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property manager Department of Commerce Powered By Docstoc
					                                  Government of
                                  Western Australia




    You and your
    property manager




  REBA
Real Estate & Business Agents Supervisory Board
This booklet contains general information that was current at the time of publication. If you
have specific inquiries about matters relating to your situation then you are strongly urged to
seek independent professional advice. The producers of this publication expressly disclaim
any liability arising out of a reader’s reliance on this publication.

This publication was produced by the Real Estate and Business Agents Supervisory Board.

This publication is available in other formats on request to assist people with special needs.
Contents
Introduction ............................................................................... 2

Property managers .................................................................... 2

Strata managers ........................................................................ 2

Role of the property manager ................................................... 3

Code of Conduct ....................................................................... 4

Choosing a property manager................................................... 5

Insurance cover ......................................................................... 6

Negotiate, then get it in writing!................................................. 7

Agency fees .............................................................................. 8

Expenses ................................................................................... 9

Initial property inspection and beyond..................................... 10

Tenant selection ...................................................................... 10

Subsequent instructions ...........................................................11

Your legal obligations to the tenant ..........................................11

Terminating the authority to act with the agency......................11

We can assist .......................................................................... 12




                                                      Real estate fees: negotiating with an agent   1
Introduction                               Property managers must also be
                                           familiar with the rights of landlords
As a property owner you may
                                           and tenants as set out in the
decide to place the responsibility of
                                           Residential Tenancies Act 1987.
managing your rental property in the
hands of a registered property             You can check if a property
manager working for a licensed real        manager is properly registered by
estate agency. Doing so will allow         calling REBA on 08 9282 0839.
you to avoid the day-to-day worries
of property management.                    Strata managers
So what can you expect from your           A strata manager performs a
property manager, and what can             different role to that of a property
you do if something goes wrong?            manager. A strata manager is a
                                           person who collects periodic levies,
Property managers                          arranges repairs, common property
                                           insurance and other matters on
Property managers who offer their
                                           behalf of people who own strata
services for a fee must be registered
                                           properties in the same strata
real estate sales representatives
                                           complex.
working for a licensed real estate
agent. It is the real estate agent who     Strata managers are not required to
is in charge of the agency. The            be licensed in their own right. If a
licensing of real estate agents and        strata manager is also licensed as a
registration of sales representatives      real estate agent through the same
is performed by the Real Estate and        business then the clients of that
Business Agents Supervisory Board          strata manager have a greater
(REBA).                                    degree of protection because of the
                                           education, conduct and trust
A property manager must satisfy the
                                           account requirements placed on real
Board that they have completed
                                           estate agents. However, strata
recognised course work, and are of
                                           issues do not fall within the Real
good character and repute in order
                                           Estate and Business Agents Act
to obtain a certificate of registration.
                                           1978.
Property managers, like other sales
                                           Issues relating to strata titles (but
representatives and real estate
                                           not strata managers) are dealt with
agents, are governed by the Real
                                           by Landgate. Landgate can be
Estate and Business Agents Act
                                           contacted on 08 9273 7044.
1978 and the Code of Conduct for
Agents and Sales Representatives.



2   You and your property manager
Role of the property                     •   advertising for and locating
manager                                      potential tenants;

The main roles of a property             •   selecting a tenant and collecting
manager are usually to market your           the rent;
rental property, select a tenant and     •   preparing a periodic or fixed-term
manage your property.                        residential tenancy agreement;

Depending on your needs, you can         •   lodging and applying for the
appoint a real estate agency to do           release of security bonds;
one or more of these tasks. The          •   carrying out the agreed upon
services the agency provides will            inspections of your property;
depend on the written management
                                         •   reporting and arranging for
agreement, usually known as a
                                             repairs and maintenance if
Written Authority, an Authority to Act
                                             necessary, and to the extent
or an Appointment to Act, that you
                                             authorised;
have agreed upon with the agency.
For more information on written          •   providing relevant notices and
authorities see the REBA publication         financial statements to you;
Real estate fees – negotiating with      •   attending meetings, such as
an agent.                                    strata company meetings;
Some of the specific tasks that may      •   paying local council rates and
be carried out by your property              strata levies etc; and
manager include:                         •   issuing breach/termination
•   negotiating a rent appropriate for       notices to the tenant, or
    the property, the area and the           arranging for court proceedings
    current market conditions;               when appropriate.


