Terminating property management contract

4 Replies


Unfortunately, I'm in a situation where I've had a rather poor experience with my property manager. They have made numerous mistakes over the years and I'm ready to move on (missing repairs, poor cleaning, slow responses etc.)

The contract expires on Jan. 31st 2021. It auto renews each year if I don't give 60 day notice. They found the winter tenant and are booking the summer weeks (vacation property). I'm totally fine with them managing it for the remainder of this term and to continue operations as such. However,I want the contract to end on 9/10 (after the summer) so I can either move in or self-manage it (yet to decide). 

They have an early termination fee of $500 and I must pay any commission for unexpired time.  I'm a little confused as to what this means? I want to pay them their commission up to 9/10 and the $500 termination fee. However, after 9/10 I don't wish to pay them anything else. Am I reading this right or do I cancel, pay $500 and still have to pay them until Jan. 31st 2021? If so, why would I even cancel? 

Termination Fee: If Owner terminates this Agreement, Broker shall receive his commission for the unexpired terms or renewals thereof, of any Lease made by Broker and/or Owner during the term of this Agreement and shall receive such commission for as long as any tenants procured by Broker occupies, rents or leases the Property. In addition, if the Agreement is terminated, subject to the terms and conditions set forth above, prior to the completion of one year, Owner shall pay Broker a Termination Fee of $500.00. This fee is in addition to any other fees owed under this Agreement.

The PM has said it's at the brokers discretion to cancel the contract. I've consulted an attorney and he said that doesn't make any sense and the reason why the termination fee exists. 

Any thoughts? 


I suppose they see the entire year's commission as theirs since it is presumably attributable to a tenant they placed in accordance with a new lease or lease renewal. Is your attorney aware of any reason that the clause could be held as invalid, otherwise this is something you ostensibly agreed to when you signed the contract?

Have you asked the broker if they will waive all or part of the termination related fees? Perhaps if you press the point of unsatisfactory services rendered they might be more disposed to a waiver? I once considered firing a PM and the company agree that if I left there would be no termination charges. Ultimately I didn't do it because they assigned me a different field manager who turned out to be much better.

Don't know you facts well, so just speculating.


So they would get paid out for the winter tenant (until the end of May) and all of the weekly summer bookings. No dispute there. However, I wish to self-manage and place the tenant for the following winter tenant (Sept 2020 to May 2021). For that reason, I planned to terminate early with the $500 fee. If I have to pay $500 to early terminate and still pay them for the winter tenant through Jan. 31st 2021, I might as well not cancel. So If it doesn't work the way I'm describing, I'm not sure why a termination fee even exists. 

As for waiving the fee, I don't think they believe they are doing a bad job. I'll admit that they aren't doing terrible, but at 18% I'd prefer them to be a lot better and for that reason I wish to move on after this summer. 

Hi Stephen, this does seem like quite a bit. There are a lot of great people in the industry (both on the self-management side with various platforms that can help you through managing it on your own, AND on the PM side if you decide to go that route). The thing is a negative experience can really leave a bad taste with you, especially given that your business is dependent upon them working with a sense of integrity. I would definitely consult with legal counsel to get a better idea of the path forward.

If you take the self-management approach, there are definitely some tools that can help with managing things moving forward but my natural assumption is that no matter how easy the on-boarding is, tenants will probably still want some sort of hand-holding through that change management process. So you may want to take that into consideration when you're deciding on a platform (one that offers different forms of support; email, phone, chat, 7-days a week). Aside from providing the basics, some services also offer your tenants additional capabilities which makes it an easier sell on your end when getting them to transition over (ie. their ability to report on-time rent payments to the credit bureaus; this can create an added incentive for making sure they pay that rent on time). I hope this information was helpful. Best of luck to you!