Property manager issues
Question from Emily updated on 25th January 2019:
We have had a terrible experience with our current property manager who failed to advise us of an issue with the tenant early in the tenancy. This has now resulted in a Tenancy Tribunal hearing where the tenant is claiming large damages at the end of their tenancy. The property manager had a full management agreement and was named on the tenancy agreement (we as owners are not named) and is also named in the proceedings.
We are considering terminating our relationship with the property manager and have two questions. Are they still bound to appear in the tribunal as the defendant even if no longer our property manager? If the Tribunal finds against the Landlord (property manager) are they liable for the penalty (as opposed to the owner) who is not named in the proceedings?
Our expert Bernard Parker responded:
You have not mentioned the nature of the “issue” that has given rise to the tenants lodging a claim against the property manager. Was it something that the property manager failed to do, even though they had your authority to act? Or was it a situation where the property manager could not act because of a lack of authority from you?
Your property manager is your agent and must act in your interests within the authority that they have been given. Your management agreement with your property manager should specify how the agreement can be terminated.
If you terminate the management it is possible that the property manager could ask the Tribunal to recognise you as the Landlord and have you named as respondent, either jointly or in place of the property manager. If the Tribunal makes an order against your agent there is a possibility that the property manager will have a subsequent claim against you in the Disputes Tribunal, even though you may not be a party to the Tenancy Tribunal proceedings.
The range of outcomes depends on the facts before the Tenancy Tribunal. I suggest you let the hearings take their course.
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.