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As a homeowner you may decide to place the responsibility of managing your rental property in the hands of a professional property manager. Doing so will allow you to avoid the day-to-day worries of property management. So what can you expect from your property manager, and what can you do if something goes wrong?
Property Managers Property managers who offer their services for a fee must be registered real estate sales representatives working for a licensed real estate agent. It is the real estate agent who is in charge of the agency. The licensing of real estate agents and registration of sales representatives is performed by the Real Estate and Business Agents Supervisory Board (REBA).
Property managers must satisfy REBA that they have completed recognised course work, and are of good character and repute before obtaining a certificate of registration. Property managers, like other sales representatives and real estate agents, are governed by the Real Estate and Business Agents Act 1978 and Code of Conduct. Property managers must also be familiar with the rights of landlords and tenants as set out in the Residential Tenancies Act 1987. You can check if a property manager is properly registered by calling REBA on (08) 9282 0839.
Strata Managers A Strata manager performs a different role from that of a property manager. A strata manager is a person who collects periodic levies, arranges repairs, common property insurance and other matters on behalf of people who own strata properties in the same strata complex. Strata managers are not required to be licensed in their own right. If a strata manager is also licensed as a real estate agent through the same business then the clients of that strata manager have a greater degree of protection bec
Issues relating to strata titles (but not strata managers are dealt with by the Department of Land
Role of the Property Manager The main roles of a property manager are usually to market your rental property, select a tenant and manage your property.
Depending on your needs, you can appoint a real estate agency to do one or more of these tasks. The services the agency provides will depend on the written management agreement, usually known as an Authority to Act, Written Authority or Appointment to Act, that you have with it. For more information on written
Some of the specific tasks that may be carried out by your property manager include: setting a rent appropriate for the property and the area; Ÿ advertising for tenants; Ÿ choosing a tenant and collecting the rent; Ÿ lodging and applying for the release of security bonds; Ÿ carrying out regular inspections of your property; Ÿ arranging for repairs and maintenance of necessary, and to the extent authorised; Ÿ providing relevant notices and financial statements to you; Ÿ attending meetings, such as strata company meetings; Ÿ paying local council rates and strata levies etc; and Ÿ issuing breach/ termination notices to the tenant, or arranging for court proceedings if the tenant def
Code of Conduct The Code of conduct sets out standards of practice for agents and their sales representatives, including property managers. These requirements protect you by promoting and enforcing appropriate standards of Conduct in the marketplace.
A number of these standards refer to the Written Authority, which is a legally binding written contract between you and the agent that
The responsibilities of agents and property managers under the Code of Conduct include requirements to: · act in your best interests, except where it would be unreasonable or improper to do so; · follow your instructions, except where it would be unreasonable or improper to do so; · act fairly and honestly; · exercise skill, care and diligence;
Code of Conduct · disclose in writing if any supplier of goods or services ( such as cleaners, carpenters etc ) recommended to you has a significant relationship, connection or affinity’ with the agency; · promptly provide information to you about expenses paid on your behalf; · not knowingly mislead or deceive any parties in negotiations or a transaction; · not engage in harsh or unconscionable conduct; · not use or disclose any confidential information obtained while acting for you unless permitted to do so by law;
· not advertise or offer for lease a property for an amount, or terms, different from that · not seek payment to others on your behalf for lees that exceed the amount agreed in the Written Authority, or is not initialled in the Written Authority; and · not seek any payment of a fee that is unjust in light of the Written Authority and other circumstances.
The Code of Conduct requires that property managers and their unlicensed assistants be supervised by the licensed real estate agent in charge of the agency. If you are having problems with the property manager, one of your first steps should be to speak to the supervising agent about it.
Choosing a Property Manager
The levels of fees charged can vary substantially from agency to agency, so it is wise to shop around for the best deal. Remember though that the ‘best deal’ is not always the cheapest. Your choice of agency should also be based on whether the property manager will successfully reduce your workload and stress, in addition to protecting your investment. When choosing an agency to manage your property, it is a good idea to seek recommendations from friends and family. Although you may negotiate with an agent, ask to meet the specific property manager who will be dealing with your tenants. If you speak personally to several property managers at their place of business, you can assess their manner and professionalism while also gaining some understanding of their business standards.
Useful questions to ask during these visits are: · What evidence and/or assurances can you provide me regarding the quality of property management service your clients receive?
· What type of tenancy will suit my particular needs? · Could you please show me your standard Written Authority and explain to me the different fees and total fee you propose to charge me?
