My Property Management Company took $8,000 from us!! What to do?

10 Replies

As it turns out, property management puts you at risk like anything else does.  Hard lesson learned.  We just found out 2 days ago that the owner of our property management company has been embezzeling all funds from the accounts.  So this means rent received and processed for June for all of our properties with management will not be distributed to us.  BIG loss there.  All tenants' deposits have been taken as well.  Another big loss there.  This adds up to $8,000 in total for us.  Others will be out much more than that I'm sure.  

There is currently court action against the company and a "receiver" has taken over.  But we are at a loss for what we need to be doing exactly.  Is there a way to fight to get our money that is due to us?  Our contracts with management are void due to fraud, right?  We have tried to get some answers from the receiver and no replies yet...  That's why they're called a "receiver" right?  Ok, bad joke.  Any help here is appreciated.

I would agree. Its time to get an attorney on this if nothing else to perform risk management because the deposits are not your money but property of your tenants. This could turn out really bad for you if you do not move quickly to get a handle on it. 

A receiver being involved means they've declared bankruptcy.  The receive is the one that oversees the bankruptcy process.   You need an attorney.  You're an unsecured creditor.   You may or may not get any money out of the bankruptcy proceedings.  Depends on how much money they can scrape up and how much is owed and the priority of other creditors.  There's a pretty good chance the $8K is completely lost.

Originally posted by @Jon Holdman :

A receiver being involved means they've declared bankruptcy.  The receive is the one that oversees the bankruptcy process.   You need an attorney.  You're an unsecured creditor.   You may or may not get any money out of the bankruptcy proceedings.  Depends on how much money they can scrape up and how much is owed and the priority of other creditors.  There's a pretty good chance the $8K is completely lost.

 We did finally get a call back from a real estate attorney today and they stated the same as you but it sounded quite hopeless even moreso because it's a "small amount" of money and not worth going after.

Actually, the person who takes over in a bankruptcy is usually called a Trustee.  If there is indeed a receiver appointed it suggests there is already a court action pending and someone has stepped in to make sure no more money is taken and to handle the day to day affairs until things are sorted out.  Often they will be going over the books to determine the extent of the theft.  No one should be getting your current rent checks without having court authority.  You need to contact the receiver immediately either way.  you do not want your funds to be used to cover operating expenses if they are not reasonable.  If someone is receiving your rent check you need to know who it is.  You may want to direct your renters by certified mail to send rent directly to you or your new property manager.  Call, write and if feasible go there in person.

Whoa!  I've heard and know some shady PMs, but this is off the hook. First thing is to direct your renters to pay rent to you, not them as @Jerry W. points out.  2nd is to call a local knee breaker and give these idiots a visit.  Seriously - I feel for you.  Perhaps self-management isn't so bad after all.  Please keep us posted @Kyle Denmark .

Originally posted by @Steve Vaughan :

Whoa!  I've heard and know some shady PMs, but this is off the hook. First thing is to direct your renters to pay rent to you, not them as @Jerry W. points out.  2nd is to call a local knee breaker and give these idiots a visit.  Seriously - I feel for you.  Perhaps self-management isn't so bad after all.  Please keep us posted @Kyle Denmark .

 Better yet, form your own management company. :)