                                                   You and your property manager   3
Code of Conduct                           •   promptly provide information to
                                              you about expenses paid on your
The Code of Conduct for Agents
                                              behalf;
and Sales Representatives sets out
standards of practice for all agents      •   not knowingly mislead or deceive
and their sales representatives,              any parties in negotiations or a
including property managers in                transaction;
Western Australia. These                  •   not engage in harsh or
requirements protect you by                   unconscionable conduct;
promoting and enforcing appropriate
                                          •   not use or disclose any
standards of conduct in the
                                              confidential information obtained
marketplace.
                                              while acting for you unless
A number of these standards refer             permitted to do so by law;
to the Written Authority, which is a      •   not advertise or offer for lease a
legally binding contract between you          property for an amount, or terms,
(the principal) and the licensed real         different from that authorised by
estate agency. The Written Authority          you;
authorises a registered property
                                          •   not seek payment to others on
manager to manage your property
                                              your behalf for fees that exceed
for you.
                                              the amount agreed in the Written
The responsibilities of agents and            Authority, or is not initialled in the
property managers under the Code of           Written Authority; and
Conduct include requirements to:          •   not seek any payment of a fee
•   act in your best interests, except        that is unjust in light of the
    where it would be unreasonable            Written Authority and other
    or improper to do so;                     circumstances.
•   follow your instructions, except      The Code of Conduct requires that
    where it would be unreasonable        property managers and their
    or improper to do so;                 unregistered assistants be
•   act fairly and honestly;              supervised by the licensed real
                                          estate agent in charge of the agency
•   exercise skill, care and diligence;
                                          at all times. If you are having
•   disclose in writing if any supplier   problems with the property manager,
    of goods or services (such as         one of your first steps should be to
    cleaners, carpenters etc)             speak to the supervising agent
    recommended to you has a              about it.
    ‘significant relationship,
    connection or affinity’ with the
    agency;

4   You and your property manager
Choosing a property                      •   Do you charge for postage and
manager                                      petties? If so how much are they
                                             and how are they calculated?
The level of fees charged can vary
substantially from agency to agency      •   Can you provide me with a copy
and is fully negotiable, so it is wise       of the statement you send
to shop around for the best deal.            landlords and if necessary
Remember though that the ‘best               explain it to me?
deal’ is not always the cheapest.        •   What type of tenancy will suit my
Your choice of agency should also            particular needs?
be based on whether the appointed        •   Could you please show me your
property manager will successfully           standard Written Authority and
reduce your workload and stress, in          explain to me the different fees
addition to protecting your                  and total fee you propose to
investment.                                  charge me?
When choosing an agency to               •   How will your agency advertise
manage your property, it is a good           for tenants?
idea to seek recommendations from
                                         •   What sort of checks do you do to
friends and family.
                                             assess the suitability of
Although you may negotiate fees              prospective tenants?
and charges with an agent, ask to        •   How much do you think the
meet the specific property manager           property should be leased for?
who will be dealing with your                Why?
tenants and looking after your
                                         •   How much will the security bond
property. If you speak personally to
                                             be? (In most circumstances it
several property managers at their
                                             should be four weeks’ rent)
place of business, you can assess
their manner and professionalism         •   Do you maintain a REBA Bond
while also gaining some                      Trust Account or use the
understanding of their business              Department of Commerce Bond
standards and experience.                    Administrator?

Useful questions to ask during these     •   What will happen to the security
visits are:                                  bond at the end of the tenancy?

•   What evidence and/or                 •   Could you show me your
    assurances can you provide me            standard lease agreement with a
    regarding the quality of property        tenant?
    management service your clients
    receive?


