Questionable PM Fees for Leasing

2 Replies

I need opinions/advice. We bought a property that already had a tenant but not under a lease.  We hired a property manager who did a background check and had him sign a lease. Our PM agreement says we will pay PM 50% of first month's rent "each time property is leased to new tenant."  Is it standard to pay the fee if the property is already occupied with a tenant?  Since he wasn't in a lease, would he be considered a "new tenant" now that he is in a lease?  Just want to be fair but not charged unnecessarily. Thanks.

Hi Alfred,

It sounds like there is some gray area here, but I don't think the PM should charge you 1/2 month's rent for running a credit/background check and then drawing up a lease.  It is only a few hours work at most.  You can easily argue that the tenant was not a new tenant.  Plus, the PM did no work in finding a new tenant, advertising the unit for rent, showing the unit, etc.  

I agree with @Jay Shapiro, the placement fee is to cover marketing, screening, showing, etc... they did none of this. I would question them to justify their fee, it seems outrageous.