Who Keeps Pet Fees? Landlord or Property Manager?

Who Keeps Pet Fees? Landlord or Property Manager?

Investor · Houston, TX · Member since 2014 · 208 posts · 135 votes

BP Hivemind.  My PM has the following language in tenant leases.  They, however, keep the monthly fee of $25 per month.  Based on the below language, would you agree that they should be keeping this $?  Clearly, I don't, but looking for your opinions.  

"1. On or before the date Tenant moves into the Property, Tenant will pay Landlord a pet deposit of $150 per pet. The pet deposit is an increase in the security deposit in the lease and is made part of the security deposit for all purposes. This increase in the security deposit is not refundable before the lease ends, even if the pet is removed. Any refund of the security deposit, including this increase, is governed by the terms of the lease.

2. Tenant will, upon execution of this agreement, pay landlord $150 Pet fee per pet as a one-time, non-refundable payment, pay landlord $25 per pet monthly, non-refundable Pet Fee."

When I asked about their logic for keeping the $, this is what I got: "We collect the fee, but you would be reimbursed the money we collected for the fee if the pet damages exceed the pet deposit. For Example if the pet damages the carpet and we have to replace it, we will give the amount we collected back."

Thoughts?

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Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
7y

@Emily Powell I agree with @Ned Carey. Seems quite clear to me the monthly pet fee should go to you (the owner). There is no logical reason whatsoever the property manager should get to keep that money. 

The animal is causing wear and tear to your property, not the property manager’s. Why would they be compensated extra for that?

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  • Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y

    @Emily Powell is the language you posted in the lease or the PM contract with you? If it’s in your agreement I’d say you keep that. If that’s in the lease I’d say it’s unclear

  • Investor · Houston, TX · Member since 2014 · 208 posts · 135 votes
    7y

    @Caleb Heimsoth it's in the lease between the PM and the tenant.  If it helps, the least opens with the following language:

    The parties to this lease are: the owner of the Property, Landord,:

    Real Property Management Preferred (as agent for the owner)

    and Tenant(s) : John Smith

  • Rental Property Investor · San Ramon, CA · Member since 2017 · 350 posts · 611 votes
    7y

    Not sure I quite understand, but generally speaking, the monthly pet fee is just like rent - landlord should collect that.  Any damage by the pet after the tenant moves out is taken out of the security deposit.

    If the $150 is a security deposit, but it is non-refundable, then it's not really a "deposit" that can be claimed by the tenant.  It's just a fee.  So even if the tenant and the pet leaves the unit in immaculate condition, they cannot get that $150 "deposit" back?

  • Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y
    Originally posted by @Emily Powell:

    @Caleb Heimsoth it's in the lease between the PM and the tenant.  If it helps, the least opens with the following language:

    The parties to this lease are: the owner of the Property, Landord,:

    Real Property Management Preferred (as agent for the owner)

    and Tenant(s) : John Smith

    So to me then if that’s in the lease it’s unclear if you or the PM retains it.  In all my agreements it clearly states in the PM agreement between me and the PM who keeps what.

    I’m not a lawyer, no legal advice given 

  • Investor · Houston, TX · Member since 2014 · 208 posts · 135 votes
    7y
    Originally posted by @Paul Choi:

    Not sure I quite understand, but generally speaking, the monthly pet fee is just like rent - landlord should collect that.  Any damage by the pet after the tenant moves out is taken out of the security deposit.

    If the $150 is a security deposit, but it is non-refundable, then it's not really a "deposit" that can be claimed by the tenant.  It's just a fee.  So even if the tenant and the pet leaves the unit in immaculate condition, they cannot get that $150 "deposit" back?

    I agree with you that the $150 fee is not clear.  You're right, if it's added to the security deposit, then it should be refundable. But the $25 per month is where I disagree with the PM's interpretation of who should get that.  Why should a PM make a profit off a tenant choosing to have a pet in my property?  The $150 should also be clarified, but the $300 per year I believe should go to me, not the PM. Do you have thoughts on that piece of the equation?

  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    7y

    @Emily Powell actually the lease is very clear you the landlord are to receive the fee. The question is; is there anything in your agreement that distinguishes between rent and "Fees" regarding how the manager is paid?

