Forums / Property Investing / Help Needed! / Good Tenants Breaking Lease Because of Bad PM

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  • Profile photo of Micky3201Micky3201
    Member
    @micky3201
    Join Date: 2013
    Post Count: 3

    Hi All,

    What a Mess! I own a townhouse in a gated complex in QLD and my tenants had been fabulous.

    A few months ago the onsite management changed hands and it appears the new managers haven't been very onto it and we regularly received emails from other owners stating things like they sacked the landscaper so the grass was overgrowng and they'd cut the office hours down from mon-fri 9am-4pm to 2 hours a day, 3 days a week. They also cut back on rubbish collection so the place hasn't been the best so we've been told.

    Nevertheless, our tenants had signed there fourth 6 month lease and continued to pay rent and water on time and pass inspections with flying colours. 

    Last month to my utter surprise I got a phone call at my office here in London from our tenant who'd googled my name on their rent receipts, found my employer on linked in, looked up the company I work for and called me at work.

    She stated she'd come home stressed from a night in hospital with her infant daughter to find a friend/handyman of our property manager blocking the entry to her garage and had woken her night shift worker husband to carry out air con maintenance that she wasn't aware of. Our tenant claims she checked with both neighbours either side of her home and both said they'd not been notified about the entry either.

    Our tenant claims she approached the property manager asking why they hadn't been notified and he says he'd put the notice in their letterboxes on Friday for entry on the Monday. Our tenant and the other neighbours all agree they'd checked their letterboxes over the weekend and there was no notice and also that the old property managers would stick the entry notices on their doors if the notice period included weekends. When our tenant told the property management she wish she knew as their daughter was sick and husband exhausted our property manager has apparently spat back "not my problem" several times. With this our tenant has raised other issues including overgrown thistle outside her front door, her neighbour using her kitchen to cook as they haven't fixed her oven for a month and garbage left lying around he has yelled at her and told her to "YOU DON'T LIKE, GET OUT, LEAVE" she was horrified and said if that's the way he's going to treat her after 20 months of good tenancy than he can terminate their lease and they'll move out. He than yelled back "YES YOU GO, GET OUT LEAVE, BUT YOU KEEP PAY RENT, YOUR LEASE NOT FINISH TILL FEBRUARY" (I have copied this from her email to me). When she said he can't throw them out and expect that he told her he was calling the police.

    Now her husband has been in touch with me over a number of issues including the fact his wife is a diagnosed sufferer of anxiety and post traumatic stress disorder (they are ex army) and he's furious his wife has been treated this way as it hinders her treatment and the sound of his buggy moving around outside their home has her on edge and that she was refusing to leave the house for fear of running into him and as much as we tried to get them to stay, offering to change property managers and getting him to apologise, the fact that he is the onsite manager and the place has (as he put it) gone to the s**thouse since they took over means they feel forced to move. They said they'd spoken with the QLDRTA and were preparing the paperwork necessary to have their lease terminated on the grounds of mental health hardship and breaching entry but as they were Landlords themselves (own property interstate and overseas) that for our sake they'd be flexible and emailed to say they would wait around for 2-3 weeks so we could find another tenant and they'd make sure the house was inspection ready. I replied stating we'd end the lease provided they paid until a new tenant that WE approve of is found and they pay the letting fee. They have responded saying that its not fair they pay the letting fee given it was the PM who drove them out and caused everything but in good faith would pay half and the PM agreed.

    They waited 1 week before giving a Notice of intention to leave form and the PM accepted this and emailed them to say they must give 2 weeks notice. The tenants paid the 2 weeks and on the day they left completed an exit condition report and paid for a mark in a door their daughter had made. Then they asked for the Bond Release form. The PM informed them that they won't get their bond back until a new tenant is found and they must pay all rent till then. 

    The Tenants thought the acceptance of the Notice of intention to leave form and 3 weeks they stayed after their email to me meant their lease was over.

    Here's the tricky part. 

    The tenants are refusing to pay the ongoing rent. They believe they did everything correctly and that the PM is responsible for all of this. They state they have had to relocate 45mins from their old home to rent a friends 1 bedroom apartment (which is more expensive than the 3 bedroom, 2 bathroom townhouse they rented from us) as the PMs kept giving them bad references for their applications (this is true and the PMs admit to it) and as result the husband is no longer in close proximity to his workplace and can't be on call and therefore his hours have been cut substantially and they are facing hardship.

