Property Manager failure to do credit check

[Tully]

Hi,

I have a question. I asked a property manager to find me tenants. They found someone, I said do a credit check, which they said they did and billed me for it (I never saw they check). The tenant has turned bad, and left arrears of a few thousand. I now find out a credit check was never done, and the tenant had already defaulted on 3 loans, naturally had I known this I would have never given the property to that tenant.

What is my recourse? Property managers don't need to be registered with a body do they? so I can't complain there. Naturally I will be asking for the cost of the credit check that was never done (but this is nominal), but is there any other action I can take?

Any advice? Other than - next time get a copy of the credit check for myself.

Thanks.

[Maccachic]

Fraud for charging for a service that wasn't carried out? Associated damages?

Hopefully a lawyer will weigh in.

[Keys]

I am constantly noting that there are minimal checks on career tenants when I check them..

[Glizzle]

They might of actually done the Credit check, just not informed you they had bad credit.

[speights boy]

Send them an account for the total you are out of pocket.
When they refuse to pay.....disputes tribunal.

[mrsaneperson]

They might of actually done the Credit check, just not informed you they had bad credit.

Even worse then.

[Rosco]

Send them an account for the total you are out of pocket.
When they refuse to pay.....disputes tribunal.

I agree with SB.

- I would ask them to pay back the amount charged for the tenancy check
- I would ask them to pay for the arrears
- I would ask them to pay any costs with trying to collect the arrears
- I would ask them to pay any lost rent(period after this tenant until next was found)
- I would include an amount for your time and hassle, maybe $500

Then if they don't pay, take them to small claims dispute

Ross

[Avalon]

We had a similar issue with Eric Voice at Agile Property Management (Based now in Martinborough). Turns our he never did any credit or reference checks on any of our tenants - at least he has failed to provide any of the client files, and remaining tenants after we fired his lazy ++++ confirm they were never asked for references.

We found out the following.

1. Unless your contract with your PM specifically states that "For the charge of whatever, we will provide the following services..." then they have not in fact broken the contract you have with them. The price you pay them is a commission on rent, nothing more, and you have no legal comeback.

2. While you may get lucky and be able to take them to the disputes tribunal - if they never respond to your allegations, you cannot use the tribunal. No response = No dispute. Which frankly disgusts me. Clearly Eric knows full well how to wheedle his way out of dealing with the consequences of his actions. I have come accross several other businesses here who operate this way, and it stinks.

3. If all else fails - blog about them Write up reviews on every advertising medium, and spill their name on here. As long as you never say anything that isn't true - and you have the proof to back it up, you are legally allowed to tell anyone and everyone to avoid dealing with people like this, something I do at every opportunity when I meet a local property investor Also note that if naming and shaming on Property Talk, you need to sign with your real name.

Good luck - I hope you have better luck recovering your money than I did. I do however take some pleasure in the fact that since firing him, we have given a Wellington PM a foothold in the area, we have repaired the damage his tenants did to our property and are now able to rent with no issues, not a single missed rent payment, and we managed to charge the highest rent in the town for that particular type of property. Sometimes the best revenge is success

Helen Winterbottom

[Glenn]

I took over a management from a licensed real estate property management firm. I was not supposed to but did a credit check on the tenant. No check had been done what more the tenant was a bankrupt. I took that tenant to the tribunal and won. The REA had charged my client a fee for the credit check. So what is the point of ever dealing with people who have bits of paper hung up on their wall. You need to be a landlord. Take the risks and take the profits.

[Maccachic]

Avalon #1 They were charged for a credit check.

[sheree99]

Hi,

I have a question. I asked a property manager to find me tenants. They found someone, I said do a credit check, which they said they did and billed me for it (I never saw they check). The tenant has turned bad, and left arrears of a few thousand. I now find out a credit check was never done, and the tenant had already defaulted on 3 loans, naturally had I known this I would have never given the property to that tenant.

What is my recourse? Property managers don't need to be registered with a body do they? so I can't complain there. Naturally I will be asking for the cost of the credit check that was never done (but this is nominal), but is there any other action I can take?

Any advice? Other than - next time get a copy of the credit check for myself.

Thanks.

Tully.. can I ask you what checks you did on the PM company and the PM before you let them manage your property. Having been in the Biz for around 20yrs I've seen many owners chose a PM solely on the fee they charge, the cheaper the better and you often get exactly what you pay for. Did you check how long the PM company had been in business, many small companies tend to be fly buy nighters. Did you check to see if they have a property trust account and are audited. Did you make sure they are part of IPMA or are REAA.
Also before you decide that the bad credit would mean a bad tnt you have to look at how long ago the bad credit occurred and whether it had been repaid. Did the Pm do any reference checks and what was the result. Did the PM issue the correct warning letters when the arrears occurred and file with the Tribunal ? Was this person the only applicant for the property? In some areas all the applicants may not have the best credit so you may be looking at the best of a bad lot. Have you spoken to the Manager of the Company about the situation?

[Glenn]

From what I read here we do not actually have a property manager failing as suggested. It looks like they have asked a "letting agent" find a tenant then managed the property themselves. Society and property owners need to understand there is a BIG difference between a casual let and management. Far too many owners want someone to find them a tenant (for free) then want to manage the property themselves. Everything might in fact work out fine. What we have though is owners wanting all the swings and none of the round a bouts. They squeal like stuck pigs when things go bad but sing their own praises when things go good. I gave up doing casual lets years ago because of this very problem. I did a number of really successful lets for several owners then when ever things would go wrong they would get me to sort out the problem. So I was doing all the "round a bouts". Some of the owners were outright pigs the way they treated me. No matter how carefully or "casually" one finds tenants there will always be some problems to various degrees. Some will have major payment issues but some will just have lower cleaning and living standards. Every owner will react differently.

[TheLiberalLeft]

Glenn, out of interest, couldn't you just verbally and written contractually word your way around that problem by stating that your tenant-finding service starts and stops with the finding of the tenant. Once tenant is in-situ, your responsibility ends.

[Glenn]

Glenn, out of interest, couldn't you just verbally and written contractually word your way around that problem by stating that your tenant-finding service starts and stops with the finding of the tenant. Once tenant is in-situ, your responsibility ends.

True but the issue is always about repeat business. Now sure in a big city one can count on never seeing or hearing from them again. Small city one hopes that full management will come in as a result of your good service. I certainly built a business on that model.

[sheree99]

F. Society and property owners( In NZ) need to understand there is a BIG difference between a casual let and management. Far too many owners want someone to find them a tenant (for free) then want to manage the property themselves. Everything might in fact work out fine. What we have though is owners wanting all the swings and none of the round a bouts. They squeal like stuck pigs when things go bad but sing their own praises when things go good..

Agree 100%

Much of the attitude you speak of comes from the do-it-yourself mentality in this country yet the many so called Landlords have no idea what they are meant to be doing. A good % either haven't read the RTA or even know that such an Act exists while others just chose to ignore it completely. They are also happy to use the free, to them, casual letting service but expect to to be able to benefit from the expertise / experience of the letting person or in some cases the property manager.