We recently fired our property manager for a bevy of reasons and have a new company with a stronger reputation managing our properties now. The old PM had a clause in their contract stating they required 30 days notice if they were getting the axe. The second week in December we emailed old PM and said we'd be using a new PM soon and while we understand there is a 30 day notice requirement, we thought it'd be easier on everyone to make the change effective 1/1. Then we said the important part, we asked her, "Do, you agree to this?"
That evening we receive a response from old PM saying, yes, this is fine.
I hire new PM and have them begin managing our two rentals effective 1/1.
Today I get an email from old PM saying she will still be charging her 8% of rents for 1/1 because it's inside of the 30 day notice window.
The entire purpose of asking if she agreed to release duties 1/1 was to avoid doubling up on management fees in any one month. In a mildly tactful but somewhat terse response I told her she will not be getting her 1/1 fees as she had previously agreed to not be managing those properties at the time. Her response was "if the fees are unpaid they'll immediately be turned over to my attorney for collections."
Now I'm froggy. I'll go to the end of the earth and back not to give this company any more money. So I guess my question is 1) has anybody been through this exceptionally specific scenario before and 2) given we're trying to scale in 2018 which will rely heavily on leverage, am I letting something petty potentially affect my credit?
I just don't feel like old PM has a leg to stand on billing for services they agreed not to perform.
Thanks a bunch for any insights.
You agreed over the telephone, but have no written proof. I think the old PM will win. It looks like it would be better to pay it off and have lesson learned.
Unfortunately a handshake or a man's word will not stand up in court. You have to have it in writing. Chock this one up to a lesson.
You will have to be careful not to slander the old pm but you can let your friends know that you will not be using the company again. Word gets around, bad business practices will catch up to them.
I agree. Just like with a bad tenant break-up, just pay up and move on, see what you can learn from it. I would probably say "We've decided to pay you rather than fight you on this issue, but you have lost any kind of positive feedback from us since you did not disclose this when we first discussed parting ways." Sounds like you could have been more specific to verify that management and fees would stop, but that they are shady, and it will eventually catch up with them.