    Our PMs have not held any inspections since being notified of the tenants intention to leave. They have advertised another property in the complex as ours using generic photos that are completely different in colour, layout, location etc. to our actual property, they have not listed any inspection times until after the tenants left and their office is only open 2 hours a day 3 days a week. I know legislation states that the PMs must do everything they can to mitigate the expenses of the outgoing tenants but I'm not sure if they've done enough? (Any advice or experience on this would be appreciated). They told the outgoings tenants (in an email) that November is the slow season and that they have 2 other units to fill before ours and because of all of this the tenants have promised they will take this to the tenancy tribunal as they feel they are in the right. 

    I don't know what to do. The PMs aren't the most honest people in the world (through all of this I discovered they'd given the tenants a second hand, sellotaped, gate and garage remote and charged us full price for it as well as photos of the complex with overgrown grass etc.) but they have disputed the tenants bond refund request and told me they intend to meet them at Tribunal and fight for the ongoing rent as the tenants broke a fixed term lease. But all the other issues surrounding this, the PM yelling at our tenant telling her to leave,

    giving them bad references placing them in hardship both financially and mentally and their minimal efforts to find new tenants gives me a lot of doubt.

    Is it worth it? Do we have a chance of recovering the ongoing rent compensation? Has anyone been in this position? What happens from now? First time in this position. I can't organise new PMs from here in the UK just yet but it is my intention. Any advice would be appreciated.

    Profile photo of FreckleFreckle
    Blocked
    @freckle
    Join Date: 2012
    Post Count: 1,681

    You need legal advice.

    My first action would be to band together and engage a brief to at least advise you of your options. Until then you're spitting into the wind.

    Profile photo of Dave WardDave Ward
    Participant
    @dave-ward
    Join Date: 2004
    Post Count: 37

    Hi Micky,

    As Freckle said, you will definitely need to do up an accurate timeline of events for all of the issues you have had. I would suspect that the Property Managers would be at risk of having their Real Estate Licenses taken from them by the department of fair trade. Have a look through the management agreement you have with them (should be one of these – http://www.fairtrading.qld.gov.au/property-management.htm) and see if it actually states that they are supposed to do inspections once per year or anything else that may be a little irregular. If the agreement is silent it will revert back to what the legislation says about the adequate management of a property which includes, but isn't limited to:

    Property manager responsibilities

    A property manager must:

    promptly respond to requests for maintenance or repairs

    act in your best interests, including getting quotes for repairs

    employ only licensed tradespeople for any repair or maintenance work

    develop and comply with a complaint handling procedure

    complete an inspection report and inventory

    accompany prospective tenants on all property inspections (unless otherwise instructed in writing).

    Start there and see where that takes you before you go down a legal route. Fair Trade takes all of this pretty seriously and they have the ability to do the following:

    Grounds for disciplinary action

    The Director General can take disciplinary action against licensees and certificate of registration holders, and former licensees and certificate holders, who:

    breach the Act or Regulation, including the Rules of Conduct – for example, failure to account for money held in trust, or failure to properly supervise employees

    breach a licence or certificate condition

    conduct business in an illegal, unfair or incompetent manner

    become disqualified from holding a licence or certificate

    cease to be suitable ‘fit and proper’ for the duties of licensee/certificate holder

    fail to pay a required contribution to the Compensation Fund

    fail to comply with an undertaking made to, or a directive made by the Director General

    fail to pay a fine imposed by the Director General following disciplinary action

    hold a licence or certificate that has been obtained fraudulently or by mistake.

    Disciplinary actions

    Where there are grounds for disciplinary action, the Director General can take the following actions:

    caution or reprimand – issue a written warning that an aspect of the person's conduct is in breach of the Act and could be grounds for further disciplinary action

    directive – an instruction to take a particular action within a specified time

    undertakings – a direction requiring the person to agree to operate in a certain manner

    monetary penalty – impose a fine of no more than $11,000 for an individual, and $22,000 for a corporation

    licence condition – impose a condition on the licence/certificate, for example, a condition that prevents the holder from performing certain functions

    licence suspension – stop a licence/certificate for a period no longer than the unexpired term of the licence/certificate

    cancellation – cancel a licence or certificate of registration

    disqualification – declare a person as disqualified from holding a licence/certificate under the Act, either permanently or for a set period of time

    disqualification from management – disqualify a person from being involved in directing, managing or conducting the business of a licensee