                                                   You and your property manager   5
•   What type of property inspection        Insurance cover
    reports will be provided to me?
                                            It is a good idea to discuss with your
    How often will they be provided
                                            property manager the different types
    and what will this cost?
                                            and amounts of insurance that you
•   What arrangement do you                 may need.
    suggest for the apportionment of
    water costs?                            In addition to house insurance, you
                                            should discuss the option of landlord
•   How thoroughly will you check
                                            protection insurance with your
    my property after the tenant
                                            property manager. This type of
    leaves? Could you show me a
                                            insurance can protect you if the
    copy of your standard Property
                                            tenant damages your property or if
    Condition Report, and can
                                            you experience a loss of rental
    photos/videos be included? How
                                            income.
    much will this cost?
•   If the tenant fails to pay rent, will   It is wise to find out exactly what the
    the notice of breach for late rent      insurance policy will cover you for.
    be issued automatically and             For example, some landlord
    promptly?                               protection policies will cover you for
                                            damage deliberately caused by
•   Do you have any experience              tenants but not accidental damage.
    representing property owners in
    the Magistrates Court?                  Another fact to bear in mind is that
                                            some landlord protection
•   What are the penalties if I
                                            underwriters will only deal with real
    terminate the Written Authority
                                            estate agencies, not directly with
    before the agreed period                owners.
    expires? Note, any penalties
    (often referred to as ‘liquidated       You may also wish to ensure that
    damages’) can be negotiated.            you have adequate public liability
                                            insurance in case someone comes
                                            to harm on your property.




6   You and your property manager
Negotiate, then get it in                manage your property for you is a
writing!                                 legally binding contract. This means
                                         that both you and the real estate
As with any business transaction, it     agency are obliged to fulfil the
is important that you are clear in       requirements of the Written
your own mind what exactly you           Authority.
require concerning the management
of your rental property.                 The Written Authority can vary
                                         between agencies, so it is important
Some questions you should ask            that you read the contract carefully.
yourself about the management of
the property include:                    For example, REIWA’s form titled
                                         Exclusive Management Authority for
•   How promptly do you wish to be       Residential Premises allows you to
    told if your tenant is behind with   specify the rental details for the
    the rent?                            premises, the period of agency, the
•   Do you want to be consulted          payments the agent is required to
    before any repairs or                make on your behalf using the
    maintenance are carried out, no      rental monies collected, and the
    matter how small? Or would you       manner in which you would like your
    prefer to be contacted only when     rental proceeds paid to you. The
    the amount exceeds a set limit?      agreement also requires you to
•   How often do you want property       specify whether or not you agree to
    inspections carried out on your      pay separate marketing and
    property?                            advertising costs, and a maximum
                                         amount payable each time the
•   For how long do you wish to          property is vacated. An agreed
    engage the real estate agency,       letting fee and management fee
    known as the period of agency?       schedule must also be specified. If
•   Do you wish to be involved each      you would like your property
    time a tenant is selected?           manager to organise improvements
                                         to your property (such as painting or
Any provisions, like the ones
                                         the installation of air-conditioning)
detailed above, need to be agreed
                                         then the fee for this service should
in writing preferably in the Written
                                         also specified, whether as a fixed
Authority.
                                         amount or a percentage of the
The Written Authority that you sign      total cost.
to authorise a real estate agency to




                                                   You and your property manager   7
An agent may claim expenses from           Agency fees
you that are related to their duties,
                                           A management fee and inspection
such as photocopying and faxing
                                           fee are likely to be included in the
costs, or reimbursement for repairs
                                           Written Authority with the agent. As
paid on your behalf. You should
                                           with any other service, these fees
discuss these expenses with the
                                           may be negotiated with the real
agent before signing the Written
                                           estate agency, and you can shop
Authority. It is important to specify in
                                           around for better deals.
the Written Authority the nature of
these expenses, and clearly set out        A management fee is a fee that
the method by which they will be           covers the routine or day to day
calculated.                                business of managing your property.
                                           The Written Authority used by
To avoid misunderstandings or
                                           REIWA members allows for a
problems later on, it is important to
                                           management fee that is either a
include in the Written Authority all       percentage of the gross collections
agreements between you and your            for the tenancy period, or a fixed fee
agent. You and the agent should            per month/year. The term ‘gross
sign and date any special                  collections’ refers to the total value
requirements that are added to the         of all money collected from all
standard contract.                         sources, including rent, water
                                           charges, electricity and gas charges.
For instance, if you have concerns         GST is payable for these services.
about the deterioration in the
condition of the property, you should      The Written Authority will also
ensure that the Written Authority          mention other fees and costs, such
                                           as charges for preparing the
includes a requirement that copies
                                           property condition and final
of all inspection reports and breach
                                           inspection reports, periodic
notices for damage are sent to you.
                                           inspections, postage and other
In this way you can keep track of          minor costs (including banking
the condition of the property.             transaction fees), attendance at
You may also wish to include the           meetings (including court
                                           appearances), marketing and
requirement that you are present at
                                           advertising costs.
all or certain property inspections
carried out by the agency.                 Tenant paid letting fees have been
                                           abolished under changes to the
                                           Residential Tenancies Act 1987 and



