Unauthorised Tenant Invoice

[cecilia1]

Would like anyone's advice on this situation - husband and I purchased a commercial warehouse in inner Sydney a while back, place was pretty run down. Biggest mistake we did was not fix up the electrics. So anyway, after the old tenant moved out, we had a new bloke come in.

He wanted to install new light fittings in addition to what we have and a 3 phase power outlet. He then got his electrician (his brother in law) and went ahead to change lights and install new fixtures WITHOUT OUR APPROVAL TO BEGIN WITH! Electrician then inspects the entire building and documents unsafe points and faults in the system - again unrequested by us.

Tenant notifies PM building electrics need fixing, PM calls me, we arrange for our own electrician to quote which came in around $5K to fix up all the problems. On our site inspection, his electrician was present - called by him and not my PM nor me and forwarded us a report but no quote nor did we sign any contracts whatsoever to contract him to do any electrical work. We also noticed with the light fixtures they were already done and had new wiring which his electrician had done.

We contracted OUR ELECTRICIAN and not his to do the works to get it up to safety standards and paid him with compliance certificate. About two days down the track, I get a call from the PM saying tenant wants to be "reimbursed for electrical works done by the wiring that his electrician fixed".

This will shock most people, but the bill he came in at $25K, no joke. PM told tenant this is an unauthorised and thought this was absurd. So about three days later, PM receives a call from his electrician demanding payment or he will enforce legal action. PM advises that there is no case for me to answer, should I be wary? Last thing I/hubby really want to deal with is more legal issues or having to hire expensive lawyers etc. especially with the new born. Heck, do we even have a case to answer??

Additional info:

Invoice was ridiculous and was not invoiced to us, rather the tenant...all it basically said was 250 hours x $100 per hour. As far as PM or me/hubby is concerned, we did not enter into any sort of agreement or contract with his electrician and are not paying for any works.

Tenant and electrician claims due to safety issues in installing his new lights and 3 phase power points, they "by law had to remove old wiring and install new ones".

On top of this, one day later, another bill came in invoiced to tenant but sent to PM for a electrical inspection report for $590.

We noticed he also did a crapload of more electrical work - all of which was unauthorised by PM or us and we strongly suspect he is passing on costs as it is our property. He didn't like the idea of putting improvements in which would in the long run belong to us.

The whole argument was, the electrician claimed my electrician and my husband gave him the go ahead verbally (this is not true, we never even verbally accepted anything he offered or even solicited his service). This is basically all he has against us, no surprises that he will use his brother in law (tenant) as a witness (who was not present during the site inspection anyway...)

Thanks for reading, I know it's such a long post, comments appreciated! At one stage, we thought we were paying for Australia's NBN!

 

[NedKelly]

If you don't have a signed contract or quote and it wasn't invoiced to you I don't think they have a chance.

 

[wylie]

I would think you have no case to answer, but I really have no clue.

What is in the lease this chap signed???

I know Dazz covers his butt in this regard and his leases make it very clear about this type of work.

What does your lease say in this regard? Does it say anything?

 

[Graingrower]

I don't think you should have to pay. Interesting to note 250 hours of work, thats 4 x 62.5 hour weeks! Was there enough time from when you supposedly gave your verbal go ahead and the invoice date?

 

[chilliblue]

There are several parts of this.

Firstly, the tenants contractor has no right to demand monies from anyone other than the person that contracted them to undertake the works. The PM should have deflected this one by requesting an approved work contract or sign off from either themselves or you.

Secondly, read the contract that you have. If the works were required as a genuine emergancy that is related to the property and not the tenancy, then you could be liable for those works. If it is simply works that the tenant decided to undertake off on their bat, then they are responsible for the payment.

Thirdly, why are you involved? This is your PM's job as this is why you pay them a managing fee.

Pass it back to the PM advising that you accept no responsibility and tell them to work it out and come to you with a resolution.

The tenant needs to have the lease read back to them and if possible have the letter sent to their solicitor and get them involved.

