How do I get rid of a bad property manager

Question

Hello,

I have been in the rental business of and on since the 90s and now own more than 10 SFR rentals in 5 states with a yearly net income in the low six figures.  So I consider myself pretty experienced/knowledgable at being an out of state landlord. But all too often this means that I need to fire another property manager (this time in Alabama). I am pretty careful at hiring PMs (unfortunately I've needed to fire quit a few over the years) though in some markets there are only so many PMs to choose from so my options were limited.

The PM that I hired in AL did a really nice job when I first hired them in 2022 to manage 2 houses (I am very glad that they only manage 2). The problem is that they've going downhill ever since (this has happened to me a lot with PMs the last time in Charlotte). In this business tenant screening is everything and they seem to rent to anyone with a pulse. Consequently I have one house vacant after the tenant left in the middle of Nov (without paying Nov rent) and the other house has only paid half the Dec rent (and it's now Dec 20). I have had candid discussions with the PM where I tell they need to improve their screening process because I not have these issues in other states and they excuse this by saying that bad tenants are unavoidable in the AL market (which seems like BS to me). Their communication with me has been terrible for the last 2 years now - they will ignore my texts for more than a week at at time (and I usually contact my PMs if I their is a problem I do not bother them when they are doing their job).

I've expressed my displeasure with the PMs performance with the co owner multiple times and clearly stated that I did not want to continue to do business with them because of their lack of communication and failure to screen tenants properly. The co owner's response was that the big corporate landlords had been poaching all their people so they are short staffed but they will hire good replacements. All PMs have a contract but whenever I've had this discussion the PM will usually let me out of the contract without any penalties (a lot of PMs have their self respect and do not want to work with an owner who does not want to work with them). Additionally most of the PMs that I talked to do not want to take on new properties unless the tenants have paid all their rent (and my AL PM rents to dirtbags so this is not the case). A year ago I posted a negative review online about their performance which upset the PM but he did improve a little so I raised it from one star to three.

My vacant property has been on Zillow for a few weeks now but I had zero feedback from the PM. After several tries I finally reached the current rep and asks her how many times the PM has showed my property. Instead of giving me a straight answer she replied that Dec is a slow month. I explained to her that I've been in this business for 30 years and I know that Dec is slow but I still expect to know how many times the PM showed the property. I asked her how many years she's been in this business and she said 10 months (from the way she talked I think they literally hired her from McDonalds). Then she cut our conversation short because she had to talk to someone else.

Yesterday I had someone go my vacant property on Zillow and request a showing. Not surprisingly that person has not received a response yet. I may have another person or two also request a showing on Zillow to document how the PM is not doing their job in case this goes to court.

So what's the best way to get rid of this PM? Has anyone sued a PM to break a contract (or been sued by a PM for breaking it)? Every PM contract states that the PM has an obligation to show the property to tenants so didn't they break the contract by not responding to the Zillow inquiries to show the property? It seems like a legal question.

I am considering downgrading my online review of the PM to 1 (which seems fair since it should be -10). On the one hand the prospect of this might give me leverage but on the other hand it will anger the PM and I will need to be very careful that I have proof for everything that I say so that I don't get sued over it (it's sad that I can't warn other landlords about this PM by telling the truth without having to worry about getting sued but that how things are).

Thank you in advance for your suggestions.

David

James Wise · Answer

For a guy who's been in the business 30 odd years you sound like you're clueless.

You think suing the PM because some rando said they didn't respond to their Zillow inquiry yesterday is cheaper and or makes more sense thean paying the termination fee you agreed to?

You're crying that they rent to anyone. How do you know that the reason they didn't reach out to your Zillow lead is because they dont think they'd be a good tenant?

Have you ever actually been involved in a lawsuit? You are looking at 10's of thousands in attorney fees for a nonsensical muddy argument that won't go anywhere.

Act like an adult business owner for Christ's sake man. Pay your contract term fee and move on if you dont like working with them. It's prolly like $1,000.

James Wise · Answer

I suggest you stop acting like a child. If you are unhappy with the performance, grow a set and terminate the contract with the PM. Hire a new one and move on. This is your business, not a relationship with your girlfriend. Act like a business owner.

Denise Evans · Answer

The failure to respond to a few Zillow inquiries will probably not support an AREC (Alabama Real Estate Commission) inquiry and sanctions. A pattern and practice of neglect will.  As far as litigation fears, things rarely reach that point. I know, because I used to be a litigation and trial attorney in Houston (mid-sized firm; the two roles were combined) who specialized in defensive litigation of real estate and banking issues.  FYI, litigators handle everything up until the actual trial and have settlement as their goal. Trial attorneys handle the actual trial if settlement fails. Yes, the costs can be astronomical in dollars, time, invasion of your privacy via discovery, and emotional stress.  If all you want is to be let out of your contract without a penalty, any lawyer with an ounce of ethics would recommend the property management company settle. If there is insurance coverage for the property management company, that attorney will CERTAINLY recommend settlement.  Unfortunately, E&O (Errors and Omissions - basically malpractice) insurance is not required for real estate licensees in Alabama, so many of them "go naked."

Dan H. · Answer

If you can document the PM deficiencies, fire them for cause.  Note simply not responding in a timely manner qualifies as cause as that is a primary PM responsibility.

One unit is empty.   Serve the other tenant for eviction for missed payment.

Start over with a new PM and let them place the tenants.   This way they have full responsibility.

If the PM sues you for you firing them (very unlikely if you have multiple documented issues - by the way I fired a pm once for simply not responding to me in a timely manner repeatedly.  They are a national PM with a horrendous reputation.  They threatened to sue, I basically said I would look forward to it.   They did not sue.   If they sued and lost, it would be posted on every social media platform their deficiencies that were proved in court.).

I do not cower with the threat of lawsuit.   They are bogus threats.  I get a threat of being sued semi regularly.  I have yet to be sued over anything RE related.

Good luck

David L. · Answer

I wish it was that simple. These contracts are expensive to terminate unless you terminate it before the annual renewal date. Also most of the prospective new PMs do not want to take over when the tenants are not paying (as is the case on one of these properties).

David L. · Answer

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Denise Evans · Answer

In Alabama, you must have a real estate license to manage a SFR. Send the PM a letter outlining their failure to represent you properly according to your contract and the requirements of Alabama license law. Request they terminate the contract without penalty.  If they refuse, then terminate anyway and file a grievance with the Alabama Real Estate Commission. At a minimum, they will probably require restitution via refund of your termination fee.

David L. · Answer

Denise,

Just to confirm you believe that failure to show the vacant property (or failure to respond to inquires made via Zillow requesting a showing) would be failure to represent the property according to AL license law? If the property manager doesn't respond to a zillow request about the property would that be sufficient?

Thank you,

David

David L. · Answer

Denise,

Thank you so much for your advice this is exactly the information that I was hoping to get.

David

Theresa Harris · Answer

I'd read your contract with them and give them notice.  If the property is now vacant, it would be a good time for a new PM to take it over.  Talk to the current one and tell them you are no longer working with them.  Then arrange to get the keys given to the new one (or simply get the locks changed).  The property is vacant, so there is no lease to renew.  You aren't happy with the job they are doing, so get rid of them and both of you can move on.  It is as simple as reading your contract and giving them notice.

How do I get rid of a bad property manager

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