“Investment is its most intelligent when it is business-like", Benjamin Graham. These are some of the most important words ever uttered about investing. This is the very reason people need to conduct their property investment like a business and therefore make decisions at arm's length. We all know shelter is a basic human need and therefore we enjoy the certainty that it brings to property inve...
A significant part of the property management role is solving problems. But sometimes when you are involved in handling a dispute or complaint with some
history, a range of complications, or a multitude of people involved, it’s easy to become tangled up in it all. When this happens, the way forward can seem unclear.
How do you know what to do, or what to suggest, or how to proceed? What do you need to take into account? What should you consider? Can the tenant do this? Can the lessor expect that? Should we have done what we did? Who is right and who is wrong?
For those times when we need to disentangle a situation, here are ten fact-finding questions we can use to analyse the situation, in order to better identify possible solutions.
What are the property management facts? It is certainly easy enough to lose sight of the essence of the matter when it starts to become layered with events, and exchanges, and emotional reactions by all concerned.
When we are in the midst of a situation there is a risk that ‘the story’ that goes with the situation can sometimes start to overshadow the actual property management issue that requires your attention. Whilst some details do matter, other details should be recognised as merely distractions; at risk of making everything seem more complicated than it really is.
For example, regardless of whether a tenant is moving out after 6 months of eye-poppingly unpleasant exchanges between the tenant’s girlfriend and the neighbour in the house next door over some personal disagreement that has escalated into petty exchanges that they have both shared with us in great (and unwanted) detail - the property management situation we are managing could be summed up as ‘the tenant is vacating at the end of their agreement’.
Therefore our focus is to ensure that the usual termination and vacate procedures and requirements apply, rather than letting the clutter and noise of ‘the story’ distract our focus, or
consume our energy.
What does the legislation say? The Residential Tenancies and Rooming Accommodation Act is the primary piece of legislation relating to residential tenancies. It contains information about the rights and obligations of the parties across a range of issues – repairs, water charging, ways to end a tenancy, actions the parties can take when the other party is in breach, and so on.
However sometimes other legislation could also have an impact – the Body Corporate and Community Management Act, the Property Occupations Act, the Agents Financial Administration Act, and of course legislation relating to issues like pool fencing, and safety switches. Although we are not a legal practitioner, a sound knowledge of the relevant legislation and when or how it impacts on industry practice will better equips us to perform our role effectively. Crucial to this is knowing where to source information when we need it – a credible source that can be relied on as accurate, rather than tapping into uninformed opinions or guesses.
Depending on the circumstances we might call or check the website of the relevant government agency that administers the particular legislation, or use the REIQ’s Property Management Support Service, or seek legal advice from a qualified legal practitioner.
But what does the agency appointment form say? Not every question is answered by legislation. Some things will come back to the specific instructions given by the property owner. So sometimes part of untangling a situation means referring to the information contained on the agency appointment form. When a client is unhappy with our actions that we have taken or have not taken in relation to their property or tenancy, the content of the appointment form will fall into sharp focus. What instructions does it contain to allow us to perform particular actions on the owner’s behalf? What authorities does it contain in relation to how or when those services are to be provided?
What restrictions or limitations are identified on the appointment form? All of this will depend on how the appointment form has been completed, and what schedules and terms & conditions have been included with the appointment. For this reason, great care is taken to ensure this document is completed in such a way that it will contain the necessary instructions and authorities we want in order to manage each particular property to best practice standards.
Signing an appointment form without the client or Rental Trends understanding what it allows and requires of each party, is almost certainly a future catalyst for disputes.
What relevant written instructions have been received from the client beyond the appointment form? Instructions from the client beyond the appointment form should always be obtained in writing, such as their instructions to proceed to QCAT about a matter that has arisen, or their instructions on what claims are to be made from a tenant’s bond, or their instructions on whether to terminate a tenancy or offer a further term.
We must follow lawful instructions from the client. If a problem or dispute arises and we are unsure of what we should have done – the answer is often found by asking ‘what was the written instruction from the client.