If you PM has done their job properly, then you have nothing to worry about.

Keep us informed on the outcome.

 

[Dazz]

He wanted to install new light fittings in addition to what we have and a 3 phase power outlet. He then got his electrician (his brother in law) and went ahead to change lights and install new fixtures WITHOUT OUR APPROVAL TO BEGIN WITH!

You've answered your own questions with this statement.


Nothing more for you to do. End of worry. Next.

 

[Macca]

I would be looking at the lease first, if you had the lease drawn by a solicitor then all this should be covered in there.

A step by step procedure usually has to be followed for any disagreement between tenant and LL.

You could contact your solicitor and ensure that you follow the correct steps as a LL as this should help you in any legal case in the future.

 

[ugotadollar4me]

I wouldn't be to concerned about that.
Sounds like there trying to scam you, you may find that his brother in law is not even registered and it is a scam that these 2 guys are doing, once they get paid then he exits the building and moves onto the next person, ask your pm if he done a search on this guy before signing them up. the above would also depend on the amount you lease the factory for and also the bond that you have taken from him, if the premisses are only small and the rent is small and the bond is small then I would think its a scam and there gonna walk once its paid. this is only my thoughts, without knowing all the details it is hard to know esactly what there doing.
I like how he says your electritian also gave him the go ahead, your electritian aint the owner so that holds know weight. if they wish to install 3 phase that is upto them, Its there business that needs 3 phase. check your lease doc to get a better feel.

 

[cecilia1]

Thanks for the comfort and advice!

What we're now running into is a verbal "I'll speak to my lawyers" kinda reply through from the electrician to the PM. This is what was conveyed back to us.

Main point of argument was that husband and electrician gave "verbal OK" for the go ahead. This is simple not true, what I suspect he will do is get his brother in law (tenant) to act as a witness who wasn't present anyway. My electrician will vouch neither husband or himself had verbally OK-ed or even implied we OK-ed anything.

We fear this may get ugly through expensive solicitors and we want to avoid this as much as possible, what should I do in this case? I know it would be a waiting game if he proceeds legally. They'll probably size it up with his solicitors and see how difficult/easy it would be for his chance from winning.

At the end of the day, legal proceedings of any sort would cost us, damage is already done emotionally and other costs involved. We've spent relatively sleepless nights on this matter.

PM is confident we really in actual fact have no case to answer for, but all in all, not a lawyer and not really a party. She advises waiting for any legal notices before commencing anything....

 

[Dazz]

Cecilia1,


Reading between the lines....you are ;

a) not concentrating enough on the specific wording of your Lease.

b) relying way too heavily on your PM's advice & knowledge.


I suggest a radical about turn on both. Force yourself to sit down and read the Lease, cover to cover. Take the phone off the hook and put the kettle on. Get matchsticks to hold your eyelids open if you have to. Have a pen and scribble as many notes as you need.


Once you and your husband have been thru it and know what you have actually agreed to, you'll be in a much stronger position with all parties (solicitors, PMs, Tenants, tradies).


Unfortunately, in the cut and thrust world of business, knowing this off by heart, word for word, line for line...is the level of detail you need to know to confidently have a conversation in real time without tripping yourself up or saying the usual thing that most people say, which is either dunno or they wing it, and get themselves into a whole bunch of unnecessary hot water.

 

[Graingrower]

Reading through your posts, I really think that they are just calling your bluff. They have no case. Have you checked the invoice to see if he is a properly licensed elecritian? You'll probably get a solicitors letter or some other legal document next. Tell us about it here. You will get lots of support on this forum. Based on the info you have provided they will probably not take you to court. If they did it would probably get thrown out.

 

[Doovalacky]

Cecilia,
If you still have a copy of the report by the supposed electrician PM it to me.
My original trade was as a sparky, I might be able to make some comments about what he has listed.

Hes supposed to have been rectifying faults and no materials?
Did he provide you a copy of the "Electrical Safety Certificate" that has to be supplied to owner?

