EAC makes major update to the Residential Management Agency Agreement

17 Nov 2017

After extensive industry consultation, we have incorporated several requests from our EAC Members into the new Management Agency Agreement (MAA).

These changes we performed in conjunction with our legal partners who provide legal support and advice on our real estate forms.

The enhancements include:

  1. We have now provided the option to charge a re-letting fee and a re-negotiation lease fee. Whether a new tenant is sourced, or an existing tenant is re-contracted to a new fixed term lease, a fee can be levied by the Agent under the terms of the new MAA contract.
  2. EAC has received a lot of feedback regarding the arduous Appeal and Stay procedures at NCAT in residential proceedings. Previously when the parties were contracting, the parties would have not thought or considered that such a laborious and strict procedure must be followed. The new MAA contract provides an opportunity to charge for the preparation and filing or defence of a Stay or Internal Appeal at NCAT. Procedurally an appeal for a residential proceeding must be lodged within 14 days of the final decision. The Reply to Appeal must be submitted within 14 days, and four copies of the Reply must be prepared and filed. The Reply to an Appeal can be quite technical. Ordinarily, EAC Members as part of their membership would be taking advice from the EAC Membership legal team on the best approach to completing the Reply to and/or appearing in a Stay application.
  3. Moving now to appearing at NCAT before the Appeal Panel. Upholding the integrity of a successful outcome for a landlord is preponderant on not only an understanding of the common law but also the correct presentation of one’s case. The addition of a further entitlement to charge a fee for appearing in an Appeal will facilitate the agency recovering their true costs when entering an appearance before the Appeal Panel in residential proceedings.
  4. The EAC Members legal support line frequently receives inquiries regarding pursuing action against a tradesperson for substandard repair work undertaken at properties under management. It has been noted in many instances that there is no home building contract. Instead, the contract takes the form of a quotation from a tradesperson and a written job order from the agency. The new MAA contract provides authority for the agent to sign home building contracts on behalf of the Landlord under the Home Building Act (NSW) for all work over $5000.00 including parts and labour. Home building contracts are vital as they provide a mechanism to protect your landlord under the Home Building Act. A Building contract for work between $5.000.00 – $20,000.00 is available to download for free from the NSW Fair Trading website.
  5. Under the warranty provisions, the MAA contract allows the landlord to warrant compliance with certain statutory requirements to the agent. Including;
    • The Landlord warrants that the premises have been released from rent control. Although there are very few rent-controlled premises remaining in NSW, the warranty does operate for tenancies falling under the regime which is specifically excluded from the Residential Tenancies Act.
    • The Landlord warrants that the property under management is individually metered for water and electricity and contains “Water Efficiency Measures” as prescribed in the Regulations under s.39. The MAA contract now requires the landlord to furnish the Water efficiency certificate to the agent within seven days from signing the MAA contract. Increasingly Tribunal Members require agents to produce evidence that the water efficiency measures are in place before making orders for the payment of water usage charges against a tenant in Tribunal proceedings.
    • Next is a warranty as to insurance which inter alia requires the landlord to keep the premises insured. The Landlord should seek independent financial advice about building insurance, contents insurance, public liability, voluntary workers insurance and Landlord protection insurance. Insurance is very important as a risk management tool. This new provision prompts the discussion with a Landlord concerning the types of insurance policies available. Landlord protection insurance should be encouraged while the agent should be mindful not to overstep by giving financial advice. The Agent can speak to their experience in previous claims and the effectiveness of certain policies in comparison with Bank insurance policies.
    • The Landlord warrants that the property complies with the Swimming Pool Amendment Act (NSW) 2012. The Principal shall furnish a Swimming pool compliance certificate to the agent within seven days of signing the MAA contract (if a pool exists at the property).
  6. Finally, the material fact provisions have been overhauled to ensure that proper instructions are received from a landlord at the commencement of the management. This measure will ensure that the agent is meeting their obligations under the Property, Stock and Business Agents Act and Regulation. It is paramount that these material fact disclosure boxes are not left blank. We would expect to see “n/a” if the disclosure does not relate to the particular property.

In 2018 we expect a raft of new legislation that will directly impact on the Management Agency Agreement. Until that time, the new EAC Management Agency Agreement incorporates feedback from our Members that will facilitate a more streamlined authority. Moreover, it seeks to ensure that agents who are entrusted to manage the tenancy relationship can do so profitability and professionally.

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