Can I sue a negligent property manager?

Question

I've never sued anybody but my ex property manager was so negligent that I'm seriously considering it.

Can it be done? Any tips on how to do it?

The negligence includes:

• improperly screening 2 tenants who paid late 3+ months before being we agreed they could break the lease early, and then the tenants last payment bounced
• allowing a large dog with those tenants (I'd said no pets)
• repairing damage for those tenants may reach $5000
• improperly managing the house utilities (deadbeat tenants left me with a $1000 water bill)
• allowed a tree to grow beside the house which cost $6000 in plumbing repairs & tree removal
• lost rent while I repair the property

I'm actually getting out of the rental property business, partially due to this.

Thanks for any suggestions!

Duncan Taylor · Answer

There are lots of things you can do long before you sue them.

• You can file a complaint with the Washington State Real Estate Commission... http://www.dol.wa.gov/business/realestate/complaint.html
• You can file a claim with their bonding company.
• You can open a file on RipOffReport about them... http://www.ripoffreport.com

That's just for starters, but if you want to sue them for non-performance you should contact an attorney in the Seattle area to get the bell rolling.

Don't let this drive you out of owning rentals.

Chris Martin · Answer

The Washington REC may be a start. But they will most likely do nothing regarding any amounts owed (or perceived amunts owed) in the scenario you present. They may not even repremand or discipline the broker... it depends on the complaint and evidence the REC gathers. I'm not tryig to be negative here, I only say this based on my experience with a REC in another state (NCREC file D13-0168).

Anyone can sue. Clearly this is a civil issue. If you sue, as plaintiff you will need to prove before a judge the negligence by the defendant. You will need proof that the screening was improper (e.g. didn't follow your written requirements), the broker allowed (in writing, without your conscent) the dog, etc. You will need to show where in the management contract the manager is responsible for detecting and alerting you about tree growth, etc. Material to the case (IMO) is the written documentation on when you fired the PM, citing the "cause" (negligence)  and any of your actions with the brokerage company and the REC.

My guess (and it is just that) is a small claims judge would dismiss a small claims case like this unless there was a REC file showing 'cause'. It's probably going to be (again, just a guess without hearing the broker's side) a he-said, she-said kind of thing. In my company's D13-0168 proceedings, both the brokers and brokerage were cited (lost licenses) and the brokerage closed. All REC documented in 167 files compiled by a REC attorney. At this point I have enough to proceed with a (civil superior court or potentially small claims) money owed case against the individuals (piercing the veil will be required by the plaintiff, so proof of the 'instrumentality rule'...)

It didn't kill me. It didn't kill you... unless you let it kill you by getting out of the business. Sometimes the lessons are hard. Some are costly. There is a reason why a lot of REI choose self-management! We all know having a broker's license is not sufficent... and because of the impact, screening the PM is more important than screening tenants.

Matthew Paul · Answer

I am curious about a few things , first, letting a tree grow that affected the sewer line to the tune of 6 grand . Were these tenants there for 10 to 12 years ?  What type of tree grows that fast ?   ( I bought a house that was vacant for 7 years the biggest tree that grew next to the house was about 2 inches around and we pulled it out with a pick up and chain)    Do you ever ride by your properties ?

Account Closed · Answer

A few questions:

How do you know he improperly screened tenants? I've had tenants that looked great on paper, then turned out to be deadbeats anyway. It happens to the best of us.

Did he allow the dog or did they just move one in anyway? If he did allow it, that's probably not enough to sue over.

In my neck of the woods, the water company won't let tenants put it in their names, so it stays in the owner's name. Then there is nothing we can do if the tenant moves out and doesn't pay the bill. Not sure if this is the case where you are.

Why is the property manager responsible for a tree growing next to your house? Did you talk about it and they agreed to have it removed and didn't? I would think it would take several years to get to the point where it cost that much in damage.

Don't let this discourage you from being in the rental property business. There are plenty of great tenants out there.

Duncan Taylor · Answer

It is separate from E&O. The bond protects you the client from their financial malfeasance. The E&O protects them from your claims of their negligence. The E&O will come into play when/if you sue them. The bond steps in much earlier in the process.

If they won't voluntarily disclose their bonding company, you may have to get an attorney to file against them and start discovery.

Not all of the items on the list in your first post would be covered by the bond, but improperly managing the utilities should. That could be enough to get them to negotiate on the rest.

K S. · Answer

Thanks for all the replies. I appreciate the helpful info!

How do I determine whether my previous property management company has Error & Omissions coverage?  @Joe Gore

A bonding company seems separate from E&O, yes? So also, how do I determine their bonding company to file a claim? @Duncan Taylor

Many thanks.

Zach Schwarzmiller · Answer

The last two triplexes I purchased were horribly mismanaged by Century 21. Good for you for noticing, the owner of these buildings had no idea and actually hired Century 21 to sell the buildings for them! Was a good situation for myself, but the poor ex-owner :(

Account Closed · Answer

See if they have E&O insurance.

Joe Gore

Can I sue a negligent property manager?

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