As Dazz has suggested read your lease carefully. While there is normally a clause covering emergency repairs hopefully it says anything else requires authorization.

Also as you clearly have hired your own electrician to make repairs I doubt they will have a leg to stand on.

 

[cecilia1]

Cecilia,
If you still have a copy of the report by the supposed electrician PM it to me.
My original trade was as a sparky, I might be able to make some comments about what he has listed.

Hes supposed to have been rectifying faults and no materials?
Did he provide you a copy of the "Electrical Safety Certificate" that has to be supplied to owner?

As Dazz has suggested read your lease carefully. While there is normally a clause covering emergency repairs hopefully it says anything else requires authorization.

Also as you clearly have hired your own electrician to make repairs I doubt they will have a leg to stand on.

All that was listed on my lease was that anything "emergency" related should be notified in writing within 14 days for the PM to action or request a course of action from the landlord. The only avenue that they can get reimbursed for anything is,

Now my situation, I didn't refuse address any safety issues, I just didn't authorise the work.

The invoice itself reads as follows (address to tenant):

* 250 Hours @ $100/Hour for Repair and Installation Works.
* Includes $5,000 materials.

Total = $25,000.

No detail, whatsoever or even a breakdown.

Secondly, why the heck has it got my tenant's name on it, and not mine? Wouldn't you think if I/husband/PM approved anything, it would be under our names? Furthemore there was no quote, no deposit made, no periodic payment dates etc.

We had a re-piping done with the old tenant (who was fantastic, he just needed a bigger place...so moved out). Throughout the whole process - we got written quotes from at least THREE contractors, the successful contractor would request a deposit and written approval in addition to stage payments. Job would not be completed had we refused to pay for the last stage.

Note, none of this ever happened with his sparky. Today, he called my PM demanding payment, when PM asked if a written approval was signed, answer was no, but pushed that a verbal one was. He stated he will commence legal action and told my PM that I should expect a legal letter soon.

 

[rugrat]

Take the advice of the others here on the board and relax a bit.

Dazz has given brilliant advice about reading and getting to know the contract inside out.

The truth is many people threaten legal action all the time over many different things. Despite all these threats running around, only a small percentage will ever take the step of even taking to a lawyer. Out of these who do talk to a lawyer, many of them will have no actionable legal footing to stand on (which I suspect is the case here).

Personally if I were you, I would familiarise yourself with the contract, I would also look into any existing legislation involving commerical real estate and look towards familiarising yourself with that. But as far as the tenant is concerned, I would sit back and ignore them until such a point as they actually do make a move to get lawyers involved, rather then just threatening to do so. Until then they are not worth loosing any sleep over. Once they have acted to get lawyers involved, then you make the decision to see your own lawyer - but not before then. Until then it is just threats.

 

[ugotadollar4me]

these guys are playing with you. okay 250 hours work, thats $80 per hour, deffinitly the high end of town.

how much do they pay per month?
how big is the building?
do you think the work that has been done is liget and was there enough time for them to do 250 hours, keeping in mind they may of had 2 or 3 electritians in there each day?
did the work really need to be done?

Next thing is, you have not been billed for the work, the tenant has.
If it was me I would put it back on the PM and let them handle it, thats what you pay them for, wait and see what comes.

That is what I would do but everyone is different

 

[NedKelly]

All that was listed on my lease was that anything "emergency" related should be notified in writing within 14 days for the PM to action or request a course of action from the landlord. The only avenue that they can get reimbursed for anything is,

Now my situation, I didn't refuse address any safety issues, I just didn't authorise the work.

The invoice itself reads as follows (address to tenant):

* 250 Hours @ $100/Hour for Repair and Installation Works.
* Includes $5,000 materials.

Total = $25,000.

No detail, whatsoever or even a breakdown.

