What if a Property Manager Vanishes?

Account Closed

Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes

7y

Originally posted by @Jefferson Smith:

We found Michael Thompson of Evermark through Bigger Pockets. My partner talked to him extensively and liked him. We both met the guy. Michael did a reasonable job for some months, although he didn't have a good communication habits. In June, he went radio silent, not even completing accounting. Finally, he sent an email in July explaining he and his wife were moving to Southern Indiana, and that he would facilitate a transition to a new property manager.

But he has just ghosted.

Has not replied to countless phone calls, text messages, and emails in nearly four weeks. We have identified a new property manager, but having no contact with him makes it hard to have a clean handoff (keys, security deposits, etc.)

Anyone gone through a disappearing/nonresponsive/vanishing property manager before? (Anyone know Michael Thompson?) Any helpful tips?

(Of course "get a reliable PM!" is the best advice, and we've had good luck in other micro-markets. And that good luck has meant we haven't had to deal with this before.)

Seems odd you wouldn't have copies of the keys, lease agreements and other items for each renter, but to each his own.

I've learned to never assume anything, especially on an Out of State investment. Too many things out of our control happen. It would appear that you need to go to the properties and introduce yourself to your tenants and get copies of the keys and lease agreements. By the way, I suggest you scan the leases and keep copies on file along with two sets of keys (one you can mail to a new manager and one for yourself).

Joe SplitrockPro Member

Moderator

Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

7y

@Jefferson Smith if he is holding rents or security deposits, the funds need to be released at termination of his contract. The money is not his. Deposits belong to the tenants. My concern would be if the money was spent to cover expenses in a failing business. I would file action in court to get the money ASAP. This could also be considered fraudulent if the deposits were not handled legally. That could be criminal in nature, so it is very serious.

@Michael Thompson you should get in touch with Jefferson Smith and resolve this issue. If you are a stand up guy, you don't want your name run down. Better to address head on.

3 Reply

OP

Portland, OR · Member since 2017 · 107 posts · 27 votes

7y

Joe, thanks for the post. Fingers crossed.

Michael Noto

Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes

7y

@Jefferson Smith Are the security deposits in a bank account that you both have access to?

Anna Sagatelova

Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes

7y

He's a licensed agent, contact his licensing board in Indiana. Are the properties he was managing for you all in Indiana?

3 Reply

Account Closed

Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes

7y

Oh wow. Yea I don’t allow PM’s to hold my security deposits. That sounds like trouble in cases like this. Plus I have keys for MY PROPERTY and at a minimum copies of all documents associated with current and past tenants, along with passed over applicants in case of a lawsuit due to a false housing discrimination suit. (I’m above board for fair housing act hence the falseness statement).

Ross Denman

Real Estate Consultant · Whitestown, IN · Member since 2014 · 547 posts · 933 votes

7y

I have taken over properties that were previously managed by @Michael Thompson. He is a licensed realtor (although he's changed brokerages a few times) and he's always been easy to work with. I would be really surprised if he was "ripping anyone off." As mentioned above, you can file with MIBoR if you have to.

Getting keys shouldn't be a big deal. We deal with it frequently enough when we are working with an uncooperative or disorganized property manager. Your new PM should try to get copies of the keys from the tenants. If not, we threaten to (and occasionally have) changed the locks at the tenants expense after a couple of months with no success.

Leases can be a little trickier, but not terrible. If you don't have copies in your records and the tenant doesn't have copies, your new PM may just have to put them on a new lease.

If your old PM is holding the security deposit, that's a tougher situation. Indiana statutes are clear about security deposits and you may have to approach with some sort of legal action if he has not released the funds back to you.

The whole process can be troublesome, but not too complicated. A good PM should be able to navigate the situation without too much trouble. Unfortunately, it happens more often than you might think. The absolute worst was working with clients who were screwed over by the Morris Invest/Oceanpointe scandal... and even then, there are ways to work through it.

Rob B.

Chicago, IL · Member since 2018 · 546 posts · 227 votes

7y

Honestly, I am so sorry to hear that you are dealing with this type of situation. Changing property managers can be a challenge especially when one decides to ghost on you with no real sense of responsibility for the people/business he was leaving behind. There are other options out there though and depending upon the number of units you have, you may see a better fit in going with a prop. management software to make the process manageable and easy for you to do (save yourself the 6 - 10% of rent charged + that 1-month rent fee). I hope you're able to get everything sorted out. Best of luck!

