Real Estate Agent Did Not Collect Bond

*Disclaimer - asking for a friend, apologies for the lack of detail

Agent allowed tenant to move in before receiving the bond of 5 weeks rent.

Tenant paid 2 weeks worth of rent then stopped.

Agent took the tenant to court/tribunal; process took a while, post tribunal, tenant paid a few more weeks of rent and then stopped again.

Agent gave notice for tenant to vacate which they did but left approx $1,800 in damages/clean up work behind.

Agent is saying the lost rent (approx 5 weeks worth) is offset with the agent's cost of preparing/attending tribunal. Per the management agreement, court attendance is $55/hour + case preparation fees.

The damages/clean up bill the agent has "offered" to go half/half.

This seems pretty unreasonable to me; I think the agent should absorb the court costs, reimburse the lost rent AND pay for the cleanup as they failed at real estate management 101 - collect the bond FIRST!

Thoughts?

Next course of action if further negotiations with agent fails?


UPDATE 18/09:

Initially, agent agreed to pay half of the repair costs (circa $900)

After emailing the agent about their negligence of not collecting the bond properly, he is now offering to pay the $3000 bond less $346 sheriff execution fee, $550 for locksmith changing all the locks etc. He will then walk away totally. He's not going to pay anything for the repair.

This is the best option?

Comments

  • +3

    Speaking as an agent, they are completely in the wrong here. Never hand over keys without signed leases, bond and a copy of the tenants insurance (in a commercial instance). Your friend should push for the agent to cover their losses, less the cost of attendance at the tribunal (seems likely that would've ended up being the case at some point even if the bond was collected). Another alternative would be the agent doesn't charge their normal re-leasing fees or gives free mgmt for a few months to offset the loss.

    That being said, is it worth your friend lodging an insurance claim, or is the excess too high to bother?

    • +1

      Great to hear from an agent!

      Insurance was only purchased after the tenant stopped payment rent (I think the first time, will check); so the insurance would only cover the damages. Excess is $1200 so probably not worth it.

  • +1

    Name and shame

    • -4

      Disagree - everyone makes mistakes. If they'd done it more than once, for sure, but not a one off.

      • +10

        What kind of fool lets gives someone the keys without the bond first?

        • +1

          agree totally ! What an idiot and they are getting paid for this shitty job !

        • +1

          Completely agree, they did a crap job. But as i said, it might be a one off.

      • +3

        This isn't a mistake, this is total negligence. The agent has a job, agent did not do the job.

        • No one's disputing that, in fact everyone here agrees on this.

      • It's always going to seem like a one off to each person/client, cause noone in their right mind would keep an agent like this after such a monumental screw up.

  • +8

    As a property manager not too long ago, collecting the bond is the number one most important step to remember as it's the buffer preventing the landlord from making a loss. I would push for full reimbursement of rent and damages, net of an allowance for attending tribunal (no more than a few hours in this instance as it's an open/shut case).

    Do keep us posted on how this goes. All the best

    • +4

      (Too late to edit so posting here)

      Forgot to explicitly mention that the most effective way of pitching this to the agent is to request that they indemnify you of any losses you would not have incurred had they not acted negligently, and then let them go after the tenant to recover their costs. You don't want to be the one stuck receiving $20 a week from the tenant after they claim they can't afford to pay and require a payment plan. Be sure to monitor the agent's time spent preparing for tribunal, as they may milk the hours to pad their own recovery.

      • Can we still go after the tenant even though they've vacated (and left a mess)?

        • I can't say for certain as it's quite an unusual case - In NSW it's normally NCAT which handle these smaller matters regarding tenancy, so I would start on their website and look into the application process.

  • I am that friend…

    Initially, agent agrees to pay half of the repair cost.

    After I emailed him about his negligent of not collecting the bond properly. He now agreed to pay $1800 which is $3000 bond money deduct $346 sheriff execution fee, $550 for locksmith changing all the locks etc. He will then walk away totally. He's not going to pay anything for the repair.

    This is my best option?

    • They only thing they should deduct from the bond they failed to collect would be the tribunal fees (as I mentioned above, it seems likely that bond or not, this tenancy would've ended in a lock out either way). If the bond was collected, you would've used it to cover the other stuff you've listed above; their logic in their offer to you is flawed.

      The only other way to re-coup losses is if you keep them on as agents and get them to waive some fees, like the re-letting fee or a few months management fees.

      • He is saying he's going to waive the tribunal fees which he attended twice. On the lease agreement form, he stated charging $55/hr.

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