Property Management Client/Manager Relationship Question

1 Reply

I recently had a client propose the below question in regards to the client transferring ownership to a new investor, but still being the point of contact and decision maker between the PM and new property owner.  Before consulting my attorney, I was wondering if any members have crossed this bridge before and if so, how was it handled?  Any input?

I have changed the company name.

See below emailed questions.

From Client:

First, let me give you an idea first of what we're trying to do – The plan is to sell current ABC LLC homes to incoming Investors but to make no changes to the "management" of those homes. Everything would stay the same with the day-to-day operations as we would be working on their behalf to handle everything, and just pass their return back to them. The concern is that there may be some technicalities within the PM side that might prevent us from doing this, so that's where I need your help! 😉 Please see the questions below and let me know your thoughts.

  1. It is imperative that we continue to work directly with you on behalf of the new Investor. All communication would continue to be sent to us, decisions would be made by us, document signed by us, and even bills would be paid by us. Basically nothing would change other than the Owner of Record. Do you see any problem with this? Can ABC LLC continue to be the main contact on behalf of the new Investor? What documentation would be required for this? (i.e. Owner Authorization? Power of Attorney?)
  2. Could rent income be paid to ABC LLC directly, or would it be required to go to the Owner of Record? Would this affect Tax Reporting?
  3. Would a new Property Management Agreement be required with the new Owner’s name? What about a new Lease for each property?


Thank you for you time and I appreciate any feedback.


Assuming you are the PM is this situation...

1) you would need a management contract with the name of the new property owner  and designating this ABC as representative.  

2) Re: rents.  It should always be paid to the property owner or your trust account.  Never anyone else.  That's just bad news bears...

3) Why on earth would they need someone especially the old property owner as  a go between amongst PM and new owner?  That is just fraught with complications and a red flag to be  honest.