Landlord Liability

In the legal game, residential tenancies have been considered to be rats and mice. They have never been considered major ticket items that deserve legal attention. This is no longer the case.

Leverage is increasingly seeing a movement toward expensive claims toward both the agent and the landlord. Presently, we have a matter sitting on our desk where the landlord is claiming $50,000 worth of damages against the tenant. We also have a tenant claiming $100,000 against the landlord for loss of amenities. We can no longer consider property management to be a low cost, low risk item. It is now a high-risk item that needs attention in any risk management process.

NCAT has power to hear claims up to $40,000. Up to $30,000, solicitors are permitted as a matter of course. Moreover, if a landlord, tenant or agent loses in such a battle, costs usually follow. In other words, if you lose, you pay the winner’s costs.

The $50,000 claim is, in our opinion, frivolous and vexatious. Nonetheless, when it appears before NCAT, a motion will be moved to dismiss the claim because it is outside jurisdiction. NCAT will offer the landlord the right to reduce their claim to $40,000 and thereby keeping it within the jurisdiction. The landlord will usually accept this, if it is a vexatious claim, and you will be left in NCAT. From this point, legal action can become costly and unsatisfying.

The $100,000 claim now involves solicitors. The solicitor has indicated that they will not seek an NCAT hearing but will take the matter to the district court. This tenancy matter is clearly now an extreme item.

In future, in issues of Leverage News, we will examine the issues in both cases.

The time has now passed where inexperienced people can be shown a property portfolio and be left to manage it. No amount of training from a registered training organisation will suffice. More and more, the individuals involved in property management will be required to obtain a sufficient legal background to be able to answer these cases. Remember: up to $30,000, a solicitor will be refused entry to NCAT. It will be left to the property manager to deal with these issues.

It is fast approaching, if it has not already arrived, that property managers are specialist real estate agents and can no longer be seen as that part of the agency that is tolerated and not enhanced. It’s always been the hard beat, the cash flow and the only asset in a real estate agency. It is now the most vital area to provide training and expertise.

 

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538