ARAMA is approached a few times every month by members with the same problem: An owner has sold or wants to move into their unit but there are existing guest bookings in place that may not be able to be moved and there is a chance they may lose the listing..
While an age-old issue, the current market condition is indicating a levelling out so it is likely that we may see even more of this as investors consolidate or exit the market while they can.
As the resident manager, in addition to your own investment the potential loss of income via any reduction in the letting pool will have a direct impact on your income and the value of your business, and it is imperative that you are proactive about taking preventative measures to protect and defend your position.
Reduce your risk by ensuring that you are armed with current documentation (PO Form 6), the ARAMA Addendum and are involved in the sales process, either through the innovative ARAMA/ReMax program or directly as a fully licensed agent so that you can better manage the discussion and activity within the property.
If however, you end up stuck between the lot owner and confirmed bookings for any reason there are a number of basic principles that one needs to be aware of:
- The resident manager is the owner’s agent assuming you have the authority to act as an agent (In Queensland this is the PO Form 6)
- Guest bookings are contracts that the resident manager brings about between owners and guests.
- In Queensland, the resident manager is not liable to a guest for a booking cancelled by the owner unless the resident manager did not have a PO Form 6 letting appointment in place (in which case the resident manager is personally liable to the guest as they didn't have authority to make the "booking").
- If an owner wants to cancel a booking it is their call. They may be liable for damages to a disappointed guest. From a public relations point of view, the resident manager will of course try and find alternative accommodation for the guest if that is possible.
- If an owner breaches their Form 6, then they may be liable to the resident manager for lost commission for the bookings. This applies to cancelled bookings and cancelled appointments.
- If an owner wants to cancel a Form 6 and move into their property, then that is their prerogative. Notice periods apply, but a resident manager cannot stop them from doing this. It is the owner’s unit, but the owner may be liable for damages as mentioned above.
- In Queensland the PO Form 6 can be cancelled by either party giving 30 days notice in writing.
- While the ARAMA Addendum does make provision to enable a Resident Manager to take bookings 12 months in advance this clause is only with the current owner and not a future owner and can be rendered if the existing owner chooses to cancel the PO Form 6 or sell the unit.
These points are the basic rules that govern any situation like this, and unfortunately the Residential Tenancies Act does not apply to holiday bookings.
Obviously, the issue that cannot be ignored is the resident manager’s relationship and goodwill with the owner, and potentially, other lot owners in the building.
To maintain an equitable position, resident managers will often need to accept early termination of letting appointments even though they may have rights against the unit owner because the actual damage they suffer in terms of lost commission will be minimal when compared to potential disagreements and discord.
Losing a unit from your letting pool is to be avoided and the best way to do this is to do everything in your power to prevent this from occurring. Prevention is better than cure.
The fact of the matter is that there are already legal protections in place for both the resident manager and their client the unit owner albeit inadequate on occasions. ARAMA is emphatic in our advice to resident managers to ensure that they are proactive about keeping up to date with legislative reforms, contracts, potential movement within the property and regular communication with unit owners. Stay connected to ARAMA and stay up to date with the necessary knowledge and insight to help you to protect and defend your letting pool.