Investment Property. Property Manager Signed without My Approval (Owner)

3jidaddy on 09/09/2019 - 08:45

Hi. I have a small townhouse in Woodridge, Queensland.

In July 02, 2019, when the lease agreement was expiring, I asked the property manager (PM) to extend the lease for another 12 months.

Last Friday, I got an email that the lease has expired. It was found out that PM signed the lease agreement for 2 months instead of 12 months that I requested. PM said that it was a system error and she will extend the lease for 12 months.

An hour later, I got an email that the tenant wanted to do periodic lease and will move out in mid-October as they are building a home and their settlement is expected in mid-October.

I was upset as PM signed the lease contract without my approval (2 months instead of 12 months that was given). The tenant is not giving the firm date as they don't know when the settlement date is. I don't want the townhouse vacated in November as I am concerning about the potential long term vacancy as it is coming towards Christmas season. Even mid-October is risky as PM sent me the market is in oversupply.

Is there anyone who had similar experience like me? If so, what did you do to resolve the issue?

Since it was a mistake from PM, can I ask PM to pay for the rest of the tenancy period (10 months that are left). 12-month renewal instruction was given via email so I have the proof for this.

A friend suggested that I should set a move out date as early as possible to find another tenant before November. What do you think?

Thank you in advance for your help!

Financial

Comments

  • waterbottled on 09/09/2019 - 09:04
    +2

    yeah you can ask them to pay the rest of the tenancy period. that's how damages work if you take it to court.

    • kipps on 09/09/2019 - 09:20
      +3

      Nope. The landlord has to mitigate loss by trying to relet. The loss and damage associated with any breach would be the lost rent for the period it is vacant and any difference between what it would have been rented for and the new rent for that same period. And even that assumes that the agent did the wrong thing.

    • elgrande on 09/09/2019 - 09:34
      +4

      Thats assuming the tenant would have agreed to sign for 12, which they might not have given they are building.

    • Typical16-bitEnjoyer on 09/09/2019 - 11:31

      Lol that's not how damages "work". kipps in on the money with their comment.

  • k-rokfm on 09/09/2019 - 09:05
    +3

    Since it was a mistake from PM

    Likely that the tenants wouldnt have signed on for a 12 month lease as they were building a home. You have no recourse from the PM. Hope that they wait till over christmas and get a new tenant once they leave

  • Skramit on 09/09/2019 - 09:15
    +1

    IMO this is not worth the effort to pursue.

    Clearly an error was made, but it's only going to mildly inconvenience you. Chasing damages is not gonna be worth the hassle / stress. Take it as a life lesson and either get a new PM or accept it was a mistake and move on.

  • weezlebub on 09/09/2019 - 09:33
    +16

    I'd say call the property management company:
    - tell them / show them that the contract was meant to be for 12 months (evidence if you have it)
    - tell them you've made plans based on this information

    From there, instead of asking them to pay the 10 months (because it likely won't be empty the whole time), try something along the lines of:
    "as i was advised that the property would be tenanted for the subsequent 10 months, I would expect that you will get another tenant in there, as soon as possible, without any agent fee's. For any period that it is not tenanted, I would anticipate your company will be making these payments as the error is on your end"

    Instead of asking them to pay you for 10 months rent, you're asking them to not disadvantage you, it also puts the onus on them to get another tenant in there as quick as possible, with you firmly establishing that it's their fault and that you don't want to mess around …

    Asking for 10 months comes across whingy, so they'll try to push you around …

    Giving them a clear expectation of the outcome you want, in a reasonable way, is a better approach (IMHO)

    They'll probably call and message and harass you for the next few days, humour them for a while, then take the stance of "This is a you problem, not a me problem, did you take out the property management fee to renew the tenant and advise me it was a 12 month contract, great, that's what I'm working to, how you achieve that is on you"

    • 3jidaddy on 09/09/2019 - 09:56

      Thank you for the lengthy suggestion. I am going to try what you suggested.

  • [Deactivated] on 09/09/2019 - 09:38
    -1

    Best you can do is get the PM to refund their fees. Even then, it will be a struggle.

    • 3jidaddy on 09/09/2019 - 09:55

      Have you asked the PM to refund in the past? If so how did you do it?

      • [Deactivated] on 09/09/2019 - 09:56

        I didn't. It wouldn't have amounted to much and the distaste was strong. I just cut ties and move on, sold out of residential rentals.

  • wei13 on 09/09/2019 - 09:52
    +2

    The tenants would not have signed a 12 month lease, so you would've had to find a new tenant sooner or later. It will be hard to substantiate that the PM caused actual loss. Just because you asked for something doesn't mean it will happen.

