Can a Landlord Terminate Agency Agreement?

Many think of real estate agents as working with individual buyers and sellers of homes, but in reality, there is a massive market for agents that assist landlords with their investment properties.

A management agreement in real estate means the agent takes on a lot of the work with property management as well as finding new tenants to fill vacancies. However, what happens when the agent/ landlord relationship isn’t working out? It’s important to know all the relevant rights and procedures to make sure a switch is done by the book.

What services do real estate agents provide?

For starters, let’s run through a few of the services a buyer’s agent would perform for a landlord.

• Marketing a property.
• Scheduling viewings with possible tenants.
• Handling the logistics of renting.
• Some agencies are willing to do more, but you’d need to ask.

Why might a landlord decide to change agents?

Many might assume landlords change their agents due to a failure on the agent’s part, but that is not always necessarily the case. Aside from a failure to properly perform their duties, other causes include:

• Seeking a more cost-effective option. 
• Opting to directly renew the tenancy with the tenant after the initial term to avoid agency renewal fees. 
• Dissatisfaction with the service provided by the current agency during the tenancy.

What do you need to know before switching to a new real estate property manager?

Before you change property management agents, landlords must consider several legal and practical factors to ensure a smooth transition:

1. Review the Current Contract: Check the termination clauses in your existing agreement. Some contracts require a 30-90 day notice period for terminating a property management agreement.
2. Notice Periods and Fees: Some agreements include exit fees if the contract is terminated early.
3. Obligations of the Old Agent: The previous property manager is legally required to provide certain documents to the new agent.
4. Tenant Notification: The tenant should be informed of the new property manager’s details.
5. Bond Transfers: Ensure the rental bond is properly transferred if necessary.

Each state has different rules regarding terminating real estate agent contracts, so it’s important to follow the legal requirements applicable to your location.

What documents does the old property manager hand over to the new agent?

When a landlord changes property management agents, the previous agent must provide:

• Tenant lease agreements
• Bond records (held with the RTA in Queensland or equivalent authority in other states)
• Entry and exit condition reports
• Financial records, invoices, and rent ledgers
• Inspection reports
• Keys and security details

Failure to hand over these documents can result in legal action against the outgoing agent.

What are the landlord’s rights?

When talking about letting agent contract termination, the landlord has certain rights. For the most part, the landlord is in the driver’s seat in terms of control. Whether there’s an exclusive or non-exclusive agency agreement, the landlord can generally terminate a relationship with written notice. This is especially easy if you stick to your state REI agreement.

What is Form 6 in a property management agreement?

Form 6 is a legally binding document used in Queensland to formalize the appointment of a property manager or real estate agent. It is issued by the Queensland Residential Tenancies Authority (RTA) and is known as the “Appointment of a Property Agent, Resident Letting Agent, or Salesperson” form. This document outlines the terms of engagement between the property owner (landlord) and the property management agent.

The Form 6 must clearly specify:

• The duration of the agreement
• The scope of services the agent will provide
• Fees and commission structures
• Terms for ending a property management agreement

Unlike a standard lease agreement, Form 6 is specifically designed for hiring a property management service. If the landlord wants to change property management agent, they must follow the termination procedures outlined in the form. Terminating a property management agreement in Queensland requires written notice, and failure to comply with the stipulated terms may result in financial penalties.

Form 6 is only used in Queensland—other states have different forms for appointing and terminating a real estate agent contract.

What is the difference between Form 5 and Form 6 in a property management agreement?

Form 5 was the previous standard contract for appointing real estate agents in Queensland. However, it was replaced by Form 6 in 2014 to provide a more comprehensive and legally sound framework for property management.

The key differences between Form 5 and Form 6 include:

• Legal Updates: Form 6 complies with changes in Queensland real estate laws, ensuring clearer terms for property owners and agents.
• Broader Coverage: Form 5 was limited to sales transactions, while Form 6 includes property management agreements, allowing landlords to change property management agents more efficiently.
• Flexibility: Form 6 provides clearer conditions for terminating a property management agreement, whereas Form 5 lacked comprehensive termination clauses.
• Commission Disclosure: Form 6 mandates transparent disclosure of agent commissions, preventing hidden fees.

Since Form 5 is outdated, any real estate contract in Queensland must now be signed using Form 6. Other states, however, have their own unique contracts.

In which states of Australia are Form 5 and Form 6 used?

Form 5 and Form 6 are only used in Queensland under the Property Occupations Act 2014 (QLD). No other states in Australia use these forms for appointing or terminating real estate agent contracts.

In other states, different forms are used for property management agreements:

• New South Wales (NSW): Managing agency agreements under the Property and Stock Agents Act 2002 (NSW).
• Victoria (VIC): Authority to Act forms, governed by the Estate Agents Act 1980 (VIC).
• Western Australia (WA): Exclusive authority agreements under the Real Estate and Business Agents Act 1978 (WA).
• South Australia (SA): Sales and property management agreements under the Land and Business (Sale and Conveyancing) Act 1994 (SA).
• Tasmania (TAS): Property management contracts under the Property Agents and Land Transactions Act 2016 (TAS).
• Northern Territory (NT): Appointments under the Agents Licensing Act 1979 (NT).
• Australian Capital Territory (ACT): Agency agreements under the Agents Act 2003 (ACT).

