Investor · Burbank, CA · Member since 2015 · 42 posts · 11 votes
Hi BP,
I am seriously considering suing my PM, and would like to hear what other landlords would do in this situation.
Recently one of my Dallas rentals became vacant. It was originally rented to an elderly couple and the husband had passed away in his sleep. The wife's family was originally from a different state so she decided to move in with her son and I agreed to release her from her lease.
Upon confirming her move out date, the manager should've gone over and do the final walk through with her. Later that night, I received an e mail from the PM saying that he is leaving the house keys with a neighbor across the street, who is not part of the lease agreement and not an emergency contact, because she will be taking a couch left over by the tenant in the garage and cleaning the house for them. Essentially, the manager decided it is alright to risk having unrelated 3rd parties go in and out of my property and potentially causing huge liability risks. I have also never met this neighbor and it's questionable if she will believe that I am the home owner and actually hand the keys to me. I am flying to Dallas to look at the work needed to be done for the home, when I requested the final walk through photos and itemized list of repairs, the e mail was left unanswered, which makes me believe that he actually didn't take any photos and made no such list.
My question now, is that I know generally speaking involving the legal system is a huge waste of time and money, but since the manager knowingly risked my entire investment by breaching his PM contract with me, which requires him to limit my liability and take care of the property, it seems appropriate to sue him for the entire value of the home, which is not a small amount and I feel like it's a needed lesson for him.
On top of handing off the keys to a neighbor, there are other things stated in the PM contract that mandates him do that he doesn't do.
For example:
The PM should upload all invoices and documents to the owners portal but the owners portal has nothing in it, and he only sends a monthly statement by e mail.
The tenants' portal was supposed to be used to submit requests but the tenants don't even have login information. All tickets are called in or e mailed.
He was supposed to file 1099 for me but he doesn't do it. When requested he sent me an annual statement and told me to take it to my accountant.
There are many other things this guy doesn't do, at the very least I feel like his license should be revoked. What do you think is the best course of action here?
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
11y
You're kidding...right?
What you've described is why you should fire them, not a reason to sue them. Have there been any monetary damages done to this property that you can document, that are sizeable enough to warrant the time an effort of legal recovery?
Sounds to me like you are just mad at yourself for not doing a better job of filtering out this PM in the first place, and not taking the responsibility for it.
From what I can see, so far, all you've "lost" is peace of mind...and a little bit of your ego. Fire them, replace the PM, learn from the experience (more valuable than what you've lost...or could gain by suing), ...and move on.
...and I say all of this as someone who likes to point out to others that if it wasn't for lawyers, you probably wouldn't need attorney's.
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
11y
The problem is that, at least from the sounds of it, there was no actual loss. Yes it was reckless, but I have, unfortunately, heard of much worse. Without a loss of note you would only be going after him for punitive damages (and the value of the house would be way too high regardless). I'm not a lawyer, but I don't think you have any case. Just find a new property manager and replace him.
Side note: In Massachusetts (and a lot of other states), by changing the locks illegally, you could of ended up in court and losing potentislly 3x the security deposit fee.....please please please learn and ask/post before jumping.
Rich changing the locks in MA (self-help eviction) is a criminal offense punishable by up to 6 months in prison and up to a $300 fine. It has nothing to do with security deposit laws. If a landlord does not handle a security deposit properly they could be responsible for the payment of 3X the amount of the deposit. Just a confusion of the different laws.
Landlord and Rehabber · Newton, MA · Member since 2010 · 2k+ posts · 877 votes
11y
As everyone else has said doing a law suit ranges from fruitless to frivolous and crazy.
It does sound like there MAY be some real issues with the PM and you should probably part ways.
Though I'm not convinced they did anything worth worrying much about prior to you getting a little nutty on them. But the stuff after the fact (Mostly the changing the locks stuff) is enough reason to end the relationship.
BTW did you happen to already have a trip out there planned or did you decided to go out there for this situation on short notice? If you flew out specifically to deal with this "issue" in all honesty if you felt you needed to go out for this you need to:
A) Sell the property and invest in something else or at least get a place locally you can self manage.
B) Move there and self manage your property. You will never be happy with any PM and will waste so much time, effort and money going out there and micro-manage that you might as well just live there.
Investor · Burbank, CA · Member since 2015 · 42 posts · 11 votes
11y
Hi BP,
I feel this post has created a lot of misunderstanding and assumptions about me as a person and as a landlord. I apologize for that happening, because all the information I gave didn't actually include a lot of the details that caused the confusion. I wanted to explain everything and make this my final post on the topic. I have learned a lot from the various replies and will be reevaluating myself as a landlord and study harder, and I thank those who have provided me with all the information.
Regarding the PM Miscommunication & expectation: Since early on signing with this PM and then finding out he doesn't do anything he said he would do in the interview and on the PM contract, I felt cheated. But since he was taking over for another PM while the tenants were in the process of moving in, I didn't want to change the PM on them again when they are trying to settle in. Not having the tenant/landlord portals was annoying, but it wasn't annoying enough to cause my tenants confusion and the termination fee, so I was going to wait til the end of the contract and find another PM. 2 weeks after the lease executed, I noticed I was missing the pet agreement and e mailed the PM to send it to me as we were already in process to purchase another home and the lender wanted to see the lease. After 3 e mails with no replies, I cced the PM's partner in business on the e mail as well to see if he would maybe respond. Without realizing it wasn't my PM who sent him the e mail, the PM partner replied saying "asking for all the docs already, what a high maintenance ^%$#" and of course I saw the e mail as well. So basically the relationship got off on a really rocky start.
