Terminating property management contract

Question from Candice updated on 30th November 2015:

I wish to terminate my property management authority as the company has been providing a very poor service (3-4 weeks for maintenance items to be done, not contacting the tenant if a inspection is cancelled, etc) and now one of my tenants is even refusing to deal with them.

However, the authority says that "in the event the tenancy created is a fixed term tenancy, the Owner shall not be permitted to terminate this authority prior to the expiry date of the fixed term, except at the sole discretion of the agent".

Have you come across this situation before and do you have advice? The reason I wish to terminate is because they haven't upheld their side of the bargain - so it does't seem right that that can lock me in like this...

Our expert Bernard Parker responded:

Such clauses are not uncommon in property management agreements. They recognise that the property manager does a lot of work in seeking, vetting and signing tenants for your property, and the property manager wishes to recover the costs of such work through management fees over the duration of the tenancy. In normal circumstances this suits a property owner as well as the property manager, as it provides certainty for both parties. As it is a contractual term, you must abide by it.

However, your property manager is your agent, and must act in accordance with your best interests. If the property manager is not carrying out the duties required by the agreement, you may consider that they have breached the agreement. You should discuss your concerns with the property manager and try to get resolution of your issues.

If you cannot resolve matters and you still want to terminate the management, you may apply to the Disputes Tribunal for termination of the management. Be aware, though, that you will have to establish that the agent has breached their management agreement so seriously as to render the agreement unworkable. Simply being dissatisfied is not enough reason to terminate the contract.

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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