How to deal with agent commission after tenant breaks contract?

[clokwise]

I have a rental property in a popular area of town, over the years it has rarely sat vacant more than a month or two. This is partially due to one property agent who is easily the largest agent in town. We have done a LOT of business with them for over a decade, renting, selling and buying properties.

 

Recently a tenant decided to break their 1-year contract and leave after only two months to head back to Europe. This kind of thing happens far too frequently, unfortunately. And each time we are stuck with loss of rental income, plus cleaning expenses, and minus the agent commission.

 

This agent has refused to offer any compensation, such as a partial refund of their commission, which equals one month rent per-year. They claim it's not their problem and refuse to offer any compensation whatsoever.

 

My argument is, part of their responsibility as an agent is to vet potential tenants and offer us only tenants that have proper visas, jobs, families, or other ties that will ensure, or at least imply, they won't break their contract. I've really had it up to here with this particular agent, I don't appreciate their attitude and I will not be working with them in the future unless we can come to some agreement - but unfortunately it seems they have have the upper hand as these rental contracts are not enforceable, and they have never expressed any genuine sympathy in this kind of situation.

 

Does anyone have any workaround for dealing with agents?  I had a few ideas:

 

• Make the tenant fork over a 3rd month of rent as a guarantee they won't break the contract, then make the 12th month rent "free"
   
• Put the agent fee in escrow and they can't touch it for one year
   
• Insist on paying the agent 1/12 of their fee every month
   
• Have a side contract/agreement with the agent with an assurance the tenant will stay, and if not, provide terms for compensation (such as prorated refund or credit toward the next tenant's agent fee)

 

I don't know how practical these ideas are, as I'd guess most (all?) agents will not accept such terms, and it's unlikely a tenant would either. Any suggestions would be appreciated.

 

I know, I know... TIT....

 

 

[Peterw42]

You don't mention what is happening to the deposit that the tenant pays, surely that's some compensation to you when they break a lease. Otherwise you cant hold the agent responsible if a tenant breaks a lease. 

Unfortunately, it appears to be the mantra amongst 2 month tourists nowadays, They want a condo for some reason even though a hotel would better suit their needs, and probably cheaper. 

I see it all the time in tourist social media forums/groups, its all they talk about, even though people are often pointing out that a condo doesn't suit a short stay. Its possible your agent is targeting these people.

 

Maybe find out where the agent is finding the tenants, or how the property is being marketed, and change the demographic of prospective tenants

[gargamon]

It's part of being a landlord, not just in Thailand but anywhere. Tenants break leases all the time. If it's too much for you then you need to get out of the business. 

[KIngsofisaan]

The precarious situation is the agent gets paid as soon as they find a tenant.

 

Why would they care once the money is in their pocket if the tenant leaves?

 

This means a repeat commission in 2 months insteading of waiting 12 months.

 

They are simply not doing their job.

 

Ask for first month, last month and a 1 month security deposit (equal to 1 month's rent)

 

 

 

 

[FriendlyFarang]

Does the tenant pay 1 or 2 months deposit?