Choosing a Property Manager · How will your agency advertise for tenants? · What sort of checks do you do to assess the suitability of prospective tenants? · How much do you think the property should be leased for? Why? · How much will the security bond be? · What will happen to the security bond at the end of the tenancy? · Could you show me your standard lease agreement with a tenant? · What type of property inspection reports will be provided to me? How often will they be provided and what will this cost? · What arrangement do you suggest for the apportionment of water costs? · How thoroughly will you check my property after the tenant leaves? Could you show me a copy of your standard Property Condition Report, and can photos/videos be included? · If the tenant fails to pay rent, will notice of breach for late rent be issued · Have you any experience representing property owners in the Small Disputes Division of the local Court? · Can you give me the name of two people whose properties you currently manage so I can speak to them about your services? · What are the penalties if I terminate the contract before the agreed period expires? Note: any penalties (often referred to as ‘liquidation damages”) can be negotiated.
Insurance Cover It is a good idea to discuss with your property manager the different types and amounts of insurance that you may need.
In addition to house insurance, you should discuss the option of landlord protection insurance with your property manager. This type of insurance can protect you if the tenant damages your property or if you experience a loss of rental income.It is wise to find out exactly what the insurance policy will cover you for. For example, some landlord protection polices will cover you for damage deliberately c Negotiate then get it in writing! As with any business transaction, it is important that you are clear in your own mind what exactly you require concerning the management of your rental property.Some questions you should ask yourself about the management of the property include:
· How promptly do you wish to be told if your tenant is behind with the rent? · Do you want to be consulted before any repairs or maintenance are carried out, no matter how small? Or would your prefer to be contacted only when the amount exceeds a set limit? · How often do you want property inspections carried out on your property? · For how long do you wish to engage the real estate agency, known as the period of agency? · Do you wish to be involved each time a tenant is selected?
Aspects such as the above need to be agreed in writing, preferably in the Written Authority. The Written Authority that you sign to appoint a real estate agency to manage your property for you is a legally binding contract. This means that both you and the real estate agency are obliged to fulfil the requirements of the Written Authority.The Written Authority can vary between agencies, so it is important that you read the contract carefully.The Real Estate Institute of Western Australia (REIWA) prints standard real estate contract documentation. The REIWA 2002 Exclusive Authority to Act as a Managing Agent for Residential Premises provides for you to specify the rental details for the premises, the period of agency, the payments the agent can make on your behalf using the rental monies collected, and your bank account details for depositing rental monies collected. The agreement also requires you to specify whether or not you agree to pay separate marketing and advertising costs. An agreed letting fee and management fee schedule must also be specified.An agent may claim expenses from you that are related to their duties, such as photocopying and faxing costs, or reimbursement for repairs paid on your behalf. You should discuss these expenses with the agent before signing the Written Authority.It is important to specify in the Written Authority the nature of these expenses, and clearly set out the method by which these will be calculated. Negotiate then get it in writing! To avoid misunderstandings or problems later on, it is important to include in the Written Authority all agreements between you and your agent. You and the agent should sign and date any special requirements that are added to the standard contract.For instance, it you have concerns about the deterioration in the condition of the property, you should ensure that the Written Authority includes a requirement that copies of all inspection reports and breach notices for damage are sent to you. In this way you can keep track of the condition of the property.You may also wish to include the requirement that you are present at periodic property inspections carried out by the agency. Agency fees A letting fee, management fee and inspection fee are likely to be included in the Written Authority with the agent. As with any other service, these fees may be negotiated with the real estate agency, and you can shop around for better deals. A letting fee is a fee for finding a tenant for your property. The Written Authority used by REIWA members includes a letting fee that is either a percentage of the total rent for the tenancy period, or a fixed fee for each new tenancy. If the agency charges a tenant a letting fee (up to a maximum of one week’s rent) then the letting fee that you as the owner may be required to pay should be reduced by the same amount. A management fee is a fee that covers the routine business of managing your property. The Written Authority used by REIWA members allows for a management fee that is either a percentage of the gross collections for the tenancy period, or a fixed fee per month/year. The term “gross collections” refers to the total value of all money collected from all sources, including rent, water charges, electricity and gas charges. The Written Authority will also mention other fees and costs, such as changes for preparing the property condition and final inspection reports, periodic inspections, postage and other minor costs (including banking transaction fees), attendance at meetings (including court appearances), marketing and advertising costs.
Expenses In some cases, landlords want their property manager to arrange repairs, newspaper advertising or other work on their behalf.
Property managers cannot pay expenses on your behalf unless you have given them permission to do so in the Written Authority. It is recommended that before you sign the Written Authority you think carefully about whether you want the property manager to arrange these matters for you. If you do, it is wise to confirm the details in writing in the Written Authority then sign and date these with your agent. For example, you could require tat all payments have a certain amount are discussed with you before these are made. This type of condition can prevent misunderstandings and unexpected bills later on.If a property manager incurs a cost on your behalf, he/she is required to include with a claim for expenses some documentation or other evidence in support of the expense.In addition, you are entitled under the Code of Conduct to ask for further information that you may “reasonably require” in order to be satisfied about the amount of the expense and that the expense was paid appropriately. In relation to advertising, some additional requirements are also in place. A property manager many not seek payment of an expense for advertising, signboards, printed material and promotions from you unless:
· you have agreed in writing to pay the expense · the Written Authority specifies a maximum amount for advertising; and · the maximum amount stated on the Written Authority has been initialled by you.