Thus, only Queensland requires Form 6 when ending a property management agreement or appointing an agent.

How to terminate a real estate agent agreement

The process begins with providing written notice to the agent, generally 30 days in advance. Some older forms require you to take 90 days, so be aware. After this, you want to make sure any tenants affected by the change are aware. After this, make arrangements to get the key and file from their office, and the relationship is formally ended. At that point, you can start looking for a new agency.

Step-by-Step Guide: How a Landlord Can Change a Real Estate Agent

1. Review Your Current Agreement: Check termination clauses, notice periods, and exit fees.
2. Notify the Existing Agent in Writing: Issue a formal termination letter specifying the last day of management.
3. Confirm Financial Settlements: Ensure the agent finalizes rent payments and bond transactions.
4. Select a New Agent: Sign a new property management agreement with a replacement agent.
5. Facilitate Document Handover: The old agent must provide lease agreements, condition reports, and rent ledgers to the new agent.
6. Inform Tenants: Notify tenants of the change in property management agent and update their rental payment details.
7. Transfer Bond and Keys: Ensure the rental bond and property keys are transferred properly.
8. Monitor the Transition: Follow up to ensure all legal and financial matters are settled smoothly.

Example of a Residential Tenancy Agreement Termination Notice

[Landlord’s Name]
[Landlord’s Address]
[Date]

To: [Tenant’s Name]
[Property Address]

Subject: Notice of Termination of Residential Tenancy Agreement

Dear [Tenant’s Name],

Pursuant to the Residential Tenancies Act [State], this letter serves as formal notice to terminate the tenancy agreement at [Property Address]. The termination date is [DD/MM/YYYY], and you are required to vacate the property by this date.

Reason for Termination: [State Reason – End of Fixed Term, Breach of Lease, Sale of Property, etc.]

Please ensure the property is returned in good condition, with all keys handed over. Final inspection will occur on [Inspection Date].

For any questions, contact me at [Contact Information].

Sincerely,
[Landlord’s Name]

Notice periods for Landlords in NSW

The notice period varies based on the type of tenancy agreement and grounds for termination. Here’s an overview: 

• Fixed-term agreement: 30 days’ notice at the end (see details below). 
• Periodic agreement: 90 days’ notice. 
• No grounds: 30 days’ notice at the end (see details below). 
• Sale of premises: Not applicable for fixed-term agreements; 30 days’ notice for periodic agreements.

Please note that if a termination notice is mailed, the landlord/agent must allow an additional 7 working days for delivery.

Notice periods for Landlords in QLD

For fixed-term tenancies, landlords can terminate without specific reasons after the end of the fixed term by providing at least 2 months’ notice. For periodic tenancies, landlords must also give at least 2 months’ notice.

However, notice periods can vary depending on the agreement, with some as short as 14 or 7 days. 

Notice periods for Landlords in VIC

• Fixed term of 6+ months: Minimum 90 days’ notice. 
• Fixed term less than 6 months: Minimum 60 days’ notice. 
• Termination after fixed term without specific reason: Minimum 120 days’ notice. 
• Termination without legal justification: May result in liability to compensate the tenant.

Is it necessary to wait 30-90 days, or can the landlord and property manager terminate the relationship earlier?

The notice period for terminating a property management agreement depends on the contract terms and state laws. While many agreements require 30-90 days’ notice, some allow for early termination under certain conditions:

• Mutual Agreement: If both parties agree, termination can be immediate.
• Breach of Contract: If the agent fails in their duties (e.g., failing to collect rent), termination may be allowed without notice.
• Cooling-off Periods: Some states allow landlords to back out of a contract within a few days of signing.

It’s important to review the agreement carefully before proceeding with terminating a real estate agent contract.

What are the agent’s rights?

Agents also have their fair share of rights, especially in the event of unexpected contract termination. If an exclusive management agreement is in place, they can’t be terminated until the end of said agreement without charging added fees. In addition, it’s a basic custom for the landlord to provide some sort of explanation to the agent as to why they are seeking a termination.

Reputable letting agents typically include clauses in their contracts stipulating ongoing fees as long as a tenant introduced by the agent remains in the property, even during renewals. Some agents may pursue legal action if a landlord unilaterally cancels the contract, with courts often enforcing fair and reasonable terms.

Real estate agents need to build up relationships with different professionals and clients in order to succeed, but equally important as an agreement between the landlord and agent is the agent having resources to do their job. One such example is using a telemarketing database. Sometimes, in the event of a property manager breach of contract, you need to sever ties with that client and pursue other credible leads. These resources are great for finding new landlords that can make use of your services.