is so that the agencies accounts are sorted otherwise they will have to dip into their pockets to make the figures stack up. That is their problem as they should not be disbursing monies that have not been cleared. Bad accounting practice.

    Maybe start looking for a new agency?
     
    Last edited: 9th Feb, 2016
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  7. Scott No Mates

    Scott No Mates Well-Known Member

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    Agency has f@$^ed up & breached their licensing obligations. They aren't permitted to pass on uncleared funds from the trust account.

    +1 @Chilliblue
     
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  8. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Weird accounting error from the agent. I've been fortunate to only have a few occassions where a tenant hasn't paid and it generally means I don't get paid.

    I imagine that if you don't re-emberse the agent, they're only going to claim it out of your bond (assuming they can do this). They can also make things go slowly towards getting a new tenant, so there's a good argument for staying on good terms with them.
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    D.T. is right. This doesn't add up. Agents usually hold your money in a trust account and cannot pay it until the cheque bounces - if they did they have broken a few rules by paying you with someone else's money. They may have also paid you from their non trust money.

    And yes what is the debt collector going to do? First they have to try to find the tenant, which may not be easy. So expect to be asked for some more fees. If they do ask, you have to consider whether you are throwing good money after bad.
     
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  10. Hamster

    Hamster Member

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    Thanks everyone for their responses.

    Just to clarify a few points:
    • It is a residential property.
    • We do have landlord insurance, however they have now advised there are 2 excesses to be paid prior to claiming so we are thinking it isn't worth it.
    • We are waiting on the bond to be released so could possibly release it from here also.
    • The agency charged us $55 for a debt collector in Dec, and suggested we go down that path first, don't think I'll bother next time.
    • Also recently found out that these tenants bond cheque bounced initially also, they ended up coming back in to pay cash. If we had of known then...
    Possibly time for a new agent, this is the second non-paying tenant to do a runner within 5 months of purchasing the property...
     
  11. Chilliblue

    Chilliblue Well-Known Member

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    @Hamster unfortunately it is a lesson learnt and it is great that you are sharing it with others who may be facing your situation.

    Whatever you do, do not refund the agency and request in writing how the rental bond is to be disbursed. I.e. ask that the change of locks and any outstanding works are paid before loss of rent.
     
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  12. Biz

    Biz Well-Known Member

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    Obviously we don't know the full story but I find that really unethical. Two wrongs don't make a right.
     
  13. Hamster

    Hamster Member

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    Thanks Chilliblue,

    However we have already transferred $600 to the agent to cover change of locks, new garage door remote, rubbish removal and cleaning...so no point claiming that from the bond!
     
  14. HUGH72

    HUGH72 Well-Known Member

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    You should be able to contact Barclays directly to pursue the tenant.
    I think you should repay the agency personally despite their poor accounting practices.
    Then find a new pm and move on, I would also be asking if the tenants who have done runner were listed on TICA previously.
     
  15. JessicaP

    JessicaP Well-Known Member

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    We have just had this happen (tenants done a runner not the payment stuff up). We had to go to vcat to get vacant possession and have put an insurance claim in because they will pay loss of rent (until new tenants are found), cleaning, change of locks, agents fees etc etc. all worth it imo.

    Our PM has been amazing. I've only spoken to the insurance company once, to let them know what was happening, all other stuff has been taken care of - including patching holes in the walls and garden care. New tenants move in tomorrow. Sounds like you need a new PM.

    Oh, and debt collectors have never been mentioned? I think the pm said the insurance company will chase the tenants for the money.
     
  16. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes you will be liable to the agent for any money mistakenly paid to you.

    for $55 all a debt collector will do is probably write a letter.
     
  17. Chilliblue

    Chilliblue Well-Known Member

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    The agent has clearly been wrong on two occasions here.

    1. Monies from a trust can only be disbursed once cleared.

    2. Telling the landlord to reimburse incorrectly disbursed monies before arranging the debt collectors (a fee already paid).

    Should the agency not fix up their practices and the landlord mitigate their losses before sorting out the agencies error?

     
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  18. Biz

    Biz Well-Known Member

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    I just don't follow the logic sorry. Sure their accounting department is sloppy, they sound like incompetent PM's alright, the tenants are deluxe a-holes. If their is a property god sure Hamster deserves the cash but still it doesn't make the landlord entitled to funds that never cleared because they should not have been paid in the first place.
     
  19. JacM

    JacM VIC Buyer's Agent Business Member

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    At the very least I'd be making them sweat big time before returning their money to them. I'd be asking to see a copy of the trust account ledger, records they've taken with respect to the cheque itself, and mumble something about need to discuss it with consumer affairs. It is not going to thrill them that the grand overseer will find out they have irregularities in their trust accounting. You never know - they might tell you they'll cover it to avoid the investigation. Either way, time for a new property manager.
     
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  20. D.T.

    D.T. Adelaide Property Manager Business Member

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    Which insurer? Usually no excess on rent related claims.