Dispute with Property Manager

19 Replies

Hi, all, I'm just looking for some guidance here.

I moved from my residence a few months ago and rather than sell, I decided to hold onto the house as a rental property. I hired a property management company for an initial fee ($245, one-time only), an advertising fee ($400 any time they have to get a new tenant) and then 10% of the monthly rent. They required three months notice if I cancelled their service, or there'd be an early termination fee of three months' rental fee (the 10% of the rental amount).

I hired them with over two month's lead time before the place would be available, figuring that would be plenty of time to get a tenant. They were sloppy from the beginning, not following through on a scheduled inspection until two weeks late, then never getting back to me on any recommended or necessary work (which there definitely was). The "professional photography" was some guy who couldn't care less coming by and snapping a few pics on his iPhone (no flash!) before driving off asap. The pics were awful, and it still amazes me that anyone could post grainy and blurry pics of random parts of the house online and expect it to sell.

It took weeks and many emails/texts and revisions on their part to correct the ads (and I had to take my own pics) and with two weeks to go, it still had not rented. In fact, only one person had even LOOKED at the house in the entire two months they had been advertising it. 

I then notified them that I was terminating our agreement immediately. I felt they didn't live up to their end off the bargain. I figured I'd eat the initial fees ($645) but since the place never rented, and they didn't live up to their end of the deal there would be no early termination fee (I really thought I should get EVERYTHING back but I figured I'd have no chance getting a dime from them without litigation). I discussed this with them, but they were noncommittal. 

Fast forward two months, and they've just sent me a bill for the early termination fee PLUS their monthly rental fees for the meantime.

How can I handle this? The amounts involved seem too small to be worth getting a lawyer involved, but I need to resolve this somehow, and they clearly aren't interested in being remotely fair. What can they do if I don't pay? What options are available to me to resolve this? 

Thanks for any and all advice/opinions/thoughts.  

@Eric Everstine  -Sorry to hear about these troubles

I do have a couple of questions for you, before I get to answering your questions

1) How did you find this property manager (I hope you used referrals and interviewed them extensively?)

2) If it was 10% of the rent, and you did not actually collect any rental income, I am not exactly sure how they can charge you for this.

3) On Termination, did you have a frank conversation with them with respect to their performance and the fact that you would not be paying the termination fee?

On MOST contracts, there are clauses for negligence in which you can terminate the agreement immediately. In these cases, you should not be expected to pay any termination fees.

In my opinion, I would NOT pay them. Challenge them to prove to you why they feel like they deserve to be paid. Also let them know that you are considering telling the world about your experience with the PM company. If they care about their reputation, they should be able to let it go..

I would just ignore the bill. Keep the documentation. If they sue you in small claims or something just show the judge the evidence. But most likely they will not really be able to pursue you on this small amount.

Hi Ram,

1) Unfortunately, not through referral but through internet search. I talked to a few places and my contact at this company (pretty big, actually) seemed the nicest and most reliable. Of course, as soon as I signed on, I was handed off to someone else who was not nearly as nice or engaged. 

2) Those are my thoughts as well, but I think there's a minimum amount, as well. My fear is that, being a big company, they've had all language in contracts written very carefully by lawyers, and perhaps even had this "dispute" discussed with a lawyer and concluded that they could very well proceed how they are proceeding.

3) Yes. I still have email exchanges to that effect. Basically, that I was not happy with their performance and would not be paying the termination fee, particularly since they never got me a tenant.

Anish,

I'm fine with going that route, except there are two issues:

1) I am now out of state, so I would much rather not deal with court, if it comes to that.

2) Is there any way this could affect my credit rating if they reported it?

I very much appreciate the responses.

Eric

Hi Eric, 

Wow. That is absolutely ridiculous, and I'm sorry that you had such a horrible experience. 

May I ask what company you were working with? That's one I'd certainly want to avoid in the future.

If you ever are in need of turnkey service with guaranteed income (and none of those ridiculous fees), I might be able to help out.