What does the tenancy agreement say? Again, not every question about the lessor’s and tenant’s obligations is specifically answered by legislation – the Act is silent on some issues. This
means that various aspects of a tenancy are open to negotiation between the parties, and relevant information will be included on the tenancy agreement.
As an example, when considering a commonly asked question like ‘can we charge the tenant for water?’ – the answer to that should be found on the individual tenancy agreement signed by the tenant. The legislation allows the tenant to be required to pay for water in some circumstances; and certainly the property owner should instruct us on their requirements in relation to water charging for their property on the appointment form they sign; but from there the tenancy agreement should tell you whether or not the tenant has to pay for water, and how that will happen. Other than water charging, there are numerous examples of common tenancy questions that should be able to be answered by simply referring to information included on the signed tenancy agreement. Use of comprehensive special terms on a tenancy agreement will make answering these questions so much easier - remembering that these terms cannot contract out of the RTRA Act, nor be authored by us due to the Legal Professions Act.
What other written agreements or correspondence are on file? In some circumstances, other written agreements will have been established with a tenant. A common example might be a written agreement to end a tenancy sooner than the end date. Where this type of negotiated agreement occurs, it would be important to ensure that the written agreement covers all bases in terms of what terms the parties agree will apply to their agreement, particularly aspects that might come under dispute later.
In that way, answer to questions like “Can the tenant do xyz?” or “Can the lessor expect xyz?” would be able to be readily answered by referring to the wording of what the parties have signed. In some situations it is also relevant to refer to the content of any related correspondence to identify what has been said by each party.
What does the entry condition report say? Where questions arise about what can be required in terms of cleaning or tenant damage at the end of the tenancy, the entry condition report is the ultimate ‘go to’ record. The more detail, the better. The tenant must leave the property as it was at the start, fair wear and tear excepted. Questions that start with “Can we expect a tenant to clean xyz?” will hinge on what the entry condition report says about that item. If the report has been completed with only sketchy details, it becomes less likely to support a clear answer. Photos can be extremely useful supporting evidence as well.
What preventative measures were taken? Where problems or disputes arise, it can be helpful to look at what actions were taken to help avoid this occurring – and this is where property managers can work smarter.
For example, consider a scenario where the tenant has accidentally broken a light cover when trying to remove it to change a bulb because they twisted when they should have pulled. Or the air-conditioning now needs a repair because the filter was not cleaned regularly. The lessor is likely to expect the tenant to pay for these repairs - but then the tenant says it’s not their fault because they were not aware of what was required or how to do it, and a dispute arises that we have to manage.
If we have records that the tenants were shown or given information on how to remove the tricky light cover, and how to clean the a/c filter, at the start of the tenancy, these types of situations either don’t occur, or become a lot easier to address if they do. A little bit of extra information provided at the start can end up providing the answer you need during a later dispute.
What do the parties want? Sometimes communications can become mired in ‘the problem’. The parties repeatedly list their grievances or complaints over an extended timeframe, getting everyone exactly nowhere! Shifting the focus from the problem to the solution by asking what outcome each party is seeking, can help move the matter forward. Does the lessor want to end the tenancy, or would they prefer to negotiate? Do they intend to seek full replacement cost of the damaged item, or would a particular dollar amount be sufficient compensation for them? Does the tenant want to move out, or stay but at a reduced rent? We need them to tell us what it is they are trying to achieve. Of course the various desired outcomes might not always be reasonable, or even possible in the circumstances - but at least we now know their end goal!
Once we have a better understanding of their agenda and motivations, we are better placed to respond and to assist the parties to negotiate. What has QCAT already decided about similar matters? In a dispute, both parties are usually equally convinced they are right, and are equally confident that QCAT will order in their favour. This then acts as a disincentive towards negotiation attempts. Educating the parties by sharing information about what QCAT has already decided about similar matters can help the parties maintain reasonable expectations. Published QCAT decisions can be accessed through the QCAT website, which links to the Supreme Court Library. Once there, we can use the word search function to locate relevant QCAT decisions. For example, if we are managing a dispute that relates to mould, we can search for published decisions containing that word. Whilst it does take time to read the decisions and determine their relevance to the situation we are managing, this sort of fact-finding can prove immensely useful.