PM Charging New Lease Fee for Previous Co-Tenant

4 Replies

The original tenants in our out of state rental property signed as co-tenants, both names are on the original lease. After a few years, one of the tenant has decided to move out and the other tenant will be remaining. We just got paperwork last month with lease paperwork with the remaining tenants signature only, and were shocked when the statement from the first month during this lease term had a $3 rental payment instead of the normal $1500. The new lease fee structure from our PM is one month's rent for new lease and $250 for lease renewal, the latter of which is what we were expecting to have deducted.

If the tenant's name is on both leases and the PM didn't have to do any work to find a new tenant, shouldn't it just be the renewal fee? The lease agreement between ourselves and the PM company are vague and only specify that it is a one month's rent fee for new lease and $250 for a renewal. Since the only change to the lease was the removal of one of the parties, is it normal to create a whole new lease and charge a fee like this?

We've had lots of issues with this PM- horrible communication, questionable charges without receipts and not notifying us of maintenance that needed to be done with the property and we would have willingly fired them a long time ago aside from the ungodly amount written into our contract to break the lease. We were naive when we signed it and didn't build more protections and terms into our side to make sure we were able to hold our PM accountable.

I'm starting to wonder if litigation or the threatening of so might be a viable option, since the PM doesn't respond to text, email or phone calls without a half a dozen attempts at this point. Any advice for this point forward would be extremely helpful and is greatly appreciated.

@Marion Ashmore   What did the PM say when you brought it to their attention?  Writing a lease taking one person's name off the lease is essentially a renewal, not a new lease.  There were no showings, background checks, etc.

How long is your contract with the current PM?  They can't hold you to it indefinitely.

Promotion
Azibo
Smart landlords use Azibo
One-stop-shop for landlords
Rent collection, banking, bill pay & access to competitive loans and insurance - free for landlords
Get started for free

@Marion Ashmore

All leases have a beginning date and an end date. If the 'new' lease is after the end date of the previous lease, then its a new lease regardless of who is on the lease.Anything else is a modification of the current lease. 

A renewal is between the current tenant and the previous tenants. It could be argued that a credit check for the current tenant constitutes a "new lease". The best course would be to have PM show you where in the contract they define this as a new lease.

I would also renegotiate your PM agreement.

Originally posted by @Marion Ashmore :

@Theresa Harris I haven’t been able to get hold of them since I discovered this yesterday. I also wanted to have a little bit of information before walking into that phone call.

With any lease renewal, their contract is also renewed. 

 I'd talk to the current tenant prior to the current lease expiring and use that to break your contract with the PM.  If the tenant wants to renew again, you could manage it yourself.