Property management contract termination

7 Replies


Hello, 

We have had continuous, in our mind negligent, problems with our PM in indy, RPM, including:

Failure to deliver efficient and timely communication and service over the year.

Failure to properly screen a tenant, who had a assault on her record, and had to be evicted.

Failure to be familiar with the laws associated with eviction which cost us time and money.  

Charged for unnecessary and unapproved work. 

We want to terminate the contract but don't know how we can ensure to get our money back, we have a substantial sum held by the manager due to buffer for eviction. The contract states 60 days. What charges can they come up with during this grace period? Do we need to honor the 60 days if we feel the contract has been breeched? Do we need a lawyer?

Sara

@Sara Swift

Companies are very unlikely to try to steal your money. Contractors yes, but not a legit PM company. Unless their is a dispute you don’t need a lawyer. Just say you are unhappy and want to terminate. Ask if their are any fees and go through the PM contract. Should be a standard business transaction. Sometime people’s expectations just don’t line up. Good luck.

@Sara Swift I often get investors that have the fear of canceling because of open issues or funds being held for unreasonable purposes.  More times then not the concerns go unfounded but that doesn't mean you shouldn't follow @Josh C. advice and simply send the notice and the cancellation letter/email it layout the expectations for both parties of the remaining time.  Often the cancellation period can become negotiable and sometimes it is in the best interest of both sides to conclude prior to agreed written term.  If your property is vacant, push to do it immediately or tell them you want to take back control 100% effective immediately and offer to pay 60 days worth of management fees as a negotiation to have them turn it back to you.  Paying that couple hundred may save you thousands if it allows you to get the property into the hands of a competent PM within days vs months.

I have yet to see an investor have to get an attorney involved in canceling a PM agreement except in extreme fraud cases where a PM failed or ran off with escrow money and that doesn't seem to be the case here.  If I read your post correct your current PM is RPM which is a nationwide franchise which should ensure this process should not go past a handful of back and forth emails to hammer out the exit.  

Feel free to reach out direct for any further advice as I can see how this can be stressful for any investor having to face management change.  My final advice is to start focusing your energy and details on finding the right PM so you don't mess that up again.  

 

@Sara Swift , sorry to hear about the management issues.  Please be aware I am not lawyer or providing legal suggestions.

One of the perks about hiring a licensed management firm is the fact they're licensed!  If they run away with your money then you can submit complaints through Indiana real estate boards.  RPM is a national brand too so I doubt they will close up shop to find from you.

Any time you deal with contracts it's important to notify them for breach of contracts.  Always in writing!  This helps you build your case if you go to court.  There might be a clause in the contract about how quickly the party has to get back into good standings, and what the penalty might be.  They have to actually breach contract terms though, unfortunately sloppy customer service might not meet the definition for breaching.

Often the terms require landlords to pay all the remaining dues, which is really unfair to the landlord.  How many months remain on their contract?  Is it worth it to terminate now?

Read the management agreement over and over.  Make sure you understand exactly how to terminate, what's required from you and them.

@Sara Swift This is a HUGE reason why I opened up the property management arm of our brokerage. Indy is a crazy market (I should know, i live here). There is so much potential for something to happen. I'm an investor myself and have been since high school believe it or not. I couldn't stand what was happening when I had to "trust" a realtor so I jumped into the professional side. And I have seen so much swindling on the PM side I decided it was time to run with that as well. We have clients from Oregon, Texas, Jersey, etc, that I speak with probably on a WEEKLY basis (if not more often).

I would be happy to help you review your options and/or refer you to local Indianapolis attorney. Feel free to get in touch.

It is laziness and a lack of caring that is getting you into this jam. It isnt hard to just talk and be honest. For example, we have a commercial client that we have a weekly "pow-wow" with just because it can get that intense.

Good luck!

@Sara Swift I would start by negotiating with them on all the problems and be firm on what you need and where you were wronged. Ask for compensation. If they won't offer any then ask to compromise by breaking the contract. Most PM will do this if they can't make you happy. Especially when there was a failure or multiple on their part. If you don't want to pursue legal action this should at least allow you to not incur any other fees. Also ask them to stop any maintenance as of now so you don't get any additional charges. That is my advice, Dolce

Call them up and try to speak to them like an adult, they will likely work with you to cancel. 

@Sara Swift we do not have termination fees on vacant units. I have asked your PM to reach out to you and discuss this.

Regarding the rest of the story. I've reviewed your account... You had 211 email correspondences with our office between Nov 15th and July 31st. That's not including the phone conversations. Most of those are back and forth on the same or next day. I understand that you feel that you haven't had adequate communication, but I would prefer some insight so we can ensure that our clients feel they have adequate communication. We communicate to owners via email, phone, and text on a frequent basis and everything is recorded, so I'd be happy to share our records with you.

As far as not "properly" screening the tenant... I would like more insight. The tenant who was placed in the home has worked for the US Post Office for 4 years and makes about $50,000 annually, which is adequate income. She had little credit history and no rental history as she had lived with her parents up until this point. She has no felonies, as I don't believe that the US Post Office hires felons. She did have a misdemeanor in 2013 for public intox and another infraction in 2015 for not using her turn signal. She didn't pay the ticket and had her license suspended and also received a citation that year for driving on a suspended license as well. I will not share the tenant's name on a public forum, but you can find her records in the courts database at mycase.in.gov. Since she has a pretty good job like, you will likely be able to pursue a judgement for damages and be able to garnish her wages. This is why we like job history like this in the event that something like this happens. It gives our clients a better position to recover money for the damages and lost rents.

Unfortunately, the tenant did not pay April rent. Supposedly, her bank account was hacked (this actually just happened to me last Friday and I am in the middle of a dispute over it right now) and she claims that her bank account was locked at that point. I do not know if we verified this... but we tried working with the tenant through this. We had a missed promise to pay and were in communication with you about this several times in April. We discussed eviction on April 30th as it didn't appear that the tenant was going to be able to bring the account current.

After filing eviction, the tenant did not move out. This isn't a common thing that we face, but it does happen. In that event we had to file a "Writ for Assistance" request a constable to forcibly remove the tenant from the home. We were prepared to possibly have to pack out her personal possessions and store them for the legally obligated time. Unfortunately, the tenant's phone was disconnected. We did receive an email asking for more time to recover her possessions, but we were firm with the date for her to get her possessions removed. We were on standby to meet the tenant to allow her to remove her items (at no cost to you for our time) but she instead broke in to the property over the last weekend in July. We sent one of our maintenance technicians out and secured the property again, but it didn't appear that she retrieved much, if any of, her personal possessions. As you mentioned, we did ask for increased money to be held in reserves in case we needed movers or a storage facility, but if you review your account, you will see that the money in that account is still there and will be returned if not used.

In reviewing your statement, the only work that has been done at the home was to repair a water leak at the washer that the tenant had called in, you were charged for some of the multiple inspections and occupancy checks performed at the property, and preventative maintenance and lawn care issues after you were notified by the HOA.

He have been waiting for direction from you regarding how to proceed with this home. We have also talked to several people who would be interested in leasing your home, but we are not even sure when it will be ready. In terrible situations like this, we typically waive the tenant placement fee, because it's important to us to have performing homes.

I do understand your frustration as we are frustrated with the situation as well on our end. This is an uncommon occurrence, but it is something that happens with even the best of homes. We're poised to get the home reperforming again, but at the end of the day, it's up to you. If you move elsewhere, we wish you the best of luck and expect that anything moving forward will be a much better experience whoever you are working with. You have a great home and there are great prospects who would love to live there, but unfortunately life takes unexpected turns that makes it difficult for even good tenants. Please reach out to our office and let us know what your plans are. Up to this point, this home is costing all of us money, including our office. We've spent much more time with this home and situation than 90% of our homes and all of us are ready to see it performing again.