I'm closing on a 14 unit apartment in Cincinnati in a couple weeks. I'm still looking for a property manager. I've found one who's terms I like, but as I was reviewing the property I saw a "Special Power of Attorney" clause. I not sure if this is normal, but most of it looked pretty mundane except the last part.
I don't mind them having the ability to hire people to make "authorized" repairs and what not, but if I'm reading correctly (and I may not be) it looks like they can request, hire, retain and direct an attorney on my behalf without my authorization. So my first question is, is this really necessary? And my second question is, what type of liability does this open me up to with regard to my PM forcing me to spend money?
@Michael Hooper It seems a little odd unless Ohio requires a limited power of attorney to perform the duties of a property manager.
In Texas, our standard TAR management agreement says "owner grants broker the authority to...... " and then lists 25 or so functions. And our management agreement specifically says that the broker may not hire or pay for an attorney to represent the owner, although the broker may communicate with the owner's attorney.
If you have questions regarding the legal impact of this kind of agreement, you certainly need to take the entire agreement to a loca lawyer for review. The provision needs to be read in light of the entire agreement to determine what, if any, danagers you may face by executing this document.
As a property manager myself I can tell you some things are negotiable. If you don’t feel comfortable with it tell them and maybe they can get language in the contract that you agree with.
This might be a way to get around having a real estate licence if that is required in that state for Property Managers. In Texas, you need to have a licence in order to be a property manager for someone else. Personally I think this is stupid. I manage 4 properties for my father, but since I do this through my remodeling business, I have similar language in place as a CYA. I know I can manage for my father without an issue, but just want it to be on the up and up as I represent myself as the PM to the tenants.
I would love to start managing properties for others as I have seen first hand the wide range of property managers out there and feel that some of them are opportunistic vultures that have fees that are outrageous and prey on remote investors.
Although I am considering getting licenced, there is nothing in becoming licenced that will improve my ability to be a good property manager.
If this is a way to getting around licensing, let me know.
Congrats Michael, let me know if you'd like a couple other leads for management in Cincinnati. I can forward.
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