Months passed and everything was fine until we got a service request on a Friday from the tenants saying the AC stopped working in TX's 110 degree heat and was asking to have it fixed. The PM contacted my home warranty and the AC company called me because I was the owner of the account and told me they couldn't get out there until Monday. The next morning around 5AM I got a call from the AC company and they told me the lady of the house was begging for them to get out there because it's too hot and her husband was doing chemo at home and couldn't bear the heat. They had contacted the manager later on Friday about having the technician come out but the PM rejected them without consulting me (I had no voice mail nor missed call), and the AC company was wondering if I would pay for the weekend rate and risk not having the warranty cover the repair to have the AC fixed for the tenants. I consider this an emergency and told them to fix it as soon as they could.
Due to the rejection of this call, communication broke down between the PM and the tenants. The husband passed away two weeks later. The tenant actually called the AC company to get my phone number to call me, instead of the PM, to inform me the husband had passed and she intended to vacate early. I redirected her to speak with the PM because he would be the one working out the move out details with them. I told the PM to contact me once he worked things out with the remaining tenant because there were some upgrades I wanted to make, and I wanted to walk the property with the contractor, who would also do the repair work after the tenant vacated. I also wanted the PM to let me know the final move out date so I could enter the property with a lockbox and provide the code to the contractor as well. I let the PM know I wish he could be there so I could introduce him to the contractor since they would be working together. First week of August PM got back to me with the move out date of the mother on 8/17, but failed to mention that cleaning for the home would be going into the weekend of 8/23 and the daughter would be doing it. The PM proceeded to ask me when I would be in town so he could schedule the walk through with me. I told him I on 8/11 I would be in on 8/21 and he waited til late 8/20 to tell me 8/21 is fine but the keys were being held by the neighbor and and he wouldn't be able to meet me on 8/22 for the walk through.
At this point, the major break down in communication was that
I had asked the PM for the final move out date of the tenant, meaning he was to deliver me a home that he had already walked through, formed a list of repairs and had the keys in hand by the time I arrived. There was no point in me being there if the tenant hadn't finished the walk through process because the contractor was going to do the repair work as well, and without knowing the actual damage I couldn't get an accurate quote. The PM provided the move out date of the mother on 8/17, not the final cleaned date on 8/22.
I waited until the PM confirmed the final move out date before booking my ticket. I had originally planned to be in Dallas first week of September, but since the final move out date was so early, I didn't want to waste 2 weeks of time and have the home just sitting there. The PM had every chance to let me know that the home would not be ready by then but he didn't say a word.
The idea of suing actually came from this miscommunication. Before I arrived, I asked the PM to ensure the tenant had relinquished possession of the home so I would actually have the right to enter.
Why wouldn't I be angry and feel like my asset had been threatened when I heard the PM actually DIDN'T go put a lockbox on the door, and instead, the house key was in some neighbor's hands?
The mistake I made out of ignorance was that based on this information I knew the keys were handed over to the daughter by the tenant, but didn't know that was actually legal. However, I stand by the request to have the lockbox put on the door because the neighbor daughter doesn't know me, and it's unclear if I would be able to get the keys back if I just met up with her. The PM should have contacted her and provided her with the code.
The point of me starting this thread was actually to find a reason NOT to get into a legal case. I don't know the legal system and I was angry and upset and felt like something needed to be done, but I also know the amount of time, effort and money involved with the case probably wouldn't be worth it, not to mention I would have to stay in Texas until the case is resolved and I don't want to miss work for it. If I was ready to proceed I would've contacted a lawyer directly instead of posting it here.
Everything here is documented through e mail and the tenant also saved all the voice mails the neighbor daughter exchanged with the PM. The information delivered by the PM to each of us didn't match up, and in certain instances the tenant had asked the PM to verify things with me but I was never contacted.
To make matters worse, while the PM was swapping out the locks, they took photos of the home, before it had been cleaned, knowing full well no work had been done yet, e mailed them to me, and suggested that I keep all deposits when the daughter had made it clear to the PM that they would be seeking a full refund and would address any problems to achieve that.
The update also included the PM explaining that the tenant had vacated the property on the 17th so I had every right to enter the home as I pleased, which demonstrated that he didn't know about the tenant's right to hand the keys off to a 3rd party while the home was still in her possession either.
@Jay Hinrichs I actually had another PM whom I had great trust and relationship with in the past, I couldn't hand this home to him because it is outside of his service area. I didn't have to step in to do anything when I was working with this PM because before I would ask a question he would always provide the answer first. Communication was fantastic and I had full confidence in his judgement. My current PM couldn't provide me with the same confidence, that's why it sounded like I was micro managing, because I felt like my tenants were being treated unfairly.