Best of luck! 

Personally, I'd write them a letter sent certified mail detailing exactly what terms in the contract they did not live up to along with my reasons for terminating the contract due to their failure to perform, then I'd ask that they send me a refund of all fees previously paid so I can obtain proper management elsewhere.  Even if they never sent me anything, I'd at least feel like I have documented exactly what happened in case it does go any further.  I'm not a lawyer, so no legal advice, but at least they know that if they push you further, you're going to be asking them for money back as well.      

Monika,

Real Property Management in Las Vegas. If you do know a good PM in that city, definitely let me know. I'm doing it myself for now, but I can't imagine wanting to be an absentee landlord forever. 

Lynn,

I like your idea. I will probably do that. I do have a free consultation with an attorney scheduled, so we'll see what useful information I can get from that. 

Originally posted by @Eric Everstine :

Is there any way this could affect my credit rating if they reported it?

Yes, if they report the unpaid portion of what they billed you for to a collections agency.  It's easy to do from their standpoint and they don't need a judgment to do it.  That would definitely show up as a negative entry on your credit report. 

Hope this works out for you.

Originally posted by @Phillip Dwyer :

@Eric Everstine Did they use a GLVAR contract with you or one they created?  

 Man, this is really awful, but I think that since I thought the book was closed on them, I may have thrown all that stuff out. Awful decision making on my part.

Could you tell me what difference it would make? 

The GLVAR contract has specific language that addresses early termination, fees, ect.  GLVAR stands for Greater Las Vegas Association of REALTORS.  Not all PM companies use this, but a good portion do. 

@Eric Everstine To add to my post from last night:  If the management company is a member of GLVAR they have agreed to certain ethical standards.  Most members use the forms developed by the association.  

I would ask the company you are dealing with for a copy of the executed agreements if you don't have them in your possession.  Then ask an attorney to review the agreements.  

Hi @Eric Everstine ,

I'm sorry about your troubles with Real Property Management Las Vegas. Just as an FYI, all Real Property Management offices are independently owned and operated franchises and you might have better luck with another office in the LV area, there are 4 offices in that area, run by different owners. Just a thought :) Good luck!  http://www.realpropertymgt.com/find-the-nearest-real-property-manager?address=las+vegas 

I would contact the other franchisees and let them know your problems and how this negative publicity on the corporate name that hey all share will hurt the rest of the franchise. Mention that you will use social media, BP and other means to let everyone know of the problem

Maybe they can share the other of the franchise that you were with into helping you out  a bit. good luck

Hi Eric,

I am a small town Real Estate Broker who also does Property Management for some investors out of CT, and I was shocked at your experience.  As a PM, I charge 10% of gross rent (including late payments).  Inclusive of that 10% is typically all what you mentioned above for extra.  There are times where I charge a fee to fill a vacancy, but if I am representing someone with multiple units, I usually do not charge anything.  For instance, I represent someone who has 6 units who I charge nothing to for filling the vacancy because of the volume of rent and amount I make.

I can tell you that I refunded an owner in June for my "fee" because we had a month of vacancy in between tenants (which I rarely have to do).  Feel free to reach out to me directly with any other thoughts as I am a property manager on a smaller level and would be fine sharing my experience with you!!  www.santa-realty.com

@Eric Everstine You should get with @Phillip Dwyer if your looking for a good manager that works hard and is honest as the day is long. 

They should have told you not to waste time marketing the property until it was vacant. The Las Vegas market moves quickly and folks like to see the place vacant movie ready. Common sense would say start a couple months early but it rarely works out. Those folks that show up with a Uhaul looking at rentals can't wait. I will never understand why anyone would move across country without a rental secured but thats Vegas.

@Tiger M. is right.  Not only are prospective tenants in a hurry to move in, but they also are not tolerant of doing move-in repairs after they've taken occupancy.  I've tried this many times thinking I'm doing them a favor by letting them take occupancy prior to me getting everything done.  It hasn't work out yet.