Management fee on past arrears

[JohnMerlin]

Interested to hear peoples take on the following scenario.

Say an agent chases up arrears from a tenant for the period they have been managing, and surprisingly the tenant decides to pay far more as he includes arrears from before the period that the agent was managing.

Should this be subject to the agreed management fee (eg. 10%) or is this nothing to do with the agent as they were not managing at that time?

[jta]

I don't know about the correctness of it, morally I believe you should be grateful to an efficient agent and allow the commission, it's a business expense after all so you can claim against your tax for it.

(Did I just say 'efficient agent'? OMG I need a drink)

[JohnMerlin]

I don't know about the correctness of it, morally I believe you should be grateful to an efficient agent and allow the commission, it's a business expense after all so you can claim against your tax for it.

(Did I just say 'efficient agent'? OMG I need a drink)

I am talking when the agent did not persue the arrears of that period, so not much to do with the agents efficiencey, efficient as they may be.

[PaulF]

1. An agent cannot be held responsible for the tenant being in arrears.
2. If the agent is contracted to manage then he is entitled to his MMF even if the tenant has not paid any rent as he is undertaking the task.
3. There should be a clause to cover this eventuality within any TOB between agent and landlord.
4. The question of the agent pursuing arrears is therefore irrelevant.

[ram]

Assume agents were not managing the property at the time of the
additional arreas were owing.

Then I would say the agent can take 10% of the money they asked
for, and the rest is yours, from before the agents were managing.

and you want that "extra" money posted to you.

the agent did not ask for this extra money, it just came as "additional"
money from the tenant, therefore that "additional money" is yours.

Many will argue it is not, but it is.

R.a.M.

[JohnMerlin]

1. An agent cannot be held responsible for the tenant being in arrears.
2. If the agent is contracted to manage then he is entitled to his MMF even if the tenant has not paid any rent as he is undertaking the task.
3. There should be a clause to cover this eventuality within any TOB between agent and landlord.
4. The question of the agent pursuing arrears is therefore irrelevant.

I am not sure of the relevance of points 1 & 2.

re 3 & 4, this is my question. What is normal acceptable practice re a situation above or what is the sensible fair attitude if there was no clear mention of it in TOB's.

I am leaning towards R.A.M. I feel that it is unreasonable for the agent to deduct or put it in the TOB's that the will deduct the 10% on old arrears UNLESS the are specifically instructed to chase them. I do believe that if the agent did specifically chase them on their own initiative, that a nice bonus should be forthcoming from LL, but not demanded at the standard MF which at %10 can be substantial.

[Phlash]

1. An agent cannot be held responsible for the tenant being in arrears.
2. If the agent is contracted to manage then he is entitled to his MMF even if the tenant has not paid any rent as he is undertaking the task.
3. There should be a clause to cover this eventuality within any TOB between agent and landlord.
4. The question of the agent pursuing arrears is therefore irrelevant.

We structure our contracts based on the rent we collect - so if the landlord is in arrears, so are we... Makes us work hard and efficiently for rent collection. I'm not sure many agents are structured in the same way.

On the OPs question: We would most likely hand on the full (old) rent without any deduction - But I would like to think that the landlord may think to say thank you back with some kind of cash reward. If the landlord had come on board with the aim of us chasing the old rent then we would have agreed what that may be worth up front.

Interestingly, our contracts with the way they are worded would mean we could charge the management fee on the whole rent in this scenario because of the nature of only charging on received rents - But I would instruct my employees not to charge on that portion where there had been no agreement on the arrears prior to us taking over management.

[mind the gap]

What is normal acceptable practice re a situation above or what is the sensible fair attitude if there was no clear mention of it in TOB's.

Tenants volunteering arrears for which they have not specifically been asked is so rare that I doubt there is an answer to that question.

And if such monies just happen to fall into the agent's lap while he is pursuing more recent arrears from the period relating to his management, then I think it must be entirely up to the LL whether he 'bungs' him some or not. It is not after all as though he has done any extra work to deserve it, is it?

I incline to the view that you should pay an agent for what they actively do, not for what they don't do.