PM signed up at tenant at incorrect rent!!!

So this is first for me and wanting your opinion.  I settled late Jan on a house in Vic.  We live a long way from it. Appionted an agent verbally prior to settlement as house was vacant and wanted to get tradies organised for day after settlement.  After PM had seen property, PM recommended a rental range.  I told her what I wanted it listed at.  Ten days after settlement she had found a tenant who wanted to move in next day.  All seemed fine at this stage, tenant had rented with agency before.  I had still not seen any paperwork.  Asked PM to send paperwork to me to formally appoint them as agent.  A few days later, rang PM as I had not received paperwork.  She said she would send it today and tenant had moved in with no dramas.  Rang PM next day - she was off sick.  Asked other PM to send me documents - a bit sus at this time.  Received documents today with the rent listed at 10% less than what I asked to list at.  Rang PM - she no longer works there and sales agent informed me that an auditor has been commissioned to look at her work.  So where do I stand???  Where does the tenant stand??? Am I just going to have to cop the loss for the length of lease (12 months)??? 
Anyone else come across this or similar??
Thanks in advance
JL

The agent can't legally rent it without a written and signed agreement . One way out maybe for them to drop their commission for 12 months . The commisson is normally 8% plus and they add postage and petties to this as well . You would come out about where you wanted to be . This maybe less painful for them than you going through the realestate institute. Not sure if you  have been doing this for a while but I would only start a new tenant on a six month lease . As a matter of fact I only ever give 6 month leases . That way I can add another 5 or 10 dollars every six months .

Hope this helps

Rodeo

If you haven't signed the agency agreement - DON'T! Hold it over the agency's head to get them to drop their management fees to compensate the loss of rent and to provide satisfactory proof that the rent achieved is market  rather than the agreed rent (ie do they have proof of advertising the property at the required rent & offers recieved below this value?). If they do not, advise them that you will be taking the matter to dept of fair trading to seek the revocation of their licence for operation without an agency agreement and without authorisation.

Thanks for the advice.  I really feel for the tenant who i think will get caught up in this mess if I persue it.  I am not signing the management agreement.  I am going to wait to see what the agency comes back to me with, but I want an idea of what I expect from them before they call.  I agree that they should forfeit their commission, but I feel for the owner of the business who employed this PM, who is likely to be losing a lot.  I get the impression that almost every client has had a drama. At this stage, I am still unsure if to 'dob them in'. 

As for the idea of a 6 month lease.  I chose to opt for 12 month lease in this situation because the population of the town is around 1600 people.  They have a very transiant professional population in that teachers, nurses, doctors etc move in and out every year - and usually just after Christmas.  I wanted to take advantage of the increased demand at this time, and maybe lose out on the occassional rent increase by doing so.  My hope is that vacancy's will not be high as a result.

Thankyou for your thoughts and I look forward to hear from anyone with any other ideas.
JL

Check this out:
Just received a call from agent.  They will not deal with me anymore unless they have a signed authority.  I guess they are making my 'dob in' option easy.  This is not all.  Tenant moved in and is now 3 weeks behind in rent.  I would change agents to sort it out, but i do not know of any other agent who services the area.  I guess I am making some phone calls.  Any suggestions.
Looks like I'm the one being held to ransom.
JL

Rang Dept of fair trading today.  They told me I can't do a thing because I had a verbal agreement for them to lease the property, even if they did lease it below market value and below my request.  The agency has not returned my calls and now I don;t know how to chase missing rent?  I have no lease documents.  Anyone have any other ideas?
JL

Did they lease it at or below market price?

