Seeking advice for terminating a short term rental management contract

Seeking advice for terminating a short term rental management contract

Member since 2023 · 2 posts · 0 votes

Bought a house in Florida last sept to STR and signed a contract with a property management company. Company has consistently fallen short of performance, communication and their accounting is a mess leading to unexplained charges.

I sent notice that i want to terminate my contract early due to these issues and the company has balked threatening outlandish early termination fees totaling several thousand based on what they claim they spent time/leg work in helping me to acquire the house and lost management fees for a projected pro forma until the rest of the contract terms.  Their pro forma is inflated so this all sounds bogus to me to compel me to stay.  Contract also just states "early termination penalty" in the termination section but does not specify what they are telling me now. 

I know a contract is a contract and should have vetted and scrutinized things more closely before signing but couldnt imagine how much of a disaster this would turn out.  I know this will go probably need to settled in a legal venue but just wanted to get some advice in getting out this situation.  I just want to terminate the contract so that i can get another prop management firm or self manage and pay some reasonable early termination penalty based on market norms.   

0Reply
65 views

Most Popular Reply

Real Estate Agent · Los Angeles, CA · Member since 2022 · 137 posts · 106 votes
3y

Most contracts should have a cancellation policy. You might have to pay a fee, but I'm sure with enough proof of their shortfallings you can reduce that $. 

See this reply in the discussion

8 Replies

Jump to latestLatest
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y

    Read your PM contract first. There should be cancellation notification listed.

  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    3y
    Quote from @John Cho:

    Bought a house in Florida last sept to STR and signed a contract with a property management company. Company has consistently fallen short of performance, communication and their accounting is a mess leading to unexplained charges.

    I sent notice that i want to terminate my contract early due to these issues and the company has balked threatening outlandish early termination fees totaling several thousand based on what they claim they spent time/leg work in helping me to acquire the house and lost management fees for a projected pro forma until the rest of the contract terms.  Their pro forma is inflated so this all sounds bogus to me to compel me to stay.  Contract also just states "early termination penalty" in the termination section but does not specify what they are telling me now. 

    I know a contract is a contract and should have vetted and scrutinized things more closely before signing but couldnt imagine how much of a disaster this would turn out.  I know this will go probably need to settled in a legal venue but just wanted to get some advice in getting out this situation.  I just want to terminate the contract so that i can get another prop management firm or self manage and pay some reasonable early termination penalty based on market norms.   


     I just sent you a PM

  • Real Estate Agent · Los Angeles, CA · Member since 2022 · 137 posts · 106 votes
    3y

    Most contracts should have a cancellation policy. You might have to pay a fee, but I'm sure with enough proof of their shortfallings you can reduce that $. 

  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y

    Is there a performance clause in the contract? Really read that contract @John Cho. There might be a way out of it.

  • Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    3y

    This is tricky because it is a contract, but will it stand up in court if you decide to break it? I always recommend to clients to try to negotiate your way out, however it doesn’t always work. 

  • Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Have a civil conversation with the PM's, you don't want to drag this to court. 

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @John Cho:

    As a general rule of thumb, the property manager should be compensated for work performed. If they procured 10 future reservations, then they should be paid their commission for those 10 reservations. If they are trying to charge you for reservations they have not yet procured, then they can get lost.

    Read your contract. You may have agreed to some crazy penalties and will have to suck it up or negotiate something with them.

    The DIY Landlord Book4.7248 Reviews
  • Investor · Nortnern Colorado · Member since 2020 · 157 posts · 131 votes
    3y

    Do all the things mentioned above. Really. 

    And next step is to block off your calendar to prevent future bookings that your PM may make. It's messy for you to add more, and not fair to them if they add bookings, then lose that income. Do that today. 

Join the conversationCreate a free account to reply, vote on answers and follow this thread.