Mishandling my money

[Mike McKinzie]

I just purchased 2 houses in Texas. They were with a property management company that I did not want to keep. So on June 2, I emailed them that I was changing property management companies but to please mail me any rent they had collected for June. Instead of sending me the rent, they returned the rent to the tenants. I believe this is mishandling of my money. Do you agree?

The original PM company deposited the rent checks and wrote new checks back to the tenants instead of to me.

I am thinking about reporting them to the Texas Real Estate Commission. Should I?

[Ralph S.]

Maybe I'm just a little confused. If the old PM was already fired (June 2nd) when they received/accepted/deposited the rent, then there was no longer any relationship between themselves, you or the tenants. Without a client relationship, there really isn't any obligation to follow your instructions, is there?

If I were in business, any busiiness, not just RE or as a PM, and someone who I no longer service or am associated with gives me money for someone I am no longer associated with, I would certainly refund the money to whoever gave it to me, letting them know I am no longer servicing that account and cannot accept any future payments. I certainly wouldn't give it to anyone else!

Seems pretty clear they weren't getting that June management fee.

Clearly there was insufficient time for your new and old PM to contact your tenants about the change. Is there a new PM? And, like many small businesses, when a check is received, it is deposited as a matter of course with all the other checks received that day. Chances are, the book keeper, receptionist or whoever who worked up the bank deposit doesn't question each check as to whether they should have received it or not.

I think they followed a standard business policy, and probably a business law or two are out there that support it. In particular, RE laws regarding the handling of client money is a regulated activity with stiff penalties. Methinks you'll find they followed them to the letter.

And, if having fired the old PM on June 2nd, you are still without the rent (the only issue here, as far as I'm concerned), I'd question your new choice in PM, or, do you have a new PM yet? Why aren't they handling or collecting on this? Is there anyone expecting a June management fee?

Your timing was terrible. Could you have planned or timed it any worse? On the second of the month? Next time plan better so all parties have sufficient time to adjust. Maybe find that new PM first, and just let them handle the transition.