We are in the process of purchasing a property in Wisconsin that is currently managed by a property management company. Does the contract that the current owners have with the management company legally get transferred to us when we assume the property, or are we legally able to cut off ties with the property management company right away? I am not sure yet if there is a contract with the property management company... I'm only assuming.
There may also be an issue of what the tenants are paying vs what their lease says. The lease (and property information that we've got up to this point) states that they are paying $670 a month, but when we look at the lease and pet addendum, they should be paying $670 a month + $25 per month pet fee. If they are not paying the $25 pet fee per month for the dog they have, are we legally able to start enforcing that as soon as we assume the property? Our other properties currently also have a $25 pet fee, per pet.
Usually a contract of that nature (the PM one) would not carry to the new owner, though obviously the lease would.
As for the pet fee, if it is in their current lease then yes you should be able to start enforcing it. The big exception is for a service animal. It could be they are not paying it because of a completely legal reason (service papers) and would therefore not be possible to collect the $25/month. Also it may be easier to enforce it X month after taking ownership, otherwise in theory that first month there could be some complications in the finances. It would also be nice to give the tenants a heads up. I would not give them 4 months, but some communication and a notice that pet fee will be enforced starting in a month would be courteous and may help smooth the transition.
If the leases are signed with the old owner, those should transfer however it would be wise to sign new leases and meet the existing residents.
Leases signed with the Management company may be a bit harder to get switched over if you plan on getting rid of the company.
I would terminate the management agreement first then re sign leases with residents.
@Casandra M. will you be paying cash for your purchase?
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