Initial property inspection and beyond Once you have chosen an agent, you should walk through the property together to reach an agreement about the actual state of your rental property. You may choose to photograph/video the property as proof of its condition at that time. The agent will then write up a Property Condition Report that explains the state of the property. The Property Condition Report will be used as the basis for comparison if the tenant leaves the property in a poor condition not attributable to normal wear and tear.
It is recommended that you make sure any particular areas of concern you have are included in the Written Authority and the lease agreement with the tenant. For instance, you may decide that you want the agent to inspect your driveway for oil stains during property inspections, and for the tenant to remove any oil stains they have made before vacating the property.
Initial property inspection and beyond Our contentious tissues that are best dealt with at this initial stage are whether pets are allowed, and who bears the responsibility for maintaining gardens, lawns, and pools. If you intend to leave any furniture or other items on the property then you may wish to make an inventory of the furniture detailing each item and its condition. Photographs can again be helpful by providing visual evidence of the initial condition of the furniture for future reference. Once agreement has been reached between you and the agent about the items and their condition, the inventory can then be attached to the agent’s Written Authority, as well as the lease agreement with the tenant to confirm their responsibilities. An agent will generally charge more for looking after a furnished property because of the extra work involved.
Tenant selection During the tenant selection process, you should bear in mind that equal opportunity legislation does not permit discrimination on the basis of a person’s race, sex, sexual preference, marital status, religious beliefs or age. The Residential Tenancies Act 1987 also does not allow a landlord (or the landlord’s agent) to refuse to let a property to someone because they will have children living with them except in some very limited circumstances. Subsequent instructions If you give any subsequent instructions to your agent after signing the Written Authority, make sure your instructions are I writing and that you keep a copy. This will help you and your property manager to keep track of your requirements.
If a new instruction arises that conflicts with the Written Authority that you signed, then the Written Authority will need to be amended to reflect the new instruction. Any amendments should be signed and dated by the agent and you.
Your legal obligations to the tenant Even if you have a property manager acting for you, all landlords have legal obligations to tenants and these are set out in the Residential Tenancies Act 1987. Property managers must comply with the Written Authority, but they and the landlords must also comply with other relevant laws like the Residential Tenancies Act 1987. The Residential Tenancies Act 1987 covers matters dealing with the rights and obligations of tenants and landlords. Some of the matters the Residential Tenancies Act 1987 deals with relate to security bonds, property maintenance/repairs, locks and security etc. You may wish to discuss these matters further with your agent or property manager.For more detailed information about your rights and obligations to your tenant, you can contact the Department of Consumer and Employment Protection’s Call Centre on 1300 30 40 54. The Department provides advice and assistance to tenants and landlords on residential tenancy issues. Tenancy information is also available on the Department’s website at www.docep.wa.gov.au.
Terminating the authority to act with the agency If you wish to end your agreement with the real estate agency, you should first check your Written Authority.If you cease paying property management fees, and have not cancelled your agreement as set out in your Written Authority, then an agency could decide to take you to court for being in breach of the contact. Therefore, it is important to cancel your agreement in writing and give the proper notice required by the Written Authority. In most written authorities, you or the agent can cancel your agreement by giving 28 days’ notice in writing to the other party. Most written authorities usually allow for “liquidated damages” to be paid to the agent at the current rate of 50% of the management fee that the agent would be expected to receive for the unexpired period of agency. If you do not agree with this clause you may negotiate another rate with the agent or strikeout this clause completely before you sign the Written Authority. However, if the agency you are contracted with is sold to another agent, or closes down, then any existing written authorities are automatically terminated and another contract will need to be established with another agent (whether the one buying the agency or another agent) if you can agree to terms. Further assistance You can phone the Real Estate and Settlement Call Centre on 1300 30 40 64 to obtain information about the duties of a property manager. You can also obtain information from REBA if the agency has not fulfilled its side of the agreement. If you wish to lodge a complain with the Board, copies of the Board’s complaint form are available from the Real Estate and Settlement Call Centre on 1300 30 40 64, or the REBA website at www.reba.wa.gov.au Alternatively, you may put your complaint in writing. If you do so, please attach copies of relevant contracts and correspondence then mail to: The Registrar - Real Estate and Business Agents Supervisory Board Locked Bag 14 Cloisters Square WA 6850 Your complaint may be referred to an investigator if a potential breach of the legislation is identified, or to a conciliator who will try to negotiate a settlement of the dispute.
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