3. AN INTRODUCTION TO REAL ESTATE PROPERTY …realestatecertificateofregistration.com.au/module...3.1 Agreements When you work in Property Management you make two types of formal Agreements

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3. AN INTRODUCTION TO REAL ESTATE PROPERTY MANAGEMENT

3.1 Agreements

When you work in Property Management you make two types of formal Agreements. These Agreements must be

completed accurately and fully and can mean a lot to salespeople in terms of claiming fees. If the Agreements are not

completed accurately and fully they can be declared null and void, which means that there is no agreement in place

so the Landlord is not required to pay the Agent for their services.

1. The Agency Agreement with a Landlord

The Agency Agreement with the Landlord is the agreement between an Agent and a Landlord that will detail what

management duties an Agent will take care of on behalf of the Landlord.

For example, collection of and the depositing rent into bank accounts, carrying out the routine inspections, processing

applicants, entering into and signing tenancy agreements, engaging tradespeople and so on. That is really the

agreement between Agent and investor or Landlord. It gives us the power to have the ongoing management duties

over that property. The Agent acts as the extension of the owner as he or she has to make all the decisions on behalf of

the owner due to the Agreement.

The property manager is paid a fee, which is detailed in the Agency Agreement. The fees outlines how much Agents will

be paid for providing ongoing services.

There are 2 kinds of ‘agency agreement’:

a) A Leasing Agency Agreement

A Leasing Agency Agreement is an agreement between the Agent and the Landlord for the Agent to find them a

Tenant. The Leasing Agreement stipulates such things as:

• The Agent is able to show the property.

• The Agent is able to select and enter into Tenancy Agreements with a Tenant, and for those services, fees would

be charged.

Once a Tenant has been found, the Agent’s management role is over under this agreement alone.


b) A Management Agency Agreement

A Management Agency Agreement goes into a little bit more detail as to the ongoing management and tasks

associated with managing a particular property, such as ensuring repairs are taken care of and property inspections

are conducted during the period of the tenancy agreement. This is the most popular agency agreement.

Remember, it is extremely important that these Agency Agreements are completed correctly as mistakes may result in

the agreement being deemed ‘null and void’, which then could hinder the Agent in claiming fees for the management

of a property.

2. The Agency Agreement with a Tenant

With Tenants, an Agent acts on behalf of the Landlord so the Residential Tenancy Agreement is contract between the

Agent acting for the Landlord and the Tenant.


3.2 Listing a Property for Lease

As the Landlord’s chosen Property Manager, it may be up to you to conduct a comparable analysis of properties similar

to that being leased (size, condition, features, location, etc). Following this analysis, it is up to the Landlord to agree (or

disagree) with the dollar amount you have reached. This rental amount is known as ‘market rent’.

A property manager is not a building inspector, but you can see wear and tear and if something looks a little bit

suspicious. Do a walk-through. Make sure the blind cords are safe, test the smoke alarms and make sure they are in

good working order, make sure the pool fence is compliant. The best thing is to recommend a safety report. Some

agencies use a service called PropertySafe. That way, Landlords are fully aware and fully advised of the risks they may

have at their property.

If a Landlord is not prepared to spend money on repairs and maintenance and making sure that the property is safe for

their Tenants, then it’s not the type of client that you (from an ethical and legal perspective) should be working with.

The Ingoing Inspection Report is part of the Residential Tenancy Agreement. The Inspection Report is carried out prior to

the Tenant signing their agreement. It is a very detailed report on a property. It goes through every room, and it reports

on the walls, the carpets, the ceiling, the lights, how many power points there may be in a property. Does it have a

dishwasher? What are the blinds like? Are their curtains, and so on? It’s detailed. It lists everything that that property

comprises. If the property has blinds, what colour are the blinds? If the property has carpet, what’s the condition of the

carpet? Mostly there are check boxes that require you to identify - is it clean, undamaged, and working? It’s up to the

property manager to determine those things and jot them down on the report. The purpose of the report is to ensure

that the Tenant then returns that property in for the most part, the same condition, less fair wear and tear.


3.3 Anti-Discrimination

Discrimination is bias or prejudice resulting in denial of opportunity, or unfair treatment of a person. Discrimination is

practised commonly on the grounds of age, disability, ethnicity, origin, political belief, race, religion, and gender, etc.,

factors which are irrelevant to a person’s competence or suitability.