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Xenia,
It's really hard to tell because it is in such a small market.  The agency I went through has 7 properties and I have found another that services the area which has11.  The agent I bought it through thinks the rental value should have been 25% higher, but they do not deal with rentals in the area.  I am unsure in such a small market on how to prove that they did rent below market value.  I had instructed them to not lease the property below a certain amount and they have.  The diffence is not huge (10%) but the margin on this property was small due to the value being low.  I have had one bonus in that I did not expect to find a tenant in such a short space of time, but again this is no good to me if they don't pay, which at this stage they haven't since early Feb. Any ideas would be gratefully appreciated.
At this point my thoughts are to just go with the other agency, who manages more in the town anyway, and chalk it up to a learning curve. 
JL

ring and ask to speak to the principle of the business  and also get the other real estate to follow it up for you.
Sign up with the other agent (if you think they sound ok) and ask them to go out and do an inspection and sort out the rent in arrears i don't believe that your verbal agreement would hold up if you pursed it through small claims court, i am guessing they are just trying to bluff there way out of it. They sound very dodgie and with the OFT how come your agreement stands but they are allowed to do what they like? ring back and speak to someone else it's suprising what one person to next will tell you from the same company.

Good Luck

nicole

Thanks Nicole,
I'll keep you posted.
JL

I think that the agency realise this PM was no good and they're probably having a horrific time trying to sort out her mess. I would have thought they'd be pretty sympathetic to your situation. Were you at all understanding about the fact that the current staff had nothing to do with this stuff-up, or did you go in angry with them? If it's at all possible to approach them in a spirit of:

"look, I know this isn't your fault but the fault of your previous PM, but I'm feeling really hard done by because I wanted this rent level and a 12-month lease, I got 10% less and a 6-month lease and they're not paying anyway. How do you propose we remedy this situation?"

then I would do that. I would think they'd be glad of the opportunity to try and clean up this mess that their staff member has put you in. If they propose something reasonable eg "We'll evict this tenant and get a new tenant in for you on the terms you wanted, and charge you no letting fee or fees for the eviction of the current tenant", then I think that's about the best you can expect.

If you go to another agent, you may or may not get better service, but they certainly won't be making good for nothing, as they're not in a position of feeling that they owe you anything. At least the current agents may feel motivated to try and remedy the situation for you, out of guilt for what their bad staff member did.

Trakka,
Funny you should write this because after my last post the agent called again to ask more questions because they have decided to send someone there on Tuesday to find out what the story is.  They were really good about it.  I assume they have thought about the position I have been placed in and are now wanting to help remedy it for me, or like you say, maybe I am one in a number that they are dealing with and are a bit overwelmed by it all.  I will now wait until Tuesday. 
They did ask me today how I would like to solve the rent issue and I suggested that waving their fees for the next 12 months would leave me in nearly the same position.  The girl then just moved on to the next question, so we will what happens.  She did state that she would not send a Notice to vacate until she had received formal notification from me regarding my instructions.  I guess I will see next week if the tennant is there, if the maintanance has been attended too and if the A/C's have been installed.  I like to remain loyal and will hopefully do so, becuase like you say, I can always get worst.   
JL

I think asking them to waive their fees for a year is a bit rich. And possibly counter-productive - what's their motivation to give you good service if you're not paying them anything? You are not going to be restored to the position of having the higher rent that you wanted and a 12-month lease, so forget that. Aim to compromise and achieve the best position going forward, and take a long-term view. 

If the current tenant makes up arrears and wants to stay, see if there's a lease drawn up. If there is, you have to honour it. I would perhaps ask the agents for a reduced commission for that six-month term, perhaps half-commission, as a gesture of goodwill.

If there's not a lease, see if you can negotiate the terms you want and sign them up. If you can't (and remember this isn't the tenant's fault either), then I think you're best to just wear it. It'll take nearly as long and cost nearly as much to evict them as to just wait for the 6 months to be up. If they choose to leave, I think the agents should wear the cost of installing a new tenant, but thereafter, I think you should pay their standard commission.

The aim of every negotiation should be win-win, not win-lose. If you screw the agents, it will ultimately go against you. Remember that the remaining staff at the agency are as blameless as you are. The actions of the former staff member have resulted in a situation where you'll probably all have to lose something, despite it not being anybody's fault but the former staff member. It's not fair, but it's reality.

