Do I need an Attorney for E&O Claim against Property Management?

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Do I need an Attorney for E&O Claim against Property Management?

Jean Norton
Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes

Two years ago I bought a Condo in Chicago.  The property management company that represents the Condo Association said I could furnish it and rent it monthly as a corporate rental, which I have done.

Now they state I must Cease and Desist as it is in violation of the Association's governing documents.

I don't mind following their rules. However, the cost for me to sell the furniture at fire sale rates, plus lost income during this phase (plus had to turn away and refund a corporate rental for a month), plus the losses incurred as a result of having to accept a lower income model is significant.

Had they properly represented the association and conveyed the rules appropriately, I never would have bought the condo.

I assume the property management company has E&O insurance, but I don't really know.

What is my recourse?

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  • Mike McCarthy
    Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    8y
    I would start with a letter. Reference your initial communications with them (hopefully you have someone in writing). Lay out your costs as of now because of their miscommunication. Ask what they can do to help offset those costs. If that doesn’t work, I think your next step is a lawyer. You’ll have to determine how much money you’re out vs the cost to sue (or threaten to). You can also consider small claims court. But I’d only peruse those options if you have a rock solid case. Also, do you have to keep working with this company? I wouldn’t really want to sue someone knowing that I expect them to look out for me over the next however many years. At some point it may be worthwhile to swallow your pride and some money if you can work out a good agreement between you both.
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  • Jean Norton
    OP
    Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
    8y

    @Mike McCarthy - I've shown the property management company the screenshot where they told me in err that I could rent monthly.  They are aware I have this documentation and have not acknowledged it.

    The property management company the association chooses is not within my control.  They serve the association and the board of directors.

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  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    8y
    Hello Jean, My first question and most importantly - did you receive a copy of your covenants and conditions and bi laws as a part of your contract to purchase ? These documents are what set the rules in which the Association and its members must abide. If those regulations state you can’t rent short term then that’s a problem.
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  • Jean Norton
    OP
    Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
    8y

    @Kim Meredith Hampton - yes I received those.  The issue is the property management company told me in error that I could use it as a corporate rental. 

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y
    Plaintiffs don’t make E&O claims. They demand money damages and/or file suit. Retaining an attorney is your best course of action.
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