Terminating PM at end of Lease - do I need to give notice?

[pipsal]

I have had enough of my current PM agency. PM has changed about 6 times since July and I can't keep up with who is there and they make dates for me to attend inspections and when I call the day before to confirm I get told they haven't sent out entry notices etc. Now taken nearly 2 months for them to organise maintenence on a dangerous glass shower door issue that I requested be done as soon as I was informed (and we ended up organising it ourselves and told them the dates, turned up with our tradie to find out they hadn't sent the entry notice again!!!). Anyway, just found out that my long term tenants are now moving out, can't help but wonder if all the things they have been trying to get fixed that weren't passed on to me are part of the reason for this too.

So, I have to give 90 days notice to PM according to my contract (standard PAMD20a). If I just let this lease run out in 3 weeks and instruct them to not worry about finding new tenants will that end our arrangement? No need to wait 90 days? If I do do it this way, how long before I can sign up with a new agent and re-list the property (in QLD)?

 

[xanh]

Hi Pipsal,

As I understand it, the lease expiring won't make any difference regarding your agreement with the PM - they are completely separate. ie. You'll have to pay them 90 days worth of management fees whether there is a lease in place or not.

Probably the best thing for you to do now is find another PM to manage the place straight away and find new tenants. Hopefully, they'll give you the first few months free (they might waive the management fee - they'll probably still want to charge leasing fee if they find the new tenants). Both will be 'managing' (and I use the term loosely) but you'll be paying one PM instead of two.

You could stick with the current PM and get them to manage the next three months and find tenants but I get the feeling they wouldn't do a good job.

In future, negotiate the notice period before signing with new PMs.

Good luck

 

[Specialist]

xanh is correct pipsal you are required to give 90 days notice.

Option 1: you could give notice to your current agent after they have found you new tenants and done all the paperwork

Option 2: you could advise your current agent you know longer wish to utilise their service and they may agree to terminating your agreement early, this is ok if all parties agree. While the agency misses out on a few weeks management fees they also risk your frustration tarnishing their reputation and we all know the power of 'word of mouth'

You can start to source a new property manager at anytime, just let them know the takeover date, some PM's will arrange all the transfer of documents, keys etc for you.

Option 3: Contact your current tenant, if not too late, convince them to stay and self-manage

 

[Specialist]

BTW if taking option 3, give me call or email, happy to assist you with the process, transferring paperwork etc

 

[INVSTOR]

If you ever sign another agreement make sure you change the 90 days notice to 30 days and initial it.

 

[pipsal]

Thanks for the replies.

Yeah, lesson learnt re. the 90 days, didn't realise you could change/challenge that! I was naiively pressured into signing this management contract without having a chance to really consider it - I was moving from another PM that was all sorts of trouble and the Principal of this agency had known the family (sold parents place and mine etc) and kept asking after my house and saying she would take it over and sort it all out. I made an appointment to go and talk to the PM about what they offered, etc as I was deciding between this one and another, and when I got there the Principal had seen my name and had the document drawn up when I got there and I was taken into an office to sign up then and there, which wasnt my intention. I can't blame them entirely, I wasn't blind to what was happening when it was happening, but 3 vs 1 and a pushy sales person, it was very awkward and foolishly I just went along with it as I had narrowed it down to only 2 PM choices anyway. To their credit, they did sort out the previous mess then the PM left and kept changing.

Anyway, I am considering taking the house off the market altogether, maybe do some reno's, possibly moving back into it, possibly putting it up for sale. It is my own place, not really an investment, and I have not had much luck with PM's that I could rely on continuously. Almost wonder if I should self-manage if I do keep it on the market, but I don't really know what I'm doing (obviously ! ).

From what you are saying, even if I take it off the market completely, I will still have to pay Management Fees for 90 days notice period (or part thereof)?? Based on the previous rental rate? (Mine is a percentage of the rent, and if vacant I don't believe I pay management fees.)

Incidentally, I have had several phone calls and emails from PM and Principal trying to chase up what my intentions are regarding advertising for a new tenant last couple of days...pity they couldn't have been that diligent with the maintenence, etc... they seem to think all I care about is having a lease when I'd rather have the property kept in excellent, safe condition and the tenants comfortable and safe (as I would expect to be if I rented!!). Maybe I'm not ruthless enough

 

[mattysavager]

From what you are saying, even if I take it off the market completely, I will still have to pay Management Fees for 90 days notice period (or part thereof)?? Based on the previous rental rate? (Mine is a percentage of the rent, and if vacant I don't believe I pay management fees.)

If you take the property off the market completely, I wouldn't expect you to have to pay anything further in management fees. I certainly wouldn't charge my client in that case. I'd let you do what you want, and if you come back to me, you come back.

I don't think that self managing is actually too difficult, however I know exactly what I'm doing. Many owners get themselves into sticky situations and can end up costing themselves more than the management fee would have been. Also, many owners don't like to be the 'bad cop' when it comes to difficult tenants.

I would advise your current PM that you are taking it off to do some renos, and then you're not sure of your intentions. They would pay you out the remaining rent, then once the property is vacant, if you decide to change agents, they would have to go to the step of invoicing you for the fees. That's another step in itself, and I think most offices wouldn't bother.

In any case, most agents will give you 3 months free management to cover any overlap in fees.

I would strongly advise if you do decide to go with a new PM, to get the NEW PM to find the tenant. If you allow the current PM to do that and then change PMs, it will make it much more difficult for the new PM to manage the tenant and you can run into issues when they eventually vacate.

In either case, let me know if you want any help. I'd be happy to either manage it for you (as long as it's in Brisbane), or give you free advice on self managing. I manage my own IP and sometimes I'm my own worst client

Matt