Dispute with property manager after sale of property

15 Replies

I just sold my investment property to a non-tenant third party. My property manager is now claiming that he is entitled to 3% of the sale and is withholding my finale rents and money owed me as partial payment. He is referencing our management agreement which I have attempted to link a photo of.

The agreement as far as I can tell, only applies if I were to sell to a tenant and does not apply because I sold to a third party. Am I correct in the way I'm reading this? He in no way helped with the sale of the property. I think he is doing this because I am out of state and have no easy way to take him to court.

Any thoughts and feedback would be greatly appreciated.

http://www.flickr.com/photos/[email protected]/8291557875/

It appears you are correct, IF the buyer was Never a tennant during their management.

H(3) is blank, so no coordination fee

Simply have them put in writng "what clause entitles you to a fee?"

Correct, the buyer was never a tenant. This is the page of the agreement that he referenced.

Just to be safe, If possible, I would see if there is any documentation to support that the new owner has ever been a tenant and then I would go after the PM company.

@Dennis Hempler I think you have a clear cut case of being in the right. I would tell this clown he needs to pay you or else you will take him to small claims court, get a judgment, collect on said judgment, and then tell every landlord you know about this whole mess. Since he is a business, you might have to go to regular court where he will have to pay for a lawyer and you can represent yourself. Collecting should be easy as you already know where he banks. I think he will pay you as soon as you threaten him. If not, file the papers and let him waste money on a lawyer.

Good luck and keep us posted.

That should be easy enough, a LLC bought it with cash and the only tenants that the PM put in there are still in there and are not part of the LLC.

How would you recommend going after the PM? I live in Oklahoma and the PM and property sold are in Texas. I'm thinking about finding a lawyer in Travis county who can handle it.

I'm trying to keep a positive "I'm going to learn something new" attitude about this whole mess.

If I were in this situation I would first send a certified letter demanding my payment. You can also email them a copy so you get a faster response but make sure you also send via USPS. Tell them in the letter that you want the money back within x days or you will hire an attorney and take them to court.

I bet this will resolve your issue, if not take the next step and hire a real estate attorney.

As a second step (after sending letters and before hiring a lawyer), I'd pursue it with the state real estate board.

Great Ideas. Thanks everyone!

This is not legal advice but it appears by what you posted that the broker is not entitled to a commission in this case.

You need to find out if you are dealing with the agent or the principal broker of the company. They are not allowed to hold or control funds in the event of a COMMISSION DISPUTE. They would need to take formal action against you with them as the principal broker but still perform their duties. If this is just an agent in most states it is not their call to even take action with a commission dispute. It is not their potential commission but the principal brokers.

Now sometimes sellers do not know that the buyer found out about the property through the marketing efforts of a broker. For instance a buyer might see something somewhere on the internet and then try to contact the seller directly or talk the broker and then call the owner directly after saying they were not interested.

So it is entirely possible that this buyer said the found you directly but actually found you through mean of the broker. Also the LLC and other transfers before it if the buyer or buyers are connected the broker could argue they are owed a commission.

So I am just throwing that out there where a seller has told me before I talked to so and so and I have this buyer and I say yes they called and found you through my marketing and I have the date and time etc I talked to them and other communication.

Some buyers will lie and just want a property however they get it and do not worry about collateral damage or duties the seller might owe in a listing agreement.

At this point really I would get an attorney at least to send legal communication to this person if they are the head broker or if they aren't send a copy to them as well as the principal broker outlining what has happened etc.

Update: I had just finished typing up a letter to send certified mail when I received an email from PM stating that I would receive my funds on the 30th of this month. If he does not deposit the funds, I will proceed with the letter, contact the state real estate board and find a lawyer.

@Joel Owens that is very useful information.

The PM did not market the property anywhere, the same tenants have been in there for over a year. I used a different broker to market and sell the property. They received all their commission. The PM was left out of the process because I didn't feel he would get the job done properly.

Did the listing agreement give them the exclusive right to sell the property whenever you decided to market it for sale?

Some PM agreements have that provision in there. If that was the case they could argue you violated the agreement with them and owe a commission as well by not giving them the opportunity to procure a buyer for you.

If no such agreement you should be okay. No legal advice.

No, the PM did not have exclusive right to sell the property. The agreement has provisions regarding if the PM acts as the broker and finds a buyer or if a tenant purchases. That's all I've been able to find in there.

UPDATE: It took a letter to the Texas Real Estate Commission, and them opening an investigation, before he paid in full. I'm glad that is over and it was a great learning experience.

Thanks for all the suggestions and feedback!

Good Idea Jon. Great it was solved positively, I just hate these management companies putting those clauses in there about commissions to sell. I guess its just life of a property owner if you dont want to self manage or manage employees.

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