So I fired the property manager in early March...

4 Replies

and it has been a rough road.

Upon being fired she was slow to respond and waited until I stated I would pick up all documents related to the property in person to take any action. The only documents she forwarded to me (weeks later) were post dated rent checks and a copy of the lease.

We've been writing back and forth sporadically since then (she never answers or returns calls) regarding the security deposits that have yet to be forwarded, however, the last time she responded was April 16th when she said she would have them in the mail by the end of the day. They're still not here.


I'm worried that I will never see those deposits. Does anyone have any advice on how to go about getting them from her? Should I just take it to court?

Thanks!

Originally posted by @Kelsy Soderlund :
and it has been a rough road.

Upon being fired she was slow to respond and waited until I stated I would pick up all documents related to the property in person to take any action. The only documents she forwarded to me (weeks later) were post dated rent checks and a copy of the lease.

We've been writing back and forth sporadically since then (she never answers or returns calls) regarding the security deposits that have yet to be forwarded, however, the last time she responded was April 16th when she said she would have them in the mail by the end of the day. They're still not here.


I'm worried that I will never see those deposits. Does anyone have any advice on how to go about getting them from her? Should I just take it to court?

Thanks!

Why don't you go over and get the deposits in person?

Give her written notice you will be taking legal action and turning it over to collections. Then, put the documents together and turn it over to a good collections company. Lesson learned, move on, be WAY more selective in who you hire next time.

It doesn't sound like she is an established company. If she is then get online and leave bad reviews on google and others, as an investor. That hurts a PM company more than most things and helps others know who not to hire.

You might have two problems.

Problem #1: The Tenants

Bad property managers sometimes attract bad tenants. That was my first thought when you mentioned the post-dated rent checks (though they could fine if they were just for convenience). You may not be able to do anything about the past, but you definitely want to fix the future. That's why I list the tenants as problem #1.

I'd keep a close eye on them to make sure you don't incur unnecessary losses in the future. If possible, review the property manager's screening info because there are multiple tenant scenarios: a) good tenants, b) bad tenants, and c) good tenants that became bad given lax management. With the 3rd group, just some good retraining may be all that's needed to make them good again.

In any case, if the PM was lax, that could have created problems for the tenant too like unresponsiveness, so letting them know that you've taken over and are dedicated to having a good landlord-tenant experience.

Problem #2: The Ex-PM

I would look at the contract and make my decision of how to proceed based on two things: 1) whether I think the PM even has the money to give me if forced to and 2) whether my contract allows the prevailing party to recoup legal and/or collections fees in case of a suit.

I see 3 options:

Collections: Like Account Closed says, collections might be a good option. I've never used a service for a real estate-related need, but have used them a lot in business-to-business needs. The good is that you turn it over to them and they do the work. The bad is that they typically take a hefty % of the recovery amount and they give up quickly if it doesn't look like it'll be a winner. If the person knows that the collector will give up, they'll just ignore them and that'll be the end of that. If I didn't think the person had the money to actually pay, I might also go this route because it's less money and/or time/effort than the other options. BTW, if your contract has language about recouping legal and collections costs, you may be able to recoup the cost of collections.

Small Claims Court: Typically, this is a relatively easy DIY legal process. Given my experiences (again B2B not necessarily RE) in my area, this could work well. Someone withholding the owner's security deposits when they (the owner) is taking over management should be relatively straight forward. You may also be able to get the court to force the PM to turn over the other items that haven't been turned over. Typically, if the other party doesn't show up for court, you can easily win by default. The only downside I can see, other than the time, is if the contract says something about the PM having time to cure any issues. Even then, if your SCC is like ours locally, the contract isn't as important as what the judge/magistrate thinks is "fair." This is probably my preferred option.

Legal Representation: This would mean getting an attorney to represent you. This would only make sense if you think the person could actually make good financially. That is, a judgement isn't worth anything if the person doesn't have the money to pay it. Also, either the amount needs to be enough to justify the expense of a lawyer and/or you need to have in the contract the language about prevailing party recouping legal fees. I really wouldn't encourage incurring legal fees because it could be throwing good money after bad.

I'll bet she doesn't have the money to send the security deposits to you.

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