Running a property management business, or being appointed as a property manager, comes with many obligations and responsibilities. These obligations and responsibilities are prescribed by the law in Australia. You will find these laws vary depending on the State or Territory you are operating in. This article discusses several legal considerations you should be aware of as a property manager to ensure you comply with your professional obligations.
Professional Obligations as a Property Manager
1. Duty to Act Ethically
As a property manager, you must act honestly, professionally and in good faith at all times. As such, you cannot be dishonest in your dealings.
Further to this, you cannot provide false information to property owners you are representing or their tenants.
2. Taking Out Appropriate Insurance Coverage
The law requires you to take out and maintain the appropriate insurance coverage to work as a property manager. If you run a property management business, you will likely need to take out professional indemnity insurance.
You must familiarise yourself with the insurance requirements in your jurisdiction and ensure that your insurance remains current at all times.
3. Having the Necessary Licences
In Australia, to work as a property manager, you need to hold the necessary licence. Although, if you are operating a property management business, you must acquire a corporation licence. The requirements for licensing vary between jurisdictions, but generally, the licensee must attain specific qualifications (such as a Certificate IV from an accredited institution) and complete work experience. In some jurisdictions, licences will expire if not renewed.
You may also be required to undertake continuing professional development each year to ensure your skills and knowledge remain current.
You risk being penalised and having your licence be suspended or terminated if you fail to comply with the licensing requirements.
Agency Agreement
You cannot act for a property owner unless you have a written and signed agency agreement in place that clearly outlines the scope of your authority. This is one of the key legal considerations as a property manager you cannot overlook.
Your agency agreement should include (among other things) the following:
- details of each party entering the agreement (including details of your licence);
- the property that is being leased;
- the terms of the agency agreement, including how the parties may terminate the agreement;
- the term of the tenancy, the proposed rental income and the payment provisions;
- the fees you will charge for your services (this may include a monthly management fee or a percentage of rent collected); and
- the property owner’s disclosure about the property.
In addition to the above, your agency agreement should clearly specify your authority as the property manager. Your authority may include advertising the property, tenant screening, rent collection and property maintenance. However, you should know these are not automatic rights you have as a property manager. You must be granted these rights in writing. A copy of the signed agency agreement must be provided to the property owner after execution.
Continue reading this article below the formCompliance With Residential Tenancies Acts
As a property manager, you must comply with the requirements outlined in the various state and territory tenancy legislation (Tenancy Acts). In addition to outlining the rights and responsibilities of property owners and tenants, the Tenancy Acts also regulate and govern the conduct of property managers.
Under various state and territory Tenancy Acts, you must, as a property manager:
- give prospective tenants mandatory information, including tenant information statements;
- oversee the tenancy agreement administration process (including providing required copies of the lease agreement to tenants and landlords);
- manage funds in relation to the rental property, such as the collection of the bond and rent;
- maintain the property in accordance with the agency agreement signed by the landlord; and
- manage and participate in dispute resolution, where required.
The obligations listed above are not exhaustive and will vary depending on where the property management services are being provided.
This factsheet provides an overview of a real estate agent’s professional obligations.
Trust Account
Property owners trust property managers with the management of rental income received. As such, legislation in Australia requires property managers to establish and maintain trust accounts for any amounts received on behalf of property owners. The trust account needs to be separate from your general trust account.
The trust account must be handled in accordance with strict accounting and auditing standards to ensure funds are not used in an unauthorised way.
Key Takeaways
To ensure that you are compliant with your obligations as a property manager and to avoid any penalties or the suspension or termination of your licence, you must ensure that you have a comprehensive understanding of the laws and legal considerations that apply to you and your profession. Further, you must ensure that you comply with any legal requirements to avoid incurring liability.
If you require assistance understanding all your obligations as a property manager, contact our experienced property lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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