  • Investor · Houston, TX · Member since 2014 · 208 posts · 135 votes
    7y

    @Ned Carey - this is the closest clause I could find in the PM agreement that might (but I don't think does) elaborate on what you're referring to:

    "Management Fees: Owner agrees to pay Manager a fee or fees for services rendered at the rates hereinafter set forth. Owner recognizes that this agreement is not a partnership between the owner and Real Property Management. Owner recognizes Real Property Management as agent in any negotiations relative to the property or any part thereof, which may have been initiated during the term hereof, and shall compensate Manager in accordance with the rates hereinafter set forth. Such compensation is due and payable on demand and may be deducted by the Manager from receipts. Management company fees charged to tenants include NSF check charges, serving fees, application fees, lease renewal fees, Administration fees, collection fees and 100% of net late fees."

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    7y

    @Emily Powell I agree with @Ned Carey. Seems quite clear to me the monthly pet fee should go to you (the owner). There is no logical reason whatsoever the property manager should get to keep that money. 

    The animal is causing wear and tear to your property, not the property manager’s. Why would they be compensated extra for that?

  • Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    7y

    Hi Emily,

    Rather than Haggle over this (because it might be the tip of the iceberg with this company so to speak), maybe find a new management company that doesn't do things like this.

    Watch your cancellation date though, because sometimes according to the contract you have with them, you will have to pay a large amount to cancel.

    Good Luck!

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    The landlord is you not the PM.  You keep the monthly fee-both the one time $150 an $25/month.

    As written the pet deposit increases the amount of the security deposit in case there is additional damage caused by the animal.  If there is no damage, then the pet deposit (and security deposit) is returned to the tenant after they move out.

    The wording states that the PM is only the agent for the owner and not the landlord.  You are the landlord in the wording you included and the PM is your agent.  So the lease is between you and the tenant with the PM acting on your behalf.

  • Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    7y

    Clarity - tell them no pets and transition when you can.  Late fees - maybe.  Pet rent - negative.

  • Investor · Houston, TX · Member since 2014 · 208 posts · 135 votes
    7y
    Originally posted by @Kyle J.:

    @Emily Powell I agree with @Ned Carey. Seems quite clear to me the monthly pet fee should go to you (the owner). There is no logical reason whatsoever the property manager should get to keep that money. 

    The animal is causing wear and tear to your property, not the property manager’s. Why would they be compensated extra for that?

     I just needed confirmation that I wasn't crazy.  

  • Investor · Houston, TX · Member since 2014 · 208 posts · 135 votes
    7y

    @Scott Mac That's definitely an option, but I have other properties with them and it sounds like a pain to move them all over.  But definitely something to consider if they fight me on this.

  • Brad LarsenPro Member
    Property Manager · San Antonio and Austin, TX · Member since 2016 · 377 posts · 380 votes
    7y

    @Emily Powell  We have a similar policy with an "Animal Guarantee".  Essentially, it says the same thing - that we will cover the damages up to "X" above the Security Deposit by collecting and retaining the monthly fee.  

    The owner is covered x 2 in this method.  First - the security deposit - and Second - the Animal Guarantee.  

    Our owners love this as we back them up much more than any deposit would.  PLUS - if you or your PM mishandle a pet deposit mixed in with a security deposit, that is (have seen it in person) grounds for a losing lawsuit if the tenant sues.  Mixing the two funds together is a giant loophole that tenant attorneys exploit.  Exposure wise, you are much safer with this technique.  

    Hope this helps! 

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    If the fee goes the to PM then it should say it goes to the PM. I think this is poorly written.

    Some managers will keep the pet fees but offer coverage for pet damage. Instead of charging pet rent, the PM will charge a fee that he keeps. The PM usually keeps the fees but then offers to cover up to a certain amount in damages, usually $2,000 - $3,000. Since most owners won't accept pets because the fees or deposit won't cover the damage, this is a great way to incentivize Landlords to accept pets with the PM taking responsibility for the damage and it also creates an income stream for the PM.

    Your PM is keeping the fees and then offering to return the fees if there is damage in excess of the deposit. In other words, your PM is making money off your property and offering you no benefit in return. He keeps $450 and he'll return $450 if there is damage. You could do the same yourself. In Brad's case, he keeps the fees but he also offers to pay up to 10x that amount in damage protection. Big difference.

    If what you are saying is true, I would find a new PM that has a clearly written, sensible management agreement and lease.

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  • Rental Property Investor · Middletown, CT · Member since 2015 · 45 posts · 11 votes
    7y

    @Emily Powell as a property manager I use a percentage of gross income - late fees, pet fees, etc are all included. We take a percentage, not the full amount.

