The devil is in the detail with property management

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It’s easy to get into a rut when it comes to property inspections. When a new tenant is moving into a property, we complete the required ingoing condition report, take a bunch of photos, and throw it all in the property file.

The same thing happens when a tenant is moving out of a property too. We walk through the property, complete the outgoing condition report, take some more photos, and close the file.

But it’s not until we’re staring down the barrel of a tribunal hearing that we realise exactly how important those reports are. It’s those reports that can be the difference between winning or losing a $20,000 claim at the tribunal against the landlord.

I know this first hand.

Back in 2013, when I was in the first stages of growing my own rent roll, I managed a property that developed a mould issue. Little did I know how big an issue it was going to become.

The tenants took possession of the property in March, and within the first month of their tenancy, they reported mould growing in their bathroom.

I’d experienced some serious mould issues in other properties, so I knew how expensive this could be for a landlord. I knew I had to act on this issue with urgency to avoid excessive expenses for my landlord.

I quickly arranged for an exhaust fan to be installed in this bathroom, hoping desperately that this would resolve the mould problem. But it didn’t. A month later, the tenants reported the mould had spread into the hallway outside the bathroom.

I could tell the tenant was getting agitated about the mould issue, so I arrange for a mould cleaning company to remove the mould in the bathroom and hallway too. The advantage of using a professional mould cleaning company was that they also prepared a full report outlining the underlying causes of the mould, and a remediation plan for treating the mould, so that it would never return. This report allowed the landlord and I to act swiftly on the mould company’s advice and treat the underlying cause of the mould: a simple guttering issue, that was resolved within a week.

By June, the tenants served a termination notice, claiming that the landlord wasn’t honouring her agreement by rectifying the mould. The tenants claimed that the mould had spread over their furniture, caused them serious health problems, and was the sole reason they needed to move out of the house.

However, the tenant refused to provide evidence of the mould, wouldn’t send photos, and wouldn’t allow me to come and inspect the mould in person.  Something didn’t add up.

However, in property management, we often are required to consider the options, and determine which dispute you want to step into. You must weigh up the battle you’re going to fight. Are you going to put effort into fighting the tenant over the termination notice, or are you going to put effort into finding a new tenant instead? Fortunately, I had a very reasonable landlord, and we agreed to release the tenant from their lease. We both agreed that it would be easier to find a new tenant after we had vacant possession of the property again.

I’d like to say the story ends here, but it doesn’t.

After vacating the property, the tenant applied to the tribunal for compensation related to replacing the damaged furniture, their moving expenses, lost wages, and even personal stress compensation. The total claim came to $21,000. An enormous figure and the largest claim I’d ever responded to in my career.

This is where those mundane property condition reports come in.

When I completed the outgoing condition report, I went looking for the mould in the house that the tenant reported. I couldn’t find it. I searched high and low, took written note and hundreds of photos, but the mould wasn’t there.

Then it got interesting.

I noticed that the tenant had left a large pile of “mould affected furniture” on the front nature strip, waiting for a council rubbish collection. So I looked a little closer. The closer I looked, the more I realised that this furniture didn’t have any mould on it. I took more notes and more photos.

The matter went before the tribunal, and within an hour the whole application was dismissed. Not a single cent awarded to the tenant.

Let me be clear: there definitely was mould in the property at the beginning. I saw it with my own eyes, I photographed it, and the mould cleaning company removed it. The defining point in the tribunal case wasn’t the fact that there was mould in the property. The reason I won the case was because I addressed the mould, fixed it, and was able to prove that the tenant’s application was false.

So the next time you’re completing your ingoing or outgoing condition reports, and you’re feeling like the effort you’re going to doesn’t justify the outcomes, remember this story. This was a once in a career tribunal case, but it was worth every second I spent on those ingoing and outgoing condition reports and photos.


A version of this article first appeared on Elite Agent here.

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