    Personally if the tenants are okay I'd be happy to contiue the periodic lease. I think tenants have to give 30 days notice to vacate, during which time you can advertise for new tenants.

    To me this is all just a part of property investing (annoying as it may be).

    • 3jidaddy on 09/09/2019 - 09:54

      I just checked in QLD, it is 14 days notice for tenants and 2 months notice for the landlord… Yes, I know that the journey of property investing is not all green, but it came out in bad timing…

  • godofpizza on 09/09/2019 - 09:56

    how does a PM sign up a tenant for 2 months instead of 12 months? thought it was either month to month or a longer lease period.
    anyway if your not happy with the service take it up with the PM's boss and see if they rectify the issue.

  • bobbified on 09/09/2019 - 10:05

    I was upset as PM signed the lease contract without my approval

    You asked the PM to extend the lease. He/she was acting on your behalf. Unless the agent has physically forged your signature, I'm not sure why you're upset that they've extended the lease. The issue is that they've put 2 instead of 12 months.

    But then, if you were expecting to have to physically sign the lease extension yourself [and didn't receive anything because the PM signed it themselves], wouldn't you follow up with the PM to see where they're at? Did they send you a copy of the lease signed by the tenant?

    I rented for years and there was never a document to sign when the initial period ended. The lease just went month to month as per one of the terms in the initial lease.

    The whole issue seems to be around the typo being "2" instead of "12" and nothing to do with the PM signing anything "without your approval".

  • JimB on 09/09/2019 - 10:14
    +3

    Doesn't sound reasonable to request the agent pays for the additional 10 months or even the vacancy period.

    Just because you requested a 12 month lease doesn't mean that the tenant would have signed a 12 month lease.

    I suggest to ask that the agent re-let the property but charge you no re-letting fee.

    You don't want to force the agent to pay for any vacancy period, otherwise the agent would choose any tenant just to reduce their cost. Any tenant could be that druggie who trashed their previous rental. Think about it.

  • coffeelover19 on 09/09/2019 - 12:01

    I know it's painful when having your property's vacant but it's one of the risks you have to consider while investing in property. And it's very common for tenant to be on periodic lease agreement.

  • serpserpserp on 09/09/2019 - 12:45

    Get them to find a 12 month contract like you wanted or vote with your feet.

    I don't own an investment property but can't you ask a bunch of agents to lease your place for you and whoever gets the tenant you pay?

  • orangetrain on 09/09/2019 - 12:47

    Sounds like the PM lied. They probably spoke to tenants who had plans to move out so the PM could only sign them for 2 months despite you wanting 12. The PM would then turn to you to pay for relet costs.

    Maybe you need a new PM.

    • redforever on 09/09/2019 - 12:52

      PM actually makes more money if the tenant vacates.

      If tenant refused the extension you requested, it is in their interest to come back to you. you can then decide to end the lease and give notice to the tenant to vacate.

      Not sure why they would intentionally lied and only extended it for 2 months.

  • Pumpkin_rrr on 09/09/2019 - 12:53

    How long have these Tenants been there? If they are longterm Tenants, I would just shake hand and let them leave when their house completes. Had done this a few times.

    You could have potentially ask for a higher rent if you knew it was going to be only 2-months.

    Did the PM charge you Let Fee for the 2-months Lease? We didnt.

    We know that many construction may not finish on time. Find out exactly at what stage they are in and what's the realistic date they might move-out.

  • Donaldhump on 09/09/2019 - 13:12

    get a new tennent, people living in woodridge generally have few options to where they can live, so if ur that concerned drop the rent $20

    why not deny their lease on a periodic, either say 12 months or no deal.

  • ihbh on 09/09/2019 - 13:27

    I don't want the townhouse vacated in November as I am concerning about the potential long term vacancy as it is coming towards Christmas season

    Give the current tenants the minimum notice period to vacate now. Get the property manager to start advertising for replacement tenants.

  • Meho2026 on 09/09/2019 - 14:51

    The agent is either incompetent or they are lying and did the tenant a favour.
    If you can get the property manager to waive the lease fee for a new tenant then go for it but if not, I would instruct the agent to issue the tenants with the notice period to end the tenancy today.
    I think you still have to give then 2 months notice but if you dont do that and something goes wrong with their planned move, they may end up staying longer and stitching you right up by vacating even closer to Christmas.
    Once the tenants are out, approach a different property manager to take over the property. Any new agent will jump at the chance because they get their letting fees and dont have the hassle of inheriting a tenant.

  • whooah1979 on 09/09/2019 - 19:11

    The agency should at most pay for the time the IP is vacant.

  • Gelato on 09/09/2019 - 23:20

    2 months lease is rather abnormal to me… I wouldn’t believe it as a honest mistake (my evil side is up)

Login or Join to leave a comment
Login Join