    In addition to the disciplinary action option, the Director General can:

    require an agent to discontinue unjust conduct, rectify any consequences of such conduct and apply to the Consumer, Trader and Tenancy Tribunal for an order restraining the conduct if the licensee does not desist.

    issue public warnings – where urgent action is needed to protect consumers from significant loss or harm, the Director General may issue, where public risk is immediate, a public warning alerting consumers to the risks of dealing with a particular person

    appoint managers and receivers – a manager can be appointed to carry on the business of an agent whose licence has been suspended or cancelled or who is no longer able to properly manage the business, to prevent disadvantage to existing clients. Also, in a range of cases, including where a licence has been suspended or cancelled, or where a failure to account is suspected, the Director General may apply to the Supreme Court to appoint a receiver.

    Disciplinary procedures

    Complaints and investigations

    Any person can make a complaint to the Director General about a breach of the legislation.

    NSW Fair Trading can conduct investigations and take disciplinary action whether or not a complaint has been made, for example, where an investigator has identified a breach.

    Penalty notices

    Penalty notices are a quick and efficient means of dealing with minor offences.

    QLD Fair Trading can serve a penalty notice on a person if there is evidence that they have committed an offence under the Act or Regulation.

    If the person does not wish to have the matter determined by a court, they may pay the amount of the penalty within the time specified in the notice.  Payment of the penalty is not regarded as an admission of liability and prevents further disciplinary action from being taken for the offence, but does not affect any civil claim arising from the matter.

    The aim of the penalty notice scheme is to encourage changes in an agent’s conduct to achieve compliance with the laws. NSW Fair Trading has guidelines on the use of penalty notices to ensure that the integrity of the penalty notice scheme is maintained and that it is used consistently and only for appropriate offences, that is, offences of a minor or technical nature. Circumstances where stronger disciplinary action would be more appropriate might include repeat or deliberate offences or behaviour that has caused serious detriment to consumers.

    When new penalty notice offences are introduced, it is QLD Fair Trading’s policy to proceed with gradual implementation in the first six months. During this time on-the-spot notices are not issued and all penalty notices must be approved at a supervisory level before being issued.

    Penalties

    Penalties under the Act reflect the seriousness of offences. For example, a person who commits trust account fraud will be guilty of an indictable offence and liable to imprisonment for a term of up to 10 years. A maximum penalty of $22,000 will apply for unlicensed trading by a corporation and $11,000 for an individual. Similar penalties apply for collusive practices at auction sales.

    Disciplinary action by the Director General may be reviewed by the Administrative Decisions Tribunal.

    Show cause notice

    The Director General can serve a show cause notice on a person where there are grounds for taking disciplinary action against the person.

    A show cause notice gives the person the opportunity to make a submission to the Director General to demonstrating the reasons why he or she believes that the proposed disciplinary action should not be taken. A person to whom a show cause notice has been issued is able to seek legal assistance in the preparation of a submission.

    The issue of a show cause notice is usually the first step taken in a procedure which may result in a licence being suspended or cancelled or a person being disqualified from holding a licence.

    In situations of serious risk, the Director General may immediately suspend a licence or certificate when issuing a show cause notice.

    Show cause notices:

    are issued in writing

    give the person at least 14 days to respond

    indicate the range of penalties and action which might be taken under the Act, and

    describe the alleged conduct for which the action is proposed to be taken.

    A person who receives a show cause notice can make oral or written submissions to the Director General. For more information, go to the Notice to show cause page.

    Appeals against disciplinary decisions

    A person against whom disciplinary action is taken may apply to the Administrative Decisions Tribunal for a review of the Director General’s decision on the disciplinary action.

    Related information

    Rules of Conduct

    Grounds for disqualification of a person

    Property, Stock and Business Agents Regulation 2003

    Administrative Decisions Tribunal

    Dave Ward | Geronimo Finance
    http://www.geronimofinance.com.au
    Email Me | Phone Me

    Property Investor, Property Investment Expert & Advisor, Finance Expert & Strategist

    Profile photo of jenni_nextplace.com.aujenni_nextplace.com.au
    Member
    @jenni_nextplace.com.au
    Join Date: 2013
    Post Count: 36

    Even if a tenant breaks lease they are still obligated to pay rent up and until the day a new tenant is found. To be removed from this agreement the tenant must apply to the courts to have the lease revoked, it needs to be agreed to between yourself/agent and the tenant. 

    If the lease is revoked by the court due to miss management. Then you will need to chase the managers for compensation. 

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