Secondly, why the heck has it got my tenant's name on it, and not mine? Wouldn't you think if I/husband/PM approved anything, it would be under our names? Furthemore there was no quote, no deposit made, no periodic payment dates etc.

We had a re-piping done with the old tenant (who was fantastic, he just needed a bigger place...so moved out). Throughout the whole process - we got written quotes from at least THREE contractors, the successful contractor would request a deposit and written approval in addition to stage payments. Job would not be completed had we refused to pay for the last stage.

Note, none of this ever happened with his sparky. Today, he called my PM demanding payment, when PM asked if a written approval was signed, answer was no, but pushed that a verbal one was. He stated he will commence legal action and told my PM that I should expect a legal letter soon.

This looks more like an attempt at extortion to me.

 

[cecilia1]

these guys are playing with you. okay 250 hours work, thats $80 per hour, deffinitly the high end of town.

how much do they pay per month?
how big is the building?
do you think the work that has been done is liget and was there enough time for them to do 250 hours, keeping in mind they may of had 2 or 3 electritians in there each day?
did the work really need to be done?

Next thing is, you have not been billed for the work, the tenant has.
If it was me I would put it back on the PM and let them handle it, thats what you pay them for, wait and see what comes.

That is what I would do but everyone is different

The "safety" side of things they did was re-wire about 3 new lights (put in by tenant, not me). This was done before my electrician arrived on the scene and without any permission from me whatsoever.

If they had called PM or me up, I would have told them stop right away and I will get my electrician in to do the rewiring works for that particular part of the building so he can put whatever lights he wants in and get his electrician to install it. This would have been the perfect scenario, but since he failed to notify and went ahead, this has spiralled out of control.

In addition to these new lights, he put in my office about 6 rows of downlights, about 6 new power points, four 3 phase outlets and motion sensor switches for some lights. He had about 8 or so new flood/spotlights outside and three inside. They also put a brand new board in because of this due to the older board not being able to handle it.

What they are trying to inflict upon me I reckon and which appears very obviously is the entire works. I mean, for what safety works he did (which by the way was *NOT* an emergency...), my electrician reckons it was worth maybe max $500 (this was to rewire about factory style lights.)

My contract states that for all electrical safety, I'm responsible, fine - I got in my spark and he fixed that. In fact, my spark had spent only about 4 days there and did it by himself - 99% of the building stuff, for a lot less...

Anyhow, I had a free consultation with a lawyer mate of mine for about 20 mins, he advised just as many has said - refer back to lease. Upon hearing my scenario, he reckons I have no case to answer, clearly invoice was sent to tenant, not me, but he reckons just sit back and wait if there would be any legal proceedings commencing as he believes there is a weak case between his electrician going after me/husband.

He said worst case scenario, it'll be a tenant vs me/husband dispute which could become a VCAT issue...

As for the verbal evidence - my lawyer reckons it'll be a case of he said, she said, very difficult to determine either way, so there chances of suing (either electrician or tenant) is very low.

Initially, he tried to get my PM to reimburse him, but my PM fired back right away with questions of "any written contract or sign off" answer was a flat "no..." then he played the "i didnt know i had to game etc. etc."

 

[Tigger]

This is why we humans invented reading and writing. You have a written lease agreement and your tenant and his BIL have nothing. Sheer weight of the paperwork is on your side.

This is just another example of bullying, and your PM should know better than to have let it get this far. The guy is trying to bully you into handing over $25k. Try not to lose any more sleep over it.

 

[Scott No Mates]

As they say, 'not my problem' - the tenant arranged the work, did not seek authorisation, did not seek lessor consent for the fitout works etc. Let the tenant's electrician file a claim against the person who authorised the works.

(Obviously check your lease to ensure that your rights are protected).

What has the PM said? Did they authorise the works? Are any of the works required (were you going to get them done with your sparky)

 

[Property Meister]

^ what this guy said!

if they don't back down, why don't you invoice them $26,000 Pain the butt fee.

at least they'll get the hint that their invoice is totally stupid, like yours