Investor · Dallas, TX · Member since 2015 · 446 posts · 197 votes
Tenant is going month-to-month at a higher rent than the (increased) 12-month lease rate. It's about a 20% increase from the current base rent, but tenant frequently pays late and it's not much more when that is considered.
Prop Mgt co is charging me the same "lease renewal" fee that they'd impose if there was an actual lease ($95). Is the imposition of this fee a reasonable bone to pick with them?
Residential Real Estate Broker · Portland, OR · Member since 2015 · 153 posts · 105 votes
11y
Does your agreement specify what a lease is? IMO, mtm tenancy is a "rental agreement" and a lease is a 6+month tenancy. But we specify that in our agreements. I wouldn't pay a lease renewal fee for a mtm unless the agency also agreed to refund the fee if the tenant moved out within 6 months.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
11y
What does your contract say? If they are entitled to a lease renewal fee, why shouldn't they get one? I hope that is $95 a year, or perhaps per increase, and not every month.
If they are charging you $95 every month, you definitely have a bone to pick with them. I would fire my PM company in a heart beat! I deal with a VERY reasonable PM company. By reasonable, I mean the owner and managers. I've always had a few issues and was upfront with them and they put their feet in my shoes and it always works out.
What does your contract say? If they are entitled to a lease renewal fee, why shouldn't they get one? I hope that is $95 a year, or perhaps per increase, and not every month.
Of course the contract says they're entitled to a lease renewal fee and it is $95/lease renewal. My point is that I expected there to be a new one-year lease, not just a fee earned for a conversion to month-to-month status because the lease lapsed on its own.
If they are charging you $95 every month, you definitely have a bone to pick with them. I would fire my PM company in a heart beat! I deal with a VERY reasonable PM company. By reasonable, I mean the owner and managers. I've always had a few issues and was upfront with them and they put their feet in my shoes and it always works out.
But once a month renewal fee is ludicrous.
Yes, a once a month renewal fee would be ludicrous. I don't expect it to be imposed monthly...
No not ethical. It's kind of funny...I purchased a few apt buildings last year and alot of the tenants have remained. ALOT of them are still on old leases and or on a M2M basis. My PM has not required them to get on their lease yet. I was afraid of getting charged lease new lease fee's on ALL the tenants as there are a lot! ha ha!
Residential Real Estate Broker · Portland, OR · Member since 2015 · 153 posts · 105 votes
11y
Does your agreement specify what a lease is? IMO, mtm tenancy is a "rental agreement" and a lease is a 6+month tenancy. But we specify that in our agreements. I wouldn't pay a lease renewal fee for a mtm unless the agency also agreed to refund the fee if the tenant moved out within 6 months.
If the rent was increased it IS a new lease. Did they not get the rent increase in writing with a new lease???
Correct. I guess I should have specified that. They didn't get a new lease signed that is a month to month lease. Rather, since the tenant didn't return the proposed new lease, it has converted to a month to month tenancy, albeit at a higher rate specified in the cover letter of the mailing. So nothing new in writing other than a letter sent out that wasn't acknowledged. When I asked what the status was I was told "well they didn't return the new lease so it just converts to MTM now".
Real Estate Agent/Property Management · Houston, TX · Member since 2014 · 1k+ posts · 827 votes
11y
I personally do not charge a renewal fee on an existing tenant. My leasing fee only kicks in when I find a new tenant for the property.
Charging a fee to convert to month-to-month seems a little sneaky to me. This is from the TAR property management agreement and it specifically excludes fees on month-to-month renewals or extensions. Not sure if your state has the same thing.
If the rent was increased it IS a new lease. Did they not get the rent increase in writing with a new lease???
Correct. I guess I should have specified that. They didn't get a new lease signed that is a month to month lease. Rather, since the tenant didn't return the proposed new lease, it has converted to a month to month tenancy, albeit at a higher rate specified in the cover letter of the mailing. So nothing new in writing other than a letter sent out that wasn't acknowledged. When I asked what the status was I was told "well they didn't return the new lease so it just converts to MTM now".
Based on that I would argue that they didn't get a new lease and are not entitled to renewal fee. "You want payment for work done, then do the work."