8   You and your property manager
Real Estate and Business Agents           For example, you could require that
Act 1978. Effective since 5 April         all payments above a certain
2007, real estate agents now              amount are discussed with you
CANNOT include a letting fee (for         before they are made. This type of
finding a tenant) as part of a            condition can prevent
residential tenancy agreement,            misunderstandings and unexpected
                                          bills later on.
however they can still charge these
fees to owners or landlords if agreed     If a property manager incurs a cost
upon in the Written Authority.            on your behalf, he/she is required to
                                          include with a claim for expenses
Additionally, the Written Authority       some documentation or other
used by REIWA members allows the          evidence in support of the expense.
agency to charge the owner, if            In addition, you are entitled under
agreed, a leasing fee for each new        the Code of Conduct to ask for
tenancy that is either a percentage       further information that you may
of the gross collections for the          ‘reasonably require’ in order to be
tenancy period, or a fixed fee per        satisfied about the amount of the
month/year.                               expense and that the expense was
                                          paid appropriately.
Expenses
                                          In relation to advertising, some
In most cases, landlords want their       additional requirements are also in
property manager to arrange               place. A property manager may not
repairs, newspaper advertising or         seek payment of an expense for
other work on their behalf.               advertising, signboards, printed
                                          material and promotions from you
Property managers cannot pay
                                          unless:
expenses on your behalf unless you
have given them permission to do          •   you have agreed in writing to pay
so in the Written Authority.                  the expense;

It is recommended that before you         •   the Written Authority specifies a
sign the Written Authority you think          maximum amount for advertising;
carefully about whether you want              and
the property manager to arrange           •   the maximum amount stated on
these matters for you. If you do, it is       the Written Authority has been
wise to confirm the details in writing        initialled by you.
in the Written Authority then sign
and date these with your agent.




                                                    You and your property manager   9
Initial property inspection              If you intend to leave any furniture
and beyond                               or other items on the property then
                                         you may wish to make an inventory
Once you have chosen an agent,           of the furniture detailing each item
you should walk through the              and its condition. Photographs can
property together to reach an            again be helpful by providing visual
agreement about the actual state of      evidence of the initial condition of
your rental property. You may            the furniture for future reference.
choose to photograph/video the           Once agreement has been reached
property as proof of its condition at    between you and the agent about
that time. The agent will then write     the items and their condition, the
up a Property Condition Report that      inventory can then be attached to
explains the state of the property.      the lease agreement with the tenant
The Property Condition Report will       to confirm their responsibilities. An
be used as the basis for comparison      agent will generally charge more for
if the tenant leaves the property in a   looking after a furnished property
poor condition not attributable to       because of the extra work involved
normal wear and tear.                    as well as charging for an inventory
It is recommended that you make          to be conducted at the completion of
sure any particular areas of concern     each tenancy.
you have are included in the Written
Authority and the lease agreement
                                         Tenant selection
with the tenant. For instance, you       During the tenant selection process,
may decide that you want the agent       you should bear in mind that The
to inspect your driveway for oil         Equal Opportunity Act 1984 does
stains during property inspections,      not permit discrimination on the
and for the tenant to remove any oil     basis of a person’s age, family
stains they have made before             responsibility, sex, sexual
vacating the property.                   orientation, gender history, disability,
                                         marital status, pregnancy, beliefs,
Other contentious issues that are
                                         race or spent convictions.
best dealt with at this initial stage
are whether pets are allowed, and        The Residential Tenancies Act 1987
who bears the responsibility for         in most cases does not allow a
water consumption and the                landlord (or the landlord’s agent) to
maintenance of gardens, lawns and        refuse to let a property to someone
pools.                                   because they will have children
                                         living with them.




