Establishing standard practice

Question from Ajit updated on 11th May 2017:

I got a well known real estate agent to find a tenant and manage the property. The agent obtained a letting fee from the tenant but charged me for credit checks done on two prospective tenants. Is this correct?

Also, the agent wants me to pay the water bill and they will claim the expense from the tenant and pass back to me when the tenant reimburses. I feel the agent is trying to take a commission out of the money that the tenant will pay for the water bill. Is this standard practice? Can I ask the agent to inform the tenant to pay the water bill?

Our expert Bernard Parker responded:

Credit checks can incur costs that can be on-charged to you because they were done as part of the service to you in selecting a tenant. Some agents do not on-charge credit checks if they can be recouped via a letting fee. Your contract with your property manager will specify what charges you have agreed to pay and which ones the property manager has agreed to carry.

As a property owner you are required to pay all rates (including water rates) to your local authority. You cannot present the whole water invoice to your tenant and ask them to pay it, because a tenant is responsible only for the charges related to their consumption. They cannot be charged the fixed charges portion of the water invoice. When a property manager undertakes an invoicing and collection activity for you, there is a reasonable expectation that the property manager can charge you for that service. Whether you are charged a flat fee for the invoicing or a percentage of the tenant’s invoice will depend on the management agreement that you have with your property manager.

Bernard is principal of Quinovic – Kapiti-Mana. Quinovic's outstanding people and systems provide the most professional, effective and reliable residential property management service in the NZ market for over 30 years.

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