Losing a letting appointment on short notice?

Updated on 1 December 2014 to include reference the Property Occupations Act 2014.

This newsletter is primarily for those that have short term lettings, but it can apply to permanent lettings as well.

Both a resident manager and an owner have the right to terminate a letting appointment (whether on a PAMDA 20A or a Property Occupations Act Form 6) without cause, and more than likely on 30 days notice. This is a statutory right that cannot be contracted out of in any way.

What happens quite often is that:

  • An owner signs a letting appointment.
  • The letting appointment includes an obligation on the owner to honour any forward bookings made by the resident manager for the unit if it is sold.
  • The resident manager happily works away taking bookings for that unit for up to 12 months in advance.
  • The owner lists the unit for sale (most times without the knowledge of the resident manager).
  • The owner sells the unit and the resident manager then gets a phone call from the selling agent, or the prospective buyer asking about collecting the keys for the settlement sometime in the next few days.
  • There are guests either in the unit, or booked for holidays in the unit over the coming months.

What happens?

Unfortunately, this is a no win situation for the resident manager. There are a few reasons for this:

  1. The contract (which is what a letting appointment.is) sits with the unit owner who is selling. There is no contract with the buyer, so if the buyer owns the unit they are entitled to possession of it. There is no doubt that the contract has been breached, which entitles the innocent party to damages. But what are those damages? Commissions on potentially 90 days of bookings as well as related income? It is hardly worth suing over.
  2. Getting in the way of the sale settling will (whether rightly or not) annoy both the owner of the unit and the buyer. Getting offside with the buyer is not a good way to start a relationship with a new member of the body corporate.
  3. A resident manager cannot hold the keys from the owner. The only time this could ever happen is when a guest might be in the unit at the actual time of settlement. That guest has a right to be in the unit, and while this might stall settlement for a few days, it will not hold it up indefinitely.

What generally ends up happening is that you need to shift forward bookings to other rooms, or other resorts, and to the extent that you have suffered loss, seek to recover that from the owners concerned.

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