10   You and your property manager
Subsequent instructions                  discuss these matters further with
                                         your agent or property manager.
If you give any subsequent
instructions to your agent after         It is now a legal requirement to have
signing the Written Authority, make      professionally installed, hard-wired
sure your instructions are in writing    smoke alarms and safety switches
and that you keep a copy. This will      (RCDs) in premises before any new
help you and your property manager       tenancy agreement. Furthermore,
to keep track of your requirements.      these will need to be installed in all
                                         leased premises even for pre-
If a new instruction arises that is in
                                         existing agreements no later than
conflict with the Written Authority
                                         October 2011 for smoke alarms, and
that you signed then the Written
                                         August 2011 for safety switches.
Authority will need to be amended
to reflect the new instruction. Any      For more detailed information about
amendments should be signed and          your rights and obligations to your
dated by the agent and you.              tenant, you can contact the
                                         Department of Commerce’s
Your legal obligations to the            Consumer Protection Advice Line on
tenant                                   1300 30 40 54. The department
Even if you have a property              provides advice and assistance to
manager acting for you, all landlords    tenants and landlords on residential
have legal obligations to tenants        tenancy issues. Tenancy information
and these are set out in The             is also available on the department’s
Residential Tenancies Act 1987.          website www.commerce.wa.gov.au.
Real estate agents and the property
                                         Terminating the authority to
managers they employ must comply
with the Written Authority, but they
                                         act with the agency
and the landlords must also comply       If you wish to end your agreement
with other relevant laws like the        with the real estate agency, you
Residential Tenancies Act.               should first check your Written
                                         Authority or consider obtaining legal
The Residential Tenancies Act
                                         advice.
covers matters dealing with the
rights and obligations of tenants and    If you cease paying property
landlords. Some of the matters the       management fees, and have not
Residential Tenancies Act deals with     cancelled your agreement as set out
relate to security bonds, property       in your Written Authority, then an
maintenance/repairs, locks and           agency could decide to take you
security etc. You may wish to            to court for being in breach of
                                         the contract.

                                                  You and your property manager   11
Therefore, it is important to cancel    We can assist
your agreement in writing and give
                                        You can phone the Real Estate and
the proper notice required by the
                                        Settlement Advice Line on
Written Authority. In most written
                                        1300 30 40 64 to obtain information
authorities, if there has been a
                                        about the duties of a property
fundamental breach by either party,
                                        manager.
you or the agent can cancel your
agreement by giving 28 days notice      You can also obtain information from
in writing to the other party.          REBA if the agency has not fulfilled
                                        its side of the agreement.
Most written authorities usually
allow for ‘liquidated damages’ to be    If you wish to lodge a complaint with
paid to the agent at the current rate   REBA, copies of our complaint form
of 50 per cent of the management        are available from the Real Estate
fee that the agent would be             and Settlement Advice Line on
expected to receive for the             1300 30 40 64, or the REBA website
unexpired period of agency. If you      at www.reba.wa.gov.au.
do not agree with this clause you
may negotiate another rate with the     Alternatively, you may put your
agent or strike out this clause         complaint in writing. If you do so,
completely before you sign the          please attach copies of relevant
Written Authority.                      contracts and correspondence then
                                        mail to:
However, if the agency you are
                                           The Registrar
contracted with is sold to another
                                           Real Estate and Business Agents
agent or closes down then any
                                           Supervisory Board
existing written authorities are
                                           Locked Bag 14
automatically terminated and
                                           Cloisters Square WA 6850
another contract will need to be
established with another agent          Your complaint may be referred to
(whether the one buying the agency      an investigator if a potential breach
or another agent) if you can agree      of the legislation is identified, or to a
to the terms.                           conciliator who will try to negotiate a
                                        settlement of the dispute.

                                        If you would like more information
                                        about these proceedings, please
                                        refer to the publication A guide to
                                        investigations and disciplinary
                                        proceedings under the Real Estate
                                        and Business Agents Act 1978.


12   You and your property manager
You and your property manager   13
Real Estate and Business Agents Supervisory Board
The Forrest Centre, Level 6, 219 St Georges Terrace
Perth, Western Australia 6000 (weekdays 8.30am - 5.00pm)

Real Estate and Settlement Advice Line: 1300 30 40 64
(for the cost of a local call statewide)

Post: Locked Bag 14, Cloisters Square WA 6850
Admin: 08 9282 0843 Facsimile: 08 9282 0869
Email: contactus@reba.wa.gov.au
Website: www.reba.wa.gov.au

National Relay Service 13 36 77
Quality of service feedback line: 1800 30 40 59
Translating and Interpreting Service: 13 14 50
                                                           19850/ Feb 10/ 5000




(ask for a connection to 1300 30 40 64)




  REBA
Real Estate & Business Agents Supervisory Board

				
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