It is unlawful to discriminate against someone because of their gender, race, sexuality, age and marital status, or

whether or not a Tenant has children.

As a service provider, you need to be very aware of anti-discrimination laws. You might find somebody walks in off the

street looking for the rental list, they might not look the best, or they may have a tribe of children with them, but you

cannot discriminate against any of those things.

There are only two things that should be taken into consideration when taking on an applicant - their ability to pay rent

and their ability to maintain the property.

Landlords can decline an applicant for a reason - they don’t always have to disclose the reason. They can select the

best quality applicant for their property. One applicant may have children, one applicant may not. It all comes down to

the quality of the application and the type of Tenant that that Landlord is looking for.

For example, should a Landlord instruct you that they won’t look at any application from anybody under the age of 30,

there are a number of things you could do:

• Walk away from the business if you wish – you cannot withhold showing people through that property who are

under the age of 30; if you did, you would personally be in breach of the Anti-Discrimination Act regardless of

whether you are acting upon the request of a client.

• Sit down with the client and explain to them their responsibilities when it comes to the matter. They may not be

aware of their responsibilities about anti-discrimination. It is better to first educate and then make a decision

regarding working with your client rather than taking hasty action.

Show every property to anybody who wants to have a look through, because you don’t know their circumstances or

their financial background or where they’ve come from until they apply. Judge the paperwork on its own merits.

A Landlord can’t discriminate, but they do have the opportunity to select the best Tenant or the best fit for their

property. As already stated, the best Tenant for any property should be based solely on two criteria: the Tenant’s ability

to pay the rent and the Tenant’s ability to maintain the property.


3.4 Inspections and Rent Increases

As a property manager it is your responsibility to the Landlord and the Tenant that the property is being maintained and

that you are inspecting the property on a regular basis. Firstly, to ensure that the Tenant is looking after the property but

also to note down any repairs that may require attention that the Tenant has not yet brought to your attention.

An Agent or the Landlord can legally carry out four inspections of a Leased property per year. They can also carry

out extra inspections for different items such as looking at maintenance of specific areas such as gutter repairs, or tile

grouting etc. Most agents inspect properties every six months, however from time to time you will have circumstances

where a Tenant may not have a renting history, such as young age Tenants. In situations such as this, ensure the lines of

communication are open and ensure they are aware that you will be performing quarterly inspections of this property,

and if things go as planned, then potentially move to six-monthly inspections after the first year.

In terms of rental increases, these really can occur at any time the market goes up, providing the Tenant is not on a

fixed term Agreement. If you have a Tenant on a fixed term Agreement then the rent cannot be increased until the

current agreement ends and a new one is about to be signed.

When making rental increases you must provide at least 60 days’ notice to the Tenant. This is however, somewhat of a

grey area and some agents will say that notice can’t begin until the fixed term ends. Other agents will state that notice

can, but the fact is that the rent cannot physically increase until the fixed term ends. The ruling is ambiguous, however

as with all legal obligations, you should err on the side of caution.


3.5 Tenancy Changes and Terminations

Other than a Tenancy Agreement coming to the its end and a Landlord wanting a fixed term termination, one of the

most common reasons a Landlord would decide to terminate a Tenancy Agreement would be due to unpaid rent. A

Lease can be terminated once the Tenant is 14 days or more in arrears, so basically the action of terminating a tenancy

can take place on day 15. If this is to happen, often the unpaid rent amount will be taken out of the bond money that

is paid at the start of the tenancy.

A property may have been leased for 12 months and the Landlord may want to end the fixed term with this Tenant for

one reason or another, so they could initiate an end of fixed term termination. They may choose to issue a ‘No Grounds

Notice’, which basically means, “You’re not on a fixed term agreement at the moment but I want my property back or I

want you to vacate, so I’m going to give you a no-grounds notice”.

If the Tenant is on a periodic tenancy and the property has sold, and the new owners choose not to continue as Land-

lords, the Tenants will receive a 30-day notice at the point of exchange and would have to vacate the premises within

this timeframe.

If the Tenants are on a fixed term tenancy and they have a period of time left on their agreement for the property that

has sold, then the tenancy remains in place. The Tenant is able to stay on at the property and the new owner then takes

on that tenancy agreement up until the end of the fixed term, at which point discussions regarding termination can

commence.

In the Tenant’s eyes, there’s not a lot of difference between a fixed term agreement and a periodic term agreement.

A fixed term agreement is when a Tenant is on a tenancy agreement that is within the period of the dates within the

contract. It might start on 1st December 2016 and then run until 30th November 2017. Once that time has elapsed,

all the terms and conditions of the Residential Tenancy Agreement still remain the same and the Tenants are still on a

Lease; it’s just not locked into fixed term and it goes on to a periodic tenancy. When that happens, the notice periods

change.

If the Agreement is at the end of the fixed term, there is a requirement for 30 days’ notice to be given to the Tenant. If

the Agreement was terminated during a periodic term and there are no grounds for termination, that would require 90

days’ notice.


Whenever you issue a notice of termination, you must deliver it in writing either by hand or by post. If posting the written

notice of termination, you have to include four business days for postage. These are known as ‘counting days’.

As the mediator between the Landlord and the Tenant, it the job of a property manager to avoid disagreements going

to the Tribunal where possible. It is good practice to encourage both parties to try and negotiate outside that forum, but

if a case does go to the Tribunal it is most likely because the Tenant is upset about something and they want to termi-

nate their tenancy based on that particular reason. It may be that the property has come on the market for sale and

they weren’t advised prior to signing their tenancy agreement, and they wish to terminate the agreement and walk

away without penalty. It could be that the Landlord is not maintaining the property and keeping it in good condition,

or it could just simply be that they want to break their agreement and the Landlord is not allowing them to walk away

without paying a fee for breaking the tenancy agreement early.

You can help Landlords and Tenants to reach amicable agreements. That is your job as the mediator. It is so important

that you try and keep the relationship in a good state. If you’ve got a happy Landlord and a happy Tenant, it will make

your job a lot easier. If you have a Landlord who looks after their property and they respect the Tenant and they do re-

pairs in a good timeframe, and you’ve got a Tenant who pays their rent on time and keeps the property in a clean and

tidy state, then everybody is happy, so it’s a win-win.

When that relationship becomes soured, a lot of emotions come into play. People start to get upset about little things.

They don’t want to let things slide, and that’s when the agent really needs to up the game with management and

negotiation skills. Once a matter reaches the Tribunal your power is gone and the decisions are made by an external

authority, so it doesn’t always mean that they both walk away with the win.


3.6 Bond Claims

Under the Residential Tenancies Act 2010, when a Landlord wishes to make a bond claim you cannot do so for any old

reason, as much as some Landlords would love to. The process is basically: the Tenant vacates, the Agent carries out

the exit inspection, and then at that inspection there may be some cleaning or some damages or some items that need

to be taken care of that are the Tenant’s responsibility. The Tenant can agree for those items to be paid for out of the

bond, or they may dispute them.

Once the exit inspection has been conducted, you have carried out the cleaning or repairs, or you have quotes for the

work required, you can then make a claim on the residential bond through Rental Bonds Online, or by submitting paper

documentation to the Bond Board through NSW Fair Trading. The Tenant can choose to agree to that, or they can

dispute it. It’s very simple for them to dispute it; they just don’t sign the form and it goes to the Bond Board which issues a

notice to the Tenant saying, “Are you happy for this claim to go ahead, or would you like to take actions or steps to go

ahead and dispute?” Then at that point they can take the Tribunal path.

Agents can easily log on to Rental Bonds Online, view all of your bonds, confirm that there are bonds being held on

properties, look at bond numbers and make sure that bonds are held or paid out. Especially when you’re going through

at the end of the month and you want to make sure that all the bonds are paid out or all the bonds were received, you

can log on and do a quick bond audit.

All parties involved also need to know the difference between what we call ‘fair wear and tear’ and ‘accidental dam-

age’.

Fair wear and tear is best described as damage which has accumulated over time, such as marks on carpets caused

by foot traffic, or weather damage where outside furniture was placed. Fair wear and tear is not subject to bond claims.

Accidental damage is best described as damage being caused by a sudden and unexpected event. This might in-

clude spilling red wine on the carpet or the breaking of a window. Accidental damage can be subject to bond claims.


3.7 Key Registers

People think keys are very simple, but keys in property management are provided to many people. They’re given out

to people who are conducting trades services, electricians, gas technicians - those keys are access to somebody

else’s property and their privacy. Keys are a hugely important part of the real estate security process. Keys must be

tagged and must not stipulate the property address in the event that somebody drops them or they get lost. You must

remember that it’s your responsibility to take care of the keys, know where they are at all times, and make sure that they

are safe.

Some agencies have computer key registers where there is a code to the key and a secure key box. Some companies

traditionally have a paper-based key register such as an A to Z phone book where they write details of the property in,

which in reality is not the best scenario in this day and age. If somebody broke into the office and took the book and

the keys, they potentially would have access to hundreds of properties; whereas with a computer software system you

need to log in and use passwords.

Every day the key cabinets need to be locked so they are safe and secure. If your agency has a paper version don’t

ever leave it laying around, because again that would be a breach of security. You are responsible for those keys and

they have to be returned at the close of business.

Rules for the dispatch of keys:

1. Make sure the Tenant has authorised that the key can go out

You can’t just give keys out to peoples’ properties and have people entering without notice. For example, a

plumber arrives with a work order to fix a dripping tap. The first thing you ask is, “Has the Tenant given permission

for you to take the keys?” If she has, give the Tenant a quick call to confirm. Once you have determined that they

have permission from the Tenant to access, ask the plumber to fill out the key register. The key register basically

tracks all the keys, because in property management keys are coming and going all the time and you need to

know who has them and at what time.

2. Note the details

Note the date, who’s taking the keys, what time they are taking them, ask them to sign, and ask for their business

card as well.

3. Get the keys back

Remember to get the keys back before the end of the day, and that they are then secured either in a lock box or a

safe within the office. The key register should show that particular keys are not in the office. It is your responsibility as

the property manager to make sure that these are retrieved before you leave the office.


3.8 Property Management Forms

The Management Agency Agreement for Residential Property

This is the most important document between the Landlord and the Agency. This Agreement gives the Agency

permission to manage the property on behalf of the client. It is really important that you complete the form correctly

and in detail. You have legal obligations that must be fulfilled.

Make sure that you have the Owner’s details for all the properties that you will be managing. If there is more than one

Owner on the title, all Owner’s details must be on the Agency Agreement.

Ensure that the Owner’s details are correct and that all your Agency details are completed, including licence numbers

and ABN. Make sure the property address is clear.

Write down the details of any work that needs to be completed by the Owner.

Ask if smoke alarms are installed in the property, and ensure that they are compliant. Note when the batteries were

last changed or ensure new batteries are installed regardless. There is a section in the form that prompts you to ask the

Landlord specifically about this.

The Landlord’s information appears again on the second page, as well as the Landlord the Agency details and

property address. Fill in the permitted number of occupants. Refer to your Management Inspection Report.

Section D Write down the date the Agency Agreement is effective from. This is often the date that you’ve signed the

Agreement with the client, which gives you permission to start acting on their behalf from the date specified.

“The Agency Agreement will be effective from X date and can be terminated thereafter in writing by either party

giving not less than X days’ notice.” You’ll find that most Agencies stipulate thirty or sixty days in this section, which gives

everybody time to source other alternatives if the Agreement isn’t working for them.

Section E runs through the Agent’s authorisations. It’s really important that you sit down with your Landlord and make

sure that you are either ticking or crossing these boxes, depending on what they want you to do for them. You’ll find

that in most cases all of these boxes will be ticked because it’s part of your Management Agreement of the things

that they want you to do for them. It runs through things such as obtaining and verifying references from prospective

Tenants, selecting Tenants, collecting rent, and serving notices if required. It’s very important to confirm all this so the

Landlord knows exactly what authorisations they are giving you.

The third page is a continuation of the authorisations that the Agent has from the Landlord, and runs through things such

as advertising the property and responding to and representing the owner at the Tribunal.


It also runs through smoke alarm installation and what to do at the end of each tenancy. Item 2 is Term of the Tenancy

and the Rent Amount. It can pay to be a little broad when it comes to this because the term of each Tenancy

Agreement can vary. You might put down somewhere between 6 to 24 months here or you might put down 6 months

only, depending on the requests from the Landlord, and the rent amount would always be at market rent per week,

fortnightly or monthly. It’s helpful to have some flexibility when it comes to the terms of the Agreement.

It also includes other authorisations or limitations, so this might be a where the Landlord instructs you to carry out other

things that are not listed on the Agency Agreement or might restrict you from doing certain things when it comes to

managing the property.

Section F is Lease advertising. It stipulates the property is to be advertised or promoted in a certain way. Often you’ll find

items listed such as database marketing, internet marketing, and advertising in the local newspaper. Fill in everything

here so the Landlord is clear on how you are going to be leasing and advertising their property. There’s a question to

ask about whether or not the Landlord wants a sign at their property, because some Landlords do wish to maintain their

privacy.

Section G is probably the most important part of the Agreement because it states what you’re going to be paid for your

services. The left hand side of the column describes the terms of service fee, management fee, letting fee and your

tenancy agreement fee. This is where you disclose any fees and charges that the Landlord will incur from your office. It’s

important to ensure that it is accurate and that everything is included because if something is not on this Agreement,

then it is not due and payable by the Landlord. If you miss something out here, you cannot charge for it. It notes when

fees fall due and are payable. At most times it would be at the end of the month, but you might find it’s at each

disbursement depending on how your Agency operates.

Section H is expenses. This includes letting advertising, administration expenses such as office and clerical expenses

or Tribunal outlays and bank charges. Once again it’s very important to make sure that you list everything thoroughly

because if it’s not listed here, you cannot charge it to the client.

Section I is the Agent’s disclosure. It reads that, “The Agent shall be entitled to rebates, discounts, and/or fees as

disclosed below”. Disclose things, especially rebates you may receive as the Agent. Some agents will receive rebates

or discounts for referring certain services. The most common with property management is a Landlord insurance policy.

You may find that the insurer pays a fee to the agent of $10-$15 for every client who is referred to them. If you don’t list

it you are in breach of your obligation. You need to make sure that the Landlord is very aware that, although you might

be referring a number of different policies to them, policy A or policy B will give you a rebate of X amount.

Section J is Property Maintenance Contracts. The Landlord might have their own gardener or their own pool

maintenance company. They may have somebody who does their own electrical work who they would prefer to use

rather than your own tradesmen. List those people down so the Landlord has the option to use their own property


maintenance contractors. It’s not very common but you get the odd one, especially if they’re in the building industry or

they are a tradesman themselves.

Section K is Insurance and Payments. The Landlord details what they would like you to pay as the Agent. Some offices

offer to pay anything that’s to do with the property. It could be the building insurance, the Landlord insurance, the

strata levies or any other invoice, cost or expense that the Landlord will incur for the property. It can be easier for the

Landlord and their accountant at the end of the year when they just have one statement that shows all the income

and expenses. You could list those things the Landlord wants you to pay for them and the information with policy

numbers or expiry dates.

Section L is Rent and Statements. This is where the Landlord can specify how they want to receive their rental payments

and how often they’d like to receive their statements. Find out whether the rent is payable to the Landlord or their bank.

Identify the bank’s branch and their account details, and where and how the statements should be sent, i.e. by EFT,

email, post or fax, to the owner, their accountant, or someone else who may look after the statements on behalf of the

Landlord.

Section M is Strata Property and Unit Levy details. This is really important for strata properties. You must note the correct

strata details, especially if a new Tenant is moving in and they need to get copies of the by-laws. You will have to notify

the strata agent of the new Tenant and their details. It’s really important that you get those details at the time of signing

the new business and have their details on the file because in the future you may actually be paying the strata levies on

the Landlord’s behalf so you need to make sure that the details are accurate and up-to-date so you can pay them in a

timely fashion.

Section N is Water Efficiency. Find out if the property is water efficient and separately metered. You will find that most

standalone houses are separately metered and often new units are not, and this is where that is stipulated. Obtain the

information from the Landlord so you know whether to charge the Tenant for water or not.

Swimming pools are also in this section. It is important that a swimming pool is compliant. All swimming pools must be

registered and the owner must hold a valid certificate of compliance before a Tenant can be put into the property.

Make sure you look up and become familiar with the most recent legislation regarding swimming pools. This legislation is

often updated.

Section P is the Landlord’s disclosure to prospective Tenants. We have a duty to disclose information. You have to ask

the right questions of the Landlord so that you have the knowledge to disclose to the Tenant. The Tenant has the right

to know, for example, if is there any proposal to sell the property, has a contract been prepared for the sale of the

property, has the property been subject to flooding or a bushfire, and has the property been the scene of a serious

violent crime within the preceding five years? These are all questions that you need to ask the Landlord because it’s

very important information that you have to pass onto the Tenant before they take a Tenancy.


Section Q is Additional Instructions from the Landlord. If the Landlord has additional instructions that are a little bit out of

the ordinary, they can be inserted here.

Section R is Special Conditions. The special conditions are inserted under instruction from a party to this Agreement.

You will find that you won’t use these very often, but if you are an Agency that is carrying out management services

for another company, this is where you need to put in the special conditions so the Landlord is aware of the set up and

agreement that the two companies have. It’s advisable to seek legal advice if this occurs.

Section S is Signatures. Make sure that all of the owners of the property sign the Agreement, as well as the Agent and

that it is also dated.

Section T is Receipt of Copy of Agreement. It’s very important that the client receives a copy of the Agreement within

48 hours after signing. If a copy was given to the Landlord at the time of signing, the Landlord can initial to confirm that

they have received a copy.

To reinforce - it is so important that you complete the Agreement correctly and in detail because this is the Agreement

that gives the Landlord and the Owner clarification of what the duties of the Agent are. It’s important to know the fees

that will be charged are very clear for all parties, because at the end of the day if the Agreement is not completed

properly it can be deemed null and void.

Often you can send your client the Agreement before meeting with them for signing, so they can read through the last

section to be 100% clear on what they are signing. The contract is a legally binding document and it is important that

the client is informed.


The Residential Tenancy Agreement

The Residential Tenancy Agreement is between the Landlord, the Tenant and the Agency, and it gives the Tenant

permission to occupy the premises.

At the top it says ‘the Agreement is made on’. This is the day that the Agreement is actually signed, and the suburb

where it is signed.

Fill out the Landlord’s details, the Tenant’s details, and then the Landlord’s Agent details. Often the Tenant’s Agent

details will be blank because the Tenant does not have an Agent. The Agent represents the Landlord.

Term of the Agreement

It’s really important that this is completed accurately because this is what stipulates the Agreement between the

Landlord and the Tenant. It lets everybody know how long the Term of the Agreement is for, when it starts, and when

it ends. Enter how many weeks, months or years the Agreement is for. The most common is a 12-month agreement. It

stipulates the day it starts on and the day it ends on, so it’s very clear when the Tenancy agreement expires.

The residential premises

The residential premises is where the address of the property is entered. It says ‘the residential premises includes ...’ Add

anything here such as single lock-up garage, double lock-up garage, or any furniture that might be included.

The rent

The rent is X amount per week, fortnightly, monthly or calendar monthly, payable in advance starting on the start date

of the Tenancy. The method by which the rent is to be paid will stipulate how the Tenant is requested or required to pay

the rent to the Landlord. Often this will be via the Agent in cash or cheque but also can be via some form of direct debit

or BPAY facility.

Rental bond

Fill in the exact amount the rental bond will be, which should be a full 4 weeks rent. It’s important that you enter the

dollar value.


Maximum number of occupants

Be mindful that the Tenant can be in breach of the Agreement if they don’t comply with these terms. You cannot put in

any more than two people if there are two occupants living at the premises at any one time. If you find out that there

are more occupants, you can breach the Tenant. Again it’s very important to be accurate and stipulate how many

people are living at the property.

Urgent repairs

It’s always important to give Tenants the contact details of somebody from your office in case they have an emergency

repair. Here you also can enter the details of your electrical contractor or plumber, or general maintenance contractor,

so the Tenant can find them direct. Often you can enter details here of people who know how your Agency operates

and how to determine what is an urgent or emergency repair.

Water usage

Determine whether or not the Tenant will be required to pay for water usage. The Landlord can only charge if the

property is water compliant, so you need confirm this and stipulate very clearly whether or not the Tenant pays water.

Strata by-laws

Are there any strata by-laws for the residential property, which the Tenant needs to be aware of? If so, The Tenant needs

to be provided with a copy of them.

A condition report

A report detailing condition of the property must be completed by or on behalf of the Landlord, before or when the

Agreement is signed. The condition report form is part of the Tenancy Agreement. It is important that the Tenant is given

a copy of the condition report at the point of signing the Tenancy Agreement because it forms part of the Tenancy.

Failure to provide the Tenant with the condition report means that you are not complying with the Regulations.

Tenancy law

This section states exactly what laws the Residential Tenancy Agreement falls under because, once again, it is a legally

binding contract. It states that the Residential Tenancies Act 2010 and the Residential Tenancies Regulation 2010 apply

to the contract and explains the standard terms of the agreement that the Landlord and the Tenant must comply with.

It is important to point out some of these terms to the Tenant because sometimes the Tenant doesn’t read the contract

in full. This section confirms the right to occupy the premises, a copy of the agreement, the rent, any rent increases,

any rent deductions, etc, and is where the Tenant’s and the Landlord’s obligations are explained and stipulated. The

Landlord or Tenant can always to refer to this section for clarification.


Additional terms

Additional terms maybe included in this part of the Agreement if both the Landlord and the Tenant agree to them, but

this is not often the case. Some Agencies do like to insert special conditions in their agreements, and they can also do

that by attaching additional pages to the agreements.

Case signatories

It is very important that this is signed by the Tenant and witnessed by the Landlord, or the Agent can act for the Landlord

and sign on their behalf. You will see that it confirms ‘signed by the Landlord, signed by the Tenant and signed by any

other Tenants’.

The Tenant must sign at the bottom of the page to acknowledge that at or before the time of signing the Residential

Tenancy Agreement, the Tenant was given a copy of the new Tenant checklist published by NSW Fair Trading. This will

form part of your procedure when signing the agreement and ensures that the Tenant reads, completes and signs the

NSW Fair Trading checklist.

This procedure ensures that the Agent has not done anything that is in breach of the legislation, such as asking the

Tenant to pay for cutting of their keys or the preparation of their Tenancy agreement. It also confirms that any work that

needs to be done to the property has been pre-organised and that all parties are aware of the commencement and

completion dates. Again it is very important that the Tenant signs this and they also sign to say that they have been

given a copy of the NSW Fair Trading checklist and they have read it and completed it.


The Residential Premises Condition Report

This forms part of the Residential Tenancy Agreement and stipulates exactly the condition of the property prior

to the Tenant signing the Agreement. Some questions are asked on the right-hand side regarding health issues,

communication facilities, and water efficiency devices, to be marked ‘yes’ or ‘no’.

This Report covers every area in the property such as every room, entrance hall, lounge, kitchen, etc, and includes

questions at the top of each page regarding ‘clean, undamaged, working, keys and Tenant agrees’. Completing this

form thoroughly is very important. You need to note whether or not these areas are clean and/or undamaged, and

comment on any items that are not working.

Be thorough, and note the type, colour and pattern of blinds and/or curtains, anything that will assist to identify them at

the end of the tenancy as the exact blind and/or curtain that was there at the commencement of the tenancy.

Inspect each room in detail, and then list any additional comments at the end of the Condition Report where required.

You may find that there won’t be any additional comments because in most cases they’re unfurnished properties.

It is important to note where the water meter is located and its reading, so the Tenant can be invoiced for the water

they consume from when they move into the property. On the right-hand side you will find the date and details of the

installation of water efficiency measures. If they are available, also note down the date of internal and external painting

of the premises, and when the flooring was laid, replaced or cleaned. It is very important to have a thorough report,

and make sure that it’s signed by you on the date that you made the report.

At the time of signing the Agreement, the Tenant receives two copies, at which time it is up to them to go through the

Agreement and list whether they agree or disagree with it, and they have the options to make any comments as well.

At the bottom of the Agreement, the Landlord or Agents promise to do any repairs and maintenance required to be

done after the Tenant takes possession of the property. There may be a small repair at the property and you need to

record the details so you have a record that this needs to be done and when it will be completed by. You can then sign

on behalf of the Landlord.

Documents

3. AN INTRODUCTION TO REAL ESTATE PROPERTY …realestatecertificateofregistration.com.au/module...3.1 Agreements When you work in Property Management you make two types of formal Agreements