Trakka,
I thank you for your feedback.  This is what I am wanting because I am obviously emotionally involved in the money side of things.  All that you say makes sense, and I guess now I will wait until they call on Tuesday armed with some new thoughts.  I did tell the girl who rang me yesterday that I do not blame her for what has occurred, I just want the best possible outcome for all involved (but obviously my family first).  At this stage I beleive the tenant to be unaware of any problems with the lease, and I expect it to stay that way.
JL

Can you terminate contract with PM and get the tennant do a direct debit to your account?.. meanwhile look for other PM..
I have similar probs.. I have 2 rental propperty in QLD, (im in Darwin) its been great until they PM left the agency.  Now my RP have been passed on to a new PM which is so dumb ... now she resigned/fired.. I have a new PM again... ooohhhh its frustrating.. I have great tennant but dumb PM..  I will be in the area this june and will shop around for a new PM.

Hi JL,

in my experience once a tenant gets behind it is near impossible to get them back up.Especially if they have rented yr house only weeks before stopping paying .
I have just had this problem and was trying to work with the tenants feeling for them as they were giving me stories that they will catch up etc etc,
eventually i found out they had no intention to pay the rent and i had to take them to court.Some tenants know the law and use it for every house they rent so they never pay rent.(this may not be the case in yr situation but just be aware.
At the end i got them out after paying $1600 of the $7K owed and they trashed my house for good measure on leaving.At the end of the day also ,the real estaet agents dont take any responsibility ,thats why yr better off controlling it yrself.

I would evict them and manage it yr self.Even advertise locally for a tenant,travel there and choose a tenant yrself,
then set up a direct debit into yr account.
or what i am now doing with centrlink tenants is get it paid staright from the gov into yr account.

kind regards

"Don't let yr character be impacted by yr surroundings, instead make yr character impact yr surroundings"
- Rachel Scott(17 yr old killed in columbine shooting 1999)http://rachelschallenge.com/

I am thinking of selling my Rental Property, BUT tennant signed for 6 months,...  How much notice do I give them? or where do I stand??  Property Manager says I have to honor the lease before I sell... is this right???

Depending upon the state you will most likely have to honour your lease obligations ie you may not be able to sell with VP. That will mean that you will have your market restricted to investors and that you will have to be on good terms with your tenant to allow the property to be shown in the best light ie neat, tidy etc rather than a shambles.

Yes, if they're on a fixed-term lease you must honour it. It's only if they're on periodic ("month-to-month") that you can give them notice to leave. Your best bet, if you want it vacant, is to offer the tenants an incentive to break the lease, such as assisting with their moving costs.

World Changer,
Thanks for your comments.  An update.  The agent has served the notice to vacate to the tenant.  The tenant had actually paid rent, the PM had just inputted it incorrectly in the computer.  So rent is up to date.  I have a very understanding tenant who is loyal to the PM company, therefore, I have renegotiated the terms between myself and the PM.  They have gone out of their way to help me.  I have now signed the authority for the PM. 
No one can find a copy of the lease.  The tenant is away and returning in a couple of weeks and happy to resign.  Maintenance issues have been sorted - but they cost a lot more than I expected without my permission.    At the beginning of every new agent agreement I obtain updates from the PM every week for around 6 weeks.  I guess this time, this was not enough.  I have come across lazy agents before, but not ones this bad.  Lesson learnt.  I will be more careful without becoming paraniod.

Emu,
As for honouring lease agreements, why not approach the tenant and ask if you can mutually agree to terminate the lease with compensation from you? Maybe if you pay for the phone reconnection etc they may be in it??  Just check this is legal before you do it.
JL

I just found out that Tennant now on periodic terms. She did not signed the re newed lease within 5 days therefore its nul void according to PM...Lease or no lease that ok with me.. cause,. I might be looking to put this property in the market but not sure yet!! According to the Real Estate Agent the Market very slow...