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10 reasons to terminate a contract

By Karen Herbert
10 January 2017 | 10 minute read
karen herbert

Property management industry insider and author of the popular Open letter to principal from PM, Karen Herbert is back with her unique brand of wisdom. This time, she discusses when it is OK to do the unthinkable – terminate a property management contract.

1. The property is unsafe

Don’t be afraid to terminate an owner’s contract if they will not spend money on rectifying a safety hazard or a potential risk. The ‘no win, no fee’ lawyers continue to circle our environment, waiting for their next potential client. It’s not worth the pain.

2. The property poses a health risk

One of the major potential health risk in our properties is mould. If the problem cannot be solved, terminate the property.

3. The owner will not fix maintenance

In today’s world of litigation, this is no longer acceptable. Courtrooms are filled with cases with PMs/owners who will not keep the property in good condition and fit to live in.

4. The owner will not spend money


We have all experienced an owner who is not prepared to spend money on maintaining or uplifting his property. An investment property is exactly that, an investment that needs to be fuelled to sustain its return. The better the property, the better the tenant and the less work for the property manager.

5. The owner refuses to adhere to the legislation

Whether it be discrimination, grounds for entry to the premises or disregarding the legislation surrounding the sale of a property, the legislation is there to protect you, but only if you adhere to it. 

6. The owner is intimidating

I have seen too many property managers say ‘yes’ to an owner because they are scared to say ‘no’. Remember that we are the expert in our industry and knowledge is power. Stay informed and understand the legislation. This will give you the courage to say ‘no’.

7. The owner has no landlord protection insurance

It’s called peace of mind, both for you as the property manager and the owner if something goes wrong. For less than one weeks’ rent, it’s a must in today’s environment.

8. The owner does his own maintenance

With all the legislation surrounding our industry, I believe that this poses one of our greatest risk exposures. Consider insurances, licences and qualifications, not to mention that it puts the owner directly in contact with a tenant. Not on.

9. The return is too low

Every property should have a minimum return to the agency and be monitored as a KPI on a regular basis. At least know your break-even point on managing a property.

10. The 80-20 rule

Every year you should make a list of the top 10 properties you would like to terminate and the reasons why. Mostly, these are the properties/owners you spend 80 per cent of your time on and who are costing you money. Wouldn’t you rather be spending time managing the properties that make you more money?


Karen Herbert

Karen Herbert

Karen Herbert is the director of Property Management Rescue. 

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