Property managing agent liability and landlords

Brief overview of the responsibility of a property manager Most landlords in Victoria, and throughout Australia more broadly, use a managing agent to manage the day-to-day tasks associated with leasing their property. This includes the initial stages, from arranging and taking professional photographs, advertising the property for lease, and then finding and vetting appropriate tenants. Usually, the managing agent does this under an exclusive management agreement for a term of 12 months (sometimes more or less) and under which the managing agent takes a percentage of the rent charged per week as consideration. In return, the managing agent collects the rent, arranges for repairs, lodges the tenant’s bond, performs inspections and does other ancillary tasks that are generally required of a managing agent in respect of residential property, in accordance with the landlord’s obligations under the Residential Tenancies Act 1997 (Vic) or that State or Territory’s residential tenancy laws. Disputes between Landlords and their Managing Agent Because of the nature of property leasing, that is, because it involves: a landlord, who usually has little to no involvement in the day-to-day management of the property; the existence of a managing agent (in essence, a middleman) who is acting on behalf of the landlord; and tenants,        there are multiple parties involved in what is in effect, one relationship; and this can cause issues in just the same way           that a normal, ordinary contractual relationship, involving only two (2) parties, can. When the tenant raises an issue, but it is not attended to quickly enough or it is otherwise not remedied, the tenant may commencing proceedings against the landlord (who is the rental provider under the Residential Tenancies Act 1997 (Vic)) seeking, usually, damages because the landlord in those circumstances, is the liable party with the ultimate responsibility to comply with the Residential Tenancies Act 1997 (Vic). It does not matter that the managing agent is the one failed to comply with the Residential Tenancies Act 1997 (Vic). When this occurs, landlords often take the view that, as they paid a property manager to ensure they complied with the Residential Tenancies Act 1997 (Vic), and to otherwise protect their interests (such as informing the landlord if the property is not being kept in a satisfactory state of repair), that the managing agent should be pay the costs of the damages which the landlord has incurred. Accordingly, the question we are often asked to advise upon is whether landlord has a claim against the managing agent for damages the landlord has suffered because of either the tenants and/or the negligence of the managing agent. Liability in these circumstances usually arises from three (3) main areas of law, namely: contract; negligence; and Australian Consumer Law. We examine each area of law in relation to the landlord-managing agent relationship in further detail below. Contractual relationship The landlord and the managing agent are, more often than not, the parties to a written contractual agreement. Where a contract exists, but a term of that contract has been breached, and the breach has caused damage (such as, where the managing agent has failed to comply with its obligations under the contract), the managing agent may be liable to the landlord for any resulting loss or damage. Ultimately, this depends on the nature and wording of the contract, the express obligations upon both parties which are contained within that contract, and implied terms as well. Negligence The tort of negligence has three (3) main elements. They are: that a duty of care is owed by one party to another (for example, a duty to take reasonable care owed by the managing agent to the landlord); that the person who owes the duty breached the duty; and that it was reasonably foreseeable that a breach of the duty would cause harm to the person who was owed the duty. Why negligence in property management matters If the property manager is negligent, there is a real likelihood that it can and will cause the landlord damage. Common types of damage the landlord may suffer if their managing agent is negligent include, but are not limited to: being taken to the Victorian Civil and Administrative Tribunal or the Magistrates Court of Victoria by the tenants for a breach of the Residential Tenancies Act 1997 (Vic); being ordered to pay money to the tenants; damage occurring to the property; financial loss in various forms; and other legal liability for a range of things. Signs of property manager negligence Although there is no guarantee in law that any particular act or omission will result in a finding of negligence, particular signs that a property manager may be negligent, include: ignoring maintenance requests from the tenant, and failing to notify or seek approval from the landlord as to what to do in respect of those requests; poor communication or unresponsiveness both from the tenants’ or the landlords’ perspective; mishandling, or failing to handle, tenant complaints; and not following or incorrectly following the Residential Tenancies Act 1997 (Vic). Addressing property manager negligence If you believe your property manager is being negligent, you should: