Property Management made $1850 Mistake

8 Replies

The property management company I hired for my rental has had very poor communication from the beginning. A year later, my tenants exited the lease and left the garbage laying throughout the entire property. The property managers call me and tell me they can find someone to clean the property for around $1800. I tell them that's a lot of money and I'll consider it but will look for more options.

A few days later I contact them via email letting them know I found someone to clean up the house for $300. Then they tell me to expect a call from one of their property managers regarding the work.

Days later I get a bill for $1850 from the property management company and it says the property manager called me and I approved the work.

The thing is, the property manager never called me, no one ever gave me a quote (only an estimate), and I never approved this expense, and yet they did the work and sent me the bill anyway.

What should I do?

@Frank L. Yikes. That's a tough break. I certainly agree with John - fire this company ASAP. 

Regarding the $1850, it's not necessarily hard to get back, but it may be costly. You would likely need to take them to small claims court. Instead, I'd suggest contacting a lawyer and asking them just to write a scary letter. This may be enough to get your money back. I would also start leaving reviews online of these guys and possibly leveraging social media. Your most cost effective and fastest method is going to be to apply some pressure.

Good luck!

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@Frank L. This is a very unfortunate and unacceptable outcome to what you describe. To me this seems like a possible case of your PM not adhering to the terms of the management agreement. Surely there is a clause in it regarding the amount of money they are permitted to spend without owner approval. I would contact the owner or managing broker and have a stern conversation about the phone call you didn't receive. Let them know you plan to escalate things if they do not cover the charges. Then do exactly what @Dave Spooner said with regard to a sternly worded letter from your attorney. The final step would be to dissolve the agreement since they were most likely in breach of contract. Good luck.  

This should not have happened. In your next property management contract limit the amount the property manager can spend without your written approval. Our limit is $200. Make sure you post reviews on Yelp and with the BBB warning others. Good Luck! Rob

Do you have a written management agreement? Does it say they require your permission before spending $XXX? My agreement says that I will contact the Landlord and seek approval before spending anything more than $250.

They sent you a bill. Respond by returning the bill, along with a short and professional letter that says you did not authorize the work and that you already lined someone up to do the work for $300. Offer to pay them $300, which is what you would have paid your vendor, and then see how they respond.

I would also include a statement that you intend to terminate their services on November 30th at 11:59PM. Then start looking earnestly for a new property manager to take over.

Remember: cheaper doesn't mean you'll make more money.

You can start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. Regardless of how you find them, try to interview at least three managers

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees. Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!

4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

@Frank L.  

More than anything what does the contract state? More often than not, property managers have clauses in their contract to protect this from ever happening to owners. Managers should agree to secure prior approval of Owner for all expenditures in excess of a certain dollar amount. Our team has a $400 dollar threshold. If there is any repair item needed, that exceeds that $400 limit, our dedicated customer service team member assigned to your account with us reaches out for approval. Look, not all the times do owners agree with the managers price, but as the owner of the property you should have the right to make that call. I am not sure what all transpired but this is why we preach CUSTOMER SERVICE IS KEY. Communication, Communication, Communication. 

Best of Luck, 

@Frank L. I would get in writting the quote for $300 and let them know this is the cost you obtained for the same work and offer to pay for that amount of money. I also agree with the others suggestions, make sure your management agreement spells out any limitations on how much they can spend on your behalf and go with that amount as well. Explain the work was never authorized by you and they should seek a resolution with the vendor. The only potential problem I could see is the vendor doing the work can go after your property in court for any unpaid fees. This is something that you should consider before making any final decisions since any unpaid fees to a contractor might result on a lien against your property unfortunately. Defenitely negotiate and perhaps meet in person with them to seek clarity and a final resolution.