Previous Management Company Trying to Keep Rents

[Levi Graziano]

Just bought a small (28 unit) apartment complex. The previous owner was using a management company as they were out of state. The closing happened 4/26 at which time I distributed flyers to all tenants telling them of the change and where and how to pay. Several of the tenants paid or had already paid the management company for May. When I went to collect the check from the company, the lady said she was going to take her 10% fee out, I didn’t take the check. I said you shouldn’t have taken the money, you had no right, she knew a change in ownership was happening. Also, she has not performed any managerial work and it’s only the 15th. My question is, do I actually owe her anything, should I take her to court? Has this happened to anyone else? What did/ would you do? Thanks!

[John Corey]

The agent works for the seller. The funds for rents should have been settled up when you completed on the purchase.

If the agent collected funds after the change of ownership the agent was not legally operating on behalf of the prior owner at that point.

It could be a simple mistake rather than anything more serious. I would expect the agent to put things right as if the funds were never received by the agency past the date of completion. 

You can speak with the RE licensing agency in the state. They will have a view on what needs to happen. They might contact the agent and explain how the agent's license could be at risk if this is not cleared up.