Hello out there BP,
I am trying to decide whether or not I have a case against my property management company. I've been reading some of the forum posts here on the subject of civil lawsuits against PM's and what I've gathered is that it's basically a waste of time and money. I'd really appreciate any feedback regarding what I am about to discuss. I'll try to keep this as short and concise as possible...
I am an out-of-state landlord, and we had a tenant turnover earlier this year. My PM conducted a walkthrough prior to the old tenants moving out to address the repairs that would need to be taken care of before the new tenants moved in. It was a rather long list of repairs- and the prices they quoted me seemed rather high. I decided, however, to have the PM take care of the repairs and agreed to their prices. Keep in mind that the tenants were responsible for about half of the repairs from damages they caused. Their entire security deposit would be used, and they were responsible for about another $800 worth of damages on top of their deposit. I followed up with the PM, and they told me that all the repairs had been taken care of and that the new tenants had moved in.
Fast forward a few months later to last week. I have not heard from the PM in quite some time (if I don't try to get ahold of them, there would be no communication- I never get any updates from them). I got this weird feeling that something was wrong due to the lack in communication. Something inside of me told me to simply give my tenants a call just to see how everything's been going since their move in date a few months ago. Good thing I did! After a rather lengthy conversation, I was informed that the majority of the supposed "repairs" were not taken care of. And the work that was done was incomplete or done if a half-assish manner. The tenant also told me that the move in condition of the property was terrible (dirty carpets, holes in the walls, broken glass windows, etc.). The house was not cleaned properly and some of the old tenants items were still there in various locations. (I also forgot to mention that the new tenant told me that, during her initial showing, she discovered the old tenants had 3 Rottweiler's that were living in the house, which was a breach of contract- and I was never informed of this by the PM). The tenant took tons of photos when they took occupancy and she sent me all of them. I sent her the list of the make ready repairs form that my PM gave me prior to her move in, and she is making notes about what was and wasn't repaired. So that's the issue regarding the make ready repairs.
The other issue is that I was blatantly lied to. I mentioned that the old tenants had a balance of about $800 due to damages they were responsible for in their contract. I emailed the PM regarding this issue, and they told me that the tenants refused to set up a payment plan with them to payoff the balance. I was then told that their balance would be sent to a collection company, and the name of the company was provided. Last week, I decided to email the collection co. about the status of the old tenants balance. They replied saying that they have no record of that individual in their system, and that no one from my PM company sent that info to their company. Included in the reply email the collection co. sent me, another email from a rep. from my PM's office was attached and indicated that they had never sent that balance to that collection company. There are probably about 10 employees who work for my PM company, so my guess is that I was lied to by a particular employee and that everyone who works there wasn't on the same page about the lie.
There are a few other things that I'm failing to mention so that I can keep this post short. But overall, I feel that I have been taken advantage of and lied to on numerous occasions by my PM. And I do have a good amount of evidence to prove it (photos, emails) and I also have the support of my new tenants who are willing to help me in court about all this (they are just as fed up as I am about this company and want justice).
Do you think I'd be able to win a civil lawsuit case if I take them to court? And if I were to win, could I also sue them for my attorney fees and other expenses related to the case that I might have to cough up? I'd be really glad to see some lawyers or experienced landlords/PM's to chime in here. The property is located in Texas.
I plan on flying there as soon as I can to figure everything out. I'm certain that, at the very least, that I am going to fire the PM.The losing money/being lied to aspect is a big issue for me regarding this matter, but more than anything I don't want anyone else to get harmed by these people. As bad as my experience has been with them, I can't understand how they have an A+ BBB rating and manage hundreds of doors, which is a lot of why I hired them in the first place. I'm going to do my best to blow the whistle so no one else gets hurt.
Another bump- please review moderator.
@Jon La Rosa Why the 2 bumps within just a few hours of the post?
It sounds like to me that your losses are very limited. You are likely to spend more money on court costs, to only get a judgement that you will be unlikely to ever recoup. Just fire the PM and hire a new company. Move on and chaulk it up to a learning experience.
I see this coming up in the forums quite a bit. Investor gets screwed by someone, whether it is a property management company, inspector, agent, lender...someone. They have a limited loss that you want to recoup. They have this feeling of betrayal or something akin to that. But in real estate, and any business for that matter you have to have a thick skin. We really need to be able to do a cost/benefit analysis. To pursue action will cost you not just money, but time, stress etc...and to what benefit? The possibility of recouping some of your money. Many people want to be right....I want to move past things like this and just get a new PM in place and move on. How much do you value your time? How much time are you going to spend trying to pursue a legal case, and how much time just thinking about it?
You should just cut your losses with that PM, forget the civil suit, you won't gain anything from it, and find a new PM. I am very blessed with a great PM and he takes care of everything, but I still check up on them. That is the only way to keep everyone honest.
On another note, I don't want my PM to call me...If he calls me something is wrong. That is why I hired them, to take care of my property. Not trying to be rude, but what do you want your PM to do in regards to communications? If you want them to call you monthly to say everything is OK, that seems a bit of a waste of time to me. On the other hand, you pay them so If you want them calling you to get updates might be good to tell them that on the front end.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.