Property management perils

Property management perils

21 August 2020

By Peter Moran

Professional negligence claims against property managers are on the rise. Allegations can sometimes verge on the bizarre, which underlines the reality that landlords and tenants alike are looking for someone to blame when problems arise. Here are some recent examples of real-life claims.

“Can I fix it?”

A British tourist was occupying a property over the Christmas period on a sub-lease. During his stay, he was injured when a ladder he was using to access a rooftop terrace collapsed.

The primary tenant had previously made a number of complaints to the property manager about the safety of the ladder. The property manager had passed these complaints on to the landlord. On different occasions, the property manager had asked for authority to arrange maintenance of the ladder, however this authority was not given by the landlord.

Despite knowledge of the need for the ladder to be fixed or replaced, the primary tenant nevertheless continued to allow short-term holiday stays on a sub-lease basis.

The injured sub-tenant sued the primary tenant, the landlord and the property manager.

TIPS

  • Maintain a paper trail (or email trail) showing that safety issues requiring maintenance or repair have been passed on to the landlord.
  • Always make a file note of verbal discussions with the landlord and confirm any instructions in writing.
  • Don’t hesitate to express concerns about the possibility of injury and press for urgent instructions.
  • In such circumstances, recommend to the primary tenant that they should cease any sub-leasing of the property until the issue is resolved. Similarly, give the tenant clear directions to avoid the area until such time that repairs have been carried out.
  • In extreme or dangerous circumstances, recommend to the landlord that they terminate the tenancy to allow time for any safety issues to be rectified.

“I knew that!”

Another potential area of exposure is where, by reason of the ingoing inspection report or ongoing periodic inspection reports, a tenant may allege that the property manager was on notice about particular issues.

In a recent case, a tenant’s guest was injured when they fell off the verandah due to the balustrade giving way. The ingoing inspection report referred to the balustrade being damaged and wearing away.

In another case, a tenant made a claim when they suffered injury due to timber floorboards giving way. A periodic inspection report prepared by the property manager including photos showing the damaged floorboards, including a number of existing holes. Despite this, nothing was recorded by the property manager in relation to repairs being carried out or recommended maintenance. However, a later periodic inspection report did show some form of repair to the floorboards.

TIPS

  • If you are on notice of an issue requiring maintenance or repair, recommend to the landlord that it be attended to as soon as possible.
  • Always notify the landlord of any maintenance and repair issues as soon as possible. If an incident occurs after an issue is drawn to your attention but before you’ve brought it to the attention of the landlord, understand that you’ll likely be the main target of any claim.
  • Suggest to the landlord that they come along with you to all ingoing and ongoing inspections.
  • Where a maintenance or repair issue is serious, recommend to the landlord that they not permit the tenancy (or terminate any existing tenancy) to allow time for the issue to be remedied – and be sure to make a file note of this advice. If the landlord chooses to ignore your advice and a tenant (or someone else) is injured, you’ll be in a much stronger position to resist any claim made against you.

“You should have told me”

A tenant occupying a property wanted access to the carpark, despite the fact that his lease did not provide a parking space. The property manager agreed, but told the tenant that there was no remote control available for the garage door and he would have to open it manually.

The tenant sliced the top of one of his fingers off when closing the garage door. In a claim against the property manager, he argued that he should have been warned of the possibility that injury might occur.

TIPS

  • When permitting a tenant to use parts of the property not granted by the lease, be careful to provide the same level of advice as if access to that part of the property were granted by the lease.
  • Keep file notes of any advice given to the tenant.

“Is there a dog in the house?”

A recent case before the NSW Civil and Administrative Tribunal saw a landlord seeking an order for repayment of management fees paid to the property manager.

The landlord claimed that the property manager had breached the Management Agency Agreement by failing to disclose that the tenants had two dogs before the Residential Tenancy Agreement was entered into. The landlord also asserted that the property manager, without authority, gave approval for the tenants to keep the dogs at the property.

While the landlord’s application for repayment of the management fees was unsuccessful, the property manager had to go through the frustrating and time-consuming process of responding to the application, preparing evidence and arranging representation.

TIPS

  • Always gauge the landlord’s position about the keeping of pets on the premises and make a file note.
  • Specifically record any instructions from the landlord regarding pets in the Management Agency Agreement.
  • Make it a habit to refer all aspects of a prospective tenancy to the landlord and record any instructions or concerns they may have.


DISCLAIMER
The information contained in this article, which is current as at the date of publication, provides only a general overview of subjects covered. It is not intended to be taken as legal advice or advice regarding any individual situation and should not be relied upon as such.

Let Realcover protect your business

Realcover’s professional indemnity insurance policy has been designed with your needs in mind. For more information and to discuss your insurance needs, please contact Realcover by speaking with JLT representative on 1800 990 312 or email realcover@jlta.com.au

PETER MORAN is a Partner at Colin Biggers & Paisley (which is a panel lawyer of QBE).

Realcover is underwritten by QBE Insurance (Australia) Ltd and managed by JLT.

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