Negligent Property Manager

6 Replies

What type of recourse or safety net does a property owner have with a negligent property manager? Also, legally, how much responsibility does a property manager have for the actual physical condition of the property?

Please no lectures about how much the owner should be involved. As owners we are as involved as we can possibly be even though we are in a different state (through no fault of our own--my husband was transferred).

Thank you in advance for any advice or information.

Originally posted by Marie V:
What type of recourse or safety net does a property owner have with a negligent property manager? Also, legally, how much responsibility does a property manager have for the actual physical condition of the property?

Do you have a signed contract with your property manager? It should all be spelled out there.

Neglience is tough to prove. If the PM screened the tenants and they wrecked the place, the problem is the tenants. OTOH if the PM let their scumbucket friends move in without screening or paying rent you might have a case. Hard to respond to such a vague question.

I'm sorry to be so vague, its a long story, and I also suspect the Property Manager may glance at these forums as I see he is registered.

My husband and I got into the rental business by accident. His company transferred us 6 months after we built a brand new higher end home on property. With assurances that we would be transferred back we found a great Property Management Company to manage our property. Unfortunately, 6 months later they had a change in management and the new management team is less than stellar. We do have a contract, but some things are not spelled out. Plus, if something is spelled out in the contract and it is "broken," we are not sure what the next step is to remedy the situation.

The house is not trashed, but we recently had some tenants move out. We were told that during the final walkthrough everything was "like new" and nothing was broken or needed repair. Tenants were given their security depost and are now long gone. Now the Property Management Team is telling us "oops, you need to fix this, and this, and this, etc." Recently we were able to visit the property physically and found a thousand dollars worth of damage not reported. We feel they should have caught the damage during the initial walkthrough--some of it is very obvious.

The contract states they are not supposed to spend over $200 without first getting our authorization, but they had our barn repaired for $500 dollars, took the money out of that months rent, and then sent us the bill.

One of the team members told us the old tenants had renewed a one year lease. Then we got an email several months later that the tenants were moving out in 15 days. The PM team never told us that the tenants did not renew, nor did they tell us when the tenants gave a 30 day notice.

This is just a very small list of grievances. Any time we try to bring up an issue (politely) the Property Manager threatens to end all ties with us. Up to now we've had to put up with his/her threats because we had no one else to turn to, but we are now ready to end this relationship, even if we have to try and manage from a distance.

I understand these issues I bring up are small bother to most of you on these forums, but we find ourselves once again being transferred with a house on our hands. I am loath to trust another property manager and think we might sell this time, but I would like to learn from our first experience and hope that some of you here can give advice.

Thanks again, sorry the explanation was so long.

I would have to say consult an attorney, I mean ultimately from what you have shared it would appear that they have broken the terms of the contract and you have legal recourse. And hopefully you have kept all the documentation between yourself and the PM.

If all your really wanting to do is get out of the contract it sounds like your PM would walk away if you pushed hard enough. So if you just want that part done with I would terminate the contract with him and let him walk away. Just make sure you have something drawn up for y'all to sign so he doesn't claim later the you broke the contract.

Hi, To the original post; it would be much better to spell out the duties and responsibilities of the manager rather than trying to show negligence, you base any claim of specific performance of the duties. Your agrement should include, if allowed by your state law, a hold hamless and indemnification clause, putting the manager at risk for any loss, costs, damages or expenses arising from or out of the agreement. Good luck, Bill

Unfortunately your experience is consistent with what other people report from PMs. I'm sure there are good ones out there, but reports of those are pretty rare.

If the PM threatens to end the contract when you bring up an issue, then perhaps you should end the relationship. Its not much of a relationship if you can't bring up your concerns.

The PM could have been telling the truth both when you were told the tenant renewed the lease, and when you were told the tenant was leaving suddenly. That's not uncommon.

Your first recourse would be with the state real estate licensing agency. Most states require PMs to be licensed real estate agents. So, a complaint to the board may get a response.

Is there another PM in the area? I'd certainly be looking for another, since you're unhappy with this one.

I'd also consider selling this house. If your husband's company's going to be transferring him frequently, I'd only buy property if the company provides a transfer program where they cover your costs. Real estate transaction costs are exorbitant, easily amounting to 10% of the price of the house. "High end" houses rarely make good rentals. You're lucky to get enough rent to cover PITI, let alone the two times the P&I payment you need to break even. I understand you thought you would move back, but this sounds like its been several years with no end in sight. The costs your experiencing are not unusual, though it does seem like the PM is not dealing with them very well.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.