  • Patti RobertsonBusiness Member
    Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
    7y

    @Emily Powell - It sounds like they are forcing you into a Pet Guarantee program.  I offer this too, and it's a program alot of owners like. It's really designed for that owner who is inclined to not take a pet because of some horror story they have heard.  The majority of households do have pets though, so the Pet Guarantee is a program that a lot of PMs are offering to give some peace of mind to these owners.  The PM agreement has to address it though.  My guess is they rolled out the program after you signed your agreement.  If done properly, they should have sent you some sort of amendment to opt in.  If you have not opted in, these fees are definitely yours.  Your PM agreement clearly outlines what fees the tenant pays that are kept by the PM, and the pet rent is not one of them.  

    I suggest finding out who the broker is for this business and calling them.  They will get this straight real quick!

  • Investor · Houston, TX · Member since 2014 · 208 posts · 135 votes
    7y

    @Patti Robertson forgive my ignorance, but what kind of broker are you referring to? 

  • Investor · Houston, TX · Member since 2014 · 208 posts · 135 votes
    7y

    @Brad Larsen @Nathan Gesner Once a tenant vacates, how does one differentiate between pet damages vs tenant damages?  My PM claims (via e-mail pasted above) that I would be reimbursed the $ they collect if pet damages exceed pet deposit (which they have never said to me until I asked about this $).  But why would they admit to damages being from a pet when they can just charge me directly for them? 

  • Member since 2019 · 59 posts · 28 votes
    7y

    I would find a new property manager.  That is totally unreasonable.  The $150 fee??  maybe as they need to sign off on the dog.  The $25 per month fee is what the tenant is paying in "EXTRA RENT" for the dog to stay there.   It has no bearing on the management of the property.

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    @Emily Powell that's a good question and I would again argue that it should be clearly spelled out.

    Many PM companies provide protection from pet damage but don't explain how they prove what caused it. This seems like one more opportunity to pit the Owner and PM against each other instead teaming up and of focusing on actual problem.

    A better system would cover damages regardless of the cause.

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  • Investor · Houston, TX · Member since 2014 · 208 posts · 135 votes
    7y

    @Nathan Gesner for the owner or PM to cover damages?  I am constantly baffled by the $$$ they charge me when a tenant turns over.  I understand that there are standard "made ready" repairs, but the lists upon lists that come in each time a tenant turns over are mind boggling to me. 

  • Brad LarsenPro Member
    Property Manager · San Antonio and Austin, TX · Member since 2016 · 377 posts · 380 votes
    7y

    @Emily Powell  Hi Emily! The comment above confused me a bit as I don't know their intent or how they explained it to you.  The best method here is to try and explain what we do and maybe that relates.  We offer the free "Animal Guarantee" of $1,000 to cover any of the pet / animal damage caused that exceeds the security deposit amount.  It's not a reimbursement necessarily, more of a situation where we will cover the work.  If the tenant causes a full security deposit amount of damage from the excessive wear and tear (kids for example) - then any pet / animal damage would come after that.....and is our policy of up to $1,000.  

    What is challenging is when a pet / animal destroys carpets (example).  This is an easy one to pick on.  We have to pro-rate the lost useful life of that carpet to meet fair wear and tear concepts with the courts here.  We use a depreciation of 7 years.  For fun - new carpet costs $7,000.  Tenant destroys carpets in a 2 year tenancy depriving the owner of 5 years worth of useful life.  Tenant is billed for $5,000.  Security deposit is $2,000.  Our guarantee is $1,000.  (We have an optional guarantee of $5,000 just FYI).......giving $3,000 in total coverage to the owner.  There is a $2,000 difference now that the owner has to cover out of their pocket.  This will then turn into a collection effort against the tenant.  

    In our experience this is very rare.  Very rare.  Long explanation, but I hope this helps with understanding the concept of how the math may work out.  The execution of this may vary.  Take care! 

  • Peter TverdovBusiness Member
    Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
    7y

    @Emily Powell I have a property management company in Central NJ and we see a pet fee as a bonus to the owner. We have yet to keep a portion of one, it’s a nominal amount anyway.

  • Patti RobertsonBusiness Member
    Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
    7y

    @Emily Powell - The RPM office is working under the supervision of a real estate broker.  If you call your state’s real estate licensing division and give them the name of the company they will tell you who the broker is.  The broker is responsible for ensuring all the agents under them obide by the laws, rulers, and code of ethics, depending on what associations they have.  

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