BiggerPockets

My property management company in Memphis wrote up a Lease Option contract on one of my SFR's in January 2011. The buyer/tenant gave a $4500 deposit and had 12 months to exercise his option. Well, 6 months into the contract, he defaulted and stopped paying rent. Property Manager initiated the eviction but the tenant filed BK to delay things so he has been living rent free for about the past 6 months. He has finally been evicted and now the Property Manager sent me an email telling me that I get $2250 of the deposit and his company gets to keep the other half. This didn't sound right so I called and he said that it is standard for all property management companies to keep half of the deposit. This doesn't sound right to me and I am going to challenge this and am contemplating a new management company for my properties but wanted to make sure and get others' opinions before I make a decision. Thank you in Advance!

Expressing this to the PM should help persuade them to back off. While I doubt it's "standard", it doesn't matter. What matters is how the written agreement, or L/O contract says.

Let us know how this plays out.