Suspicious PM Actions?

[Account Closed]

Hi Everyone,

So we recently rented out one of our rentals and the tenant moved in on 8/1. Before they moved in they handed the August rent and non refundable pet deposit to the management company on 7/31. When I went to check my online portal on Monday, I noticed the PM charged their management fee for July based on the total amount of money received, meaning the rent and pet deposit combined. 

So 2 questions here:

1. Even though the pet deposit is non refundable, and can be counted as income the minute it was received, why do I have to pay the PM a percentage just to receive that deposit and to the tenant I still have to say I have the full pet deposit set aside when they are ready to move out?

2. Even though the rent was received on 7/31, the rent the tenants paid really isn't due until 8/1, