Selling Managed Units

By Les Elborne – REIQ Agency Practice Advisor

Conflict between Selling Agents and Restricted Letting Agents is always Non-productive.

Owners of managed units have a right to sell their property at any time, and the only way that this can be achieved is by appointing a real estate agent to sell the property. This appointment then places the Restricted Letting Agent in a position where the right of the selling agent to inspect the property is perceived as overriding the control of the management. The result is conflict.

Under the new Real Estate Agency Practice Code of Conduct in the Property Agents and Motor Dealers Act, Clause 37 requires the real estate agency to immediately give written notice of their appointment to sell to any agent (Restricted Letting Agent) responsible for the management of the property.

Where the unit has permanent tenants the position is addressed by the requirements of the Residential Tenancies Act 1994. This Act requires the selling agent to provide both the Restricted Letting Agent and the tenant with a copy of the RTA Form 10 "Notice of Lessors Intention to Sell the Property" on receiving the listing. The Act further requires a RTA Form 9 "Entry Notice" to the Restricted Letting Agent and the tenant for each inspection with a prospective buyer.

This is the law, and both the Restricted Letting Agent and the Real Estate Agent must be aware of and act in accordance with these requirements. Failure to do so attracts a penalty of $1,500.00 if prosecuted under the Residential Tenancies Act 1994.

With the sale of holiday units the situation becomes quite different in that holiday tenancies are not covered by any particular legislation. This means that it is left to the Restricted Letting Agent and the selling agent to reach a satisfactory arrangement regarding inspections and possible sale.

For some time this association has created conflict between the Restricted Letting Agent and the selling agent for the following reasons:

• Demands by the selling agent for immediate access to inspect.
• Restricted Letting Agents protecting the rights of holidaying occupants to quiet enjoyment.
• Agents seeking the management of the unit after the sale, thereby decreasing the letting pool of the complex.
• Restricted Letting Agents being obstructive in allowing access to the property or the unit.
• Selling agents often fail to take into account forward booking when selling holiday units exposing the Restricted Letting Agent to possible litigation.

The REIQ Members Council in April 2001 resolved "that the REIQ take steps to introduce a workable procedure for the arrangement of inspections of home units listed for sale in a complex with outside agents where a Restricted Letting Agent is in situ".

Of course any steps or procedures that the Institute can introduce will only be as successful as the willingness of the selling agents and the Restricted Letting Agents to work together and to respect the rights of each other. It must be remembered that the Restricted Letting Agent is the person with the investment in the management rights on whom the most restriction applies in the possible loss of managements to outside agents.

In May 1990 the Management Rights Chapter produced a Code of Ethics for Restricted Letting Agents. Article 3 stated – While accepting that both the Restricted Letting Agent and real estate agent are each working in the best interest of the unit owner, the Restricted Letting Agent will nevertheless also owe a duty to the tourist industry where appropriate and the tenant or occupier of the unit to ensure that as a result of the property being listed for sale, they suffer the minimum amount of inconvenience as a result of that listing.

Our solicitors have advised that at Common Law a holiday tenant can successfully sue for compensation for their lack of pleasure, enjoyment and relaxation on their holiday due to interruptions experienced. Such cases have been recorded.

It is important for real estate agents also to be aware of the REIQ Code of Ethics Article 2.1 Members must conduct their business so they minimise controversies and avoid conduct that is contrary to good agency practice. In all dealings members must treat each other in a manner that does not disadvantage existing negotiations and with strict professional courtesy and integrity.

To simply say that the selling agent and the inspection for sale of a unit overrides the right of the Restricted Letting Agent and the permanent or holiday tenant is not acceptable. All parties have rights, responsibilities and obligations and no one person’s rights should take precedence over the other.

While agents continue to make demands and Restricted Letting Agents continue to demand the appropriate respect, this problem may never see a resolution.

On the other hand, if all parties create and foster a professional working relationship that does not undermine the position of the Restricted Letting Agent the result may be many referrals to the agency of units for sale when the Restricted Letting Agent becomes aware that a owner wishes to put the unit up for sale.

When you look back to the resolution of Members Council, it is obvious that the solution has always been there, all that is required is for professional courtesy between both parties and respect for the specific roles that exist with their clients.

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