Indemnity for property managers
Question from Megan updated on 7th July 2016:
Our property mangers have failed in many areas of our rental management contract. Late and absent rent from their account, incorrect bond collected, failure to inspect (subsequent damage), failure to quote of repairs with many more dollars spent than agreed to in non emergency situations. We would like to take the case to disputes tribunal but we have noted the following clause in the small print of our contract:
"We as owners acknowledge that we indemnify the agent against all actions/claims/costs and expenses of any kind which may be taken or made against the agent or exercise of any powers,duties, or authorities contained in this management authority."
Does having signed up to the contract which includes this clause rule us out of taking this dispute to the tribunal? We are owed thousands of dollars. Or, as they were acting as our agents, do they have an obligation to act in our interests?
Our expert Bernard Parker responded:
You have listed a few areas where you believe your property managers have breached their contract. Some of these (such as late payment of rent) may be beyond the property manager’s control. In such issues the tenant may well be at fault.
However, there are some basic functions that the property manager must carry out in fulfilment of their contract with you. You are entitled to rely on the property manager as your agent to carry out the duties, such as inspections, that have been promised.
The Agent Indemnity clause that you cite is not uncommon with property managers’ contracts. Its purpose is to protect the property manager against orders of the Tenancy Tribunal where the agent has not complied with the required maintenance owing to a lack of spending authority from the property owner.
In such an instance the Tenancy Tribunal order for specific work to be done is really an order against the property owner. The Indemnity Clause says precisely that and any order against the property manager while they are acting on behalf of the property owner is indemnified by the owner as his own cost.
However, an Indemnity Clause cannot insulate a property manager against their contractual duty to act in the best interests of the property owner. I suggest you take these issues up with your property manager. Your final recourse, if you cannot sort out the matter appropriately, is an application to the Disputes Tribunal.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.