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 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.

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.

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.

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.

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