Property management yearly subscription legit or not?

Question

Hi, I’m currently selling my two duplexes in Belton, Missouri and I have this property managment ￼ meridian Realty. Right now they charging me to pay off the yearly management fee for the rest of 2024 when my sales is close in April!! They told me that the contract auto renewal by itself without sending me any any notification or email consent. Is this something legit or not? How can they charge me a yearly contract that even though I’m gonna sell the house and I’m no longer the owner after April?? Property management name is Meridian Realty! If you guys have deal with similar experience, or have some tips on how to avoid this, please let me know. I greatly appreciate it.

Nathan Gesner · Answer

Yes, they can charge this because you agreed to it. The text you shared from your contract is very clear that you agreed to renew the lease, you agreed to give 60 days notice of termination, and you agreed to pay the fees for the remainder of the year.Those are bad terms, but you agreed to them.

Lynn McGeein · Answer

@Kevin Zhang it took us forever to find good management because so many sounded great when discussing with them but actual contracts were full of ridiculous terms we wouldn’t agree to and they wouldn’t change. Once you’re finished with these guys, please leave honest google, yelp, other reviews warning others of those practices as many don’t read the whole contract, like you, apparently. The yearly renewals are actually pretty common but charging even when vacant seems wrong, should be incentivized to keep units occupied.

Kevin Zhang · Answer

@Nathan GesnerYeah, anyway that’s lesson learning and moving forward!! I have deal with four different property management before but never have this kind of bad terms and customer service!!

David Bennett · Answer

Kevin, off doing other things, so I did not get back to this. The provisions I have in the PMA I use (note I am on the PM side of things) will require the Owner to pay management fees for the current lease term of the tenant. This is so that an Owner does not garner the leasing services at mgmt service rates and then dump the management. I feel this reasonable to balance the interests of both parties. However, you should have a sale provision in the lease which will terminate the lease, thereby ending the mgmt services. I would make sure your future PMAs have reference to that provision.As far as paying for vacant properties and no escape clause for sale - this is a lesson learned - make sure you understand what service you are paying for upfront. Every person above who said to read in detail is absolutely correct - it is a painful lesson to learn, though. Sorry.

Vasudev Kirs · Answer

I think you should read the terms and conditions carefully before you commit to anything. They also look for profit and revenue as anyone else. Be it a lesson for future endeavors. Having a termination fee is not uncommon in midwest where I live.

Kevin Zhang · Answer

Hi Lynn, After dealing with maybe 4 different management companies before, this one is by far the worst. I don't see anywhere where they say they charge for a vacant tenant, which is ridiculous. The response I attached is also outrageous. They're saying we have to cover their staff expenses for the rest of the year? So, you're charging me a fee for the rest of the year, plus you're going to charge a fee for the new owner? That's just a business scam. Yes, after it closes, I'm going to write about my frustration with them on Yelp, the Better Business Bureau, and any other review sites I can find to expose their ridiculous contract terms."My company budgets their operations off 12 month contracts. It would be impossible to staff appropriately without holding owners accountable for their contract terms. I have copied my attorney on this email if you have any questions." what a scam!!! Lesson learn and moving forward. My other property management in the same city are much more personable.

Melanie P. · Answer

Actually he brought the issue to your attention, was absolutely correct and the best thing you can do is make a note of it for the future. What is this some flat rate agreement that is X amount per month, not tied to rents, no fees for leasing, etc.? Do they bill the fees monthly or annually? Describe the fees.Anything in the agreement about selling the property? Change in ownership?

Kevin Zhang · Answer

@Michael SmytheWell you no help onissue! No thanks for your comment.

Michael Smythe · Answer

@Kevin Zhang why are you asking us and not reading your contract?Your apparent lack of attention to detail is what got you in this situation to begin with.

Kevin Zhang · Answer

David, this the first PM that I encounter with such clause and it's so ridiculous. I have a unit that was vacant for 3 months and they still charges me management fee even though it was vacant and they didn't know about until I notify them about the low rent that is collecting from them. Below the PMA agreement I just was able to dig out and find the writing. (hereinafter called the “Property” and sometimes the “Premises”), 4 dwelling unit(s), upon the terms and conditions hereinafter set forth, for original term beginning on 2/1/2023 and ending on 1/31/2024 and shall automatically renew for successive twelve (12) month periods. Both Agent and owner may cancel this Management Agreement by giving both Agent and Owner a sixty (60) day written notice prior to the end date of the Agreement. The management fees associated with the initial (12) month Agreement and any successive terms must be fulfilled regardless of when management services actually terminate.