Risk, responsibility and the reality of property management
A common issue that
can arise between a landlord and their Property Manager is that the landlord
sometimes feels the Property Manager is working more for the tenant than for
the landlord. This is rarely true. What is more likely happening here is that
the Property Manager recognises the risk around liability if issues are not
resolved. A recent conversation I had with a landlord was around a tenant who
had overloaded a power point. The electrics blew, and a heat pump has stopped
working since this event occurred. The landlord wanted to hold the tenant to
account for the damage caused by their indiscretion. Emotions can run high,
especially when substantial sums of money are involved, or the landlord has a
strong emotional attachment to the property.
Emotions can also
often blur judgment. In this case, the landlord got frustrated when I had to
explain to them that we cannot simply hold a tenant liable, and as the damage
was likely accidental, the amount we can claim is limited and only then if the
tenant accepts liability.
If you cannot reach an agreement, you must decide
whether it is worth going to the Tribunal. This takes time, not just in
preparation but also due to delays. I have worked in this industry for over two
decades, and I have never known it to be so slow to get a Tribunal date.
When I am dealing with
disputes, I try to take the emotion out of the situation and base my decisions
on facts and evidence. I will then put myself in the position of a Tribunal
adjudicator. The adjudicator will make decisions based on the balance of probabilities,
which is the standard of proof in civil law, requiring that a claim is more
likely than not to be true (i.e., more than 50% likely). To do this, you need
evidence, and of course, you must apply the law, and in our case, this means
the Residential Tenancies Act (RTA).
Conflict can arise
when a landlord does not fully understand their rights and obligations. I do
not blame them for this. Our role as Property Managers is not just to manage
the tenancy; we also have a responsibility to ensure that all parties we
interact with understand their rights and responsibilities. It is the
industry's responsibility to educate all parties, particularly our landlords,
as to how tenancy law is applied.
Nobody enjoys calling
clients with bad news. However, you want a Property Manager to tell a landlord
what they need to hear rather than what they want to hear; that is the mark of
a good Property Manager.
What many landlords
also do not realise is who is exposed to risk. In a recent Tenancy Tribunal
case in which I was involved, the adjudicator gave an excellent summary in the
case notes of where liability lies. As a Property Manager acts as the agent, the
RTA defines a landlord as the grantor of the tenancy and can be an agent of the
landlord. Therefore, the Tribunal considers the Property Manager to have equal
status with the landlord.
In the aforementioned case, the adjudicator states,
"A recent District Court decision found that where an agent is reporting
maintenance issues to the landlord, but the landlord is not authorising them to
address them and not addressing them themselves, the agent will remain liable
for so long as they remain the agent. If they do so remain, they are liable to
be treated as a landlord in relation to any failure to maintain the premises."
This leaves the
Property Manager with a choice. Do I simply walk away from a landlord, accept
the risk, or get the work done regardless of what the landlord instructs?
Asking to change a
Property Manager because they are telling you something you do not want to hear
is not the answer. If a company is consistent, it should not matter who the
Property Manager is, as they should be working to the same policies.
From a landlord's
perspective, I do understand the frustrations. My recommendation is to ensure
you read and understand the terms and conditions of the Management Agreement
that you sign. Ensure that you have a slush fund for unexpected maintenance and
understand that you are in business. Property ownership carries unavoidable
risk.
Also, please understand that we are working with your interests at heart.
As an industry, we also recognise there is more we can do to better educate and
support property owners, and we hope this article has provided some helpful
guidance along the way.
