Often we’re asked to take on the property management of an investment and the owner asks us to collect the file from the current agent immediately. We love helping new clients and are keen as mustard to take on new properties to manage. But there’s one time constraint we have to work with when a landlord is terminating their current agent’s service.
The Property Agents and Motor Dealer’s Act says a property owner and an agent must give eachother a minimum of 30 days notice to part company. Writing in the REIQ’s Journal this month Carter Newell Lawyers’ Paul Hopkins confirms that, ready as an owner might be to get a new agent underway, Section 114(4) of the Act requires that month’s notice.
“It is not possible to contract out of the statutory minimum notification period and any attempt to do so may potentially expose the property manager to formal disciplinary action by the Office of Fair Trading, which may result in severe fines or penalties. ”
“Relevantly, a property manager will continue to be responsible for the property throughout the entire period of the appointment (up to and including the whole of the statutory termination period). This will remain the case, regardless of whether or not the property manager has access to the property. ”
Paul Hopkins also explains that a common industry practice of paying out the agent for their 30 days’ fees is not a way around the 30 day law. “The acceptance of monies for a service which is no longer being provided will expose the property manager to a breach of sections 133 and 139 of the PAMDA, which states that commission may only be claimed in relation to actual amounts collected by the property manager on behalf of the landlord client.”
The requirements of the Act might seem onerous, especially if you’re really unhappy with that agent. But for the time being it’s the law they’re obliged to comply with.