OP

Portland, OR · Member since 2017 · 107 posts · 27 votes

7y

Update: Thanks folks. After ~4 weeks of radio silence, (which followed the ~8 weeks prior to that), his head poked up...and then went down again. I am grateful for the Bigger Pockets community -- after the discussion here (maybe a coincidence of timing, but maybe not), we did get an email from his address. So at least hopefully he's alive and well.

That said, Michael has still not called us, and he has still not handed over security deposits or the keys.

Ross, your comments were apt and helpful; agreed that the security deposits will be the toughest thing if he continues to hold them. Anna, yes, all the properties are in Indiana. And Mike, good advice for the future.

Appreciate y'all.

Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

7y

Originally posted by @Jefferson Smith:

Update: Thanks folks. After ~4 weeks of radio silence, (which followed the ~8 weeks prior to that), his head poked up...and then went down again. I am grateful for the Bigger Pockets community -- after the discussion here (maybe a coincidence of timing, but maybe not), we did get an email from his address. So at least hopefully he's alive and well.

That said, Michael has still not called us, and he has still not handed over security deposits or the keys.

Ross, your comments were apt and helpful; agreed that the security deposits will be the toughest thing if he continues to hold them. Anna, yes, all the properties are in Indiana. And Mike, good advice for the future.

Appreciate y'all.

Do you have a new PM? If not why not talk to the person who had taken over properties from him before (Ross)? Seems like they have a relationship and might be easier to get everything taken care of. It shouldn't take him 12 weeks to respond to your messages. Find out if he's set up a new company in the city he moved to and call him using someone else's phone so your name doesn't appear on called id.

Kenny Dahill

Investor · Tempe, AZ · Member since 2018 · 1k+ posts · 731 votes

7y

@Jefferson Smith, I would make an immediate grievance file against him since he is a licensed realtor. Actions speak loud here.

OP

Portland, OR · Member since 2017 · 107 posts · 27 votes

7y

Theresa, Thanks so much. Perhaps a different caller ID could indeed help! We have identified a property manager who is trying to help get this untangled. (Ross does seem knowledgeable!)

Kenny, I think I'll reserve a formal complaint for if there isn't a satisfactory conclusion. Thank you for the nudge.

Sam S.

Investor · San Jose, CA · Member since 2016 · 5 posts · 6 votes

7y

@Jefferson Smith

I am in same boat :( Just got silence for last few months from Michael in response to voice mails/text/emails.

Sending you PM

OP

Portland, OR · Member since 2017 · 107 posts · 27 votes

7y

Oh dear, I'm sorry.

@Sam S. did you ever recover keys and / or security deposits? Anything you did that seemed smart/helpful?

(Tagging my partner, @Jason Skelton

Sam S.

Investor · San Jose, CA · Member since 2016 · 5 posts · 6 votes

7y

@Jefferson Smith

not yet. i am told it will be next week. lets see. I have PMed you more details.

OP

Portland, OR · Member since 2017 · 107 posts · 27 votes

7y

Update: Not really. He actually replied to a text thread with me and the new property manager, and Michael Thompson gave a date certain when he would provide keys and security deposits. But then he didn't do it...and hasn't replied since. And he still hasn't answered the phone nor returned any phone call.

Maya Roberts

Rental Property Investor · Sunnyvale, CA · Member since 2019 · 60 posts · 40 votes

7y

@Jefferson Smith, you need to file a claim immediately with the Indiana real estate commissioner. You've now lost 8 weeks of time, energy and added stress. Stop protecting this guy and start protecting you!

Andy Rumple

Wholesaler and Real Estate Broker · Indianapolis, IN · Member since 2009 · 438 posts · 293 votes

7y

yell " TA DA!!!!!"

Casey Powers

Las Vegas, NV · Member since 2018 · 403 posts · 474 votes

7y

Please tell me this was not in Las Vegas. I've just taken over some properties from 2 different PM companies where the brokers took off. Neither are cooperating to provide documents, money owed, etc. Very frustrating and I hate that some PMs do this. ugh.

OP

Portland, OR · Member since 2017 · 107 posts · 27 votes

7y

Nah Casey, this was in Indy. (My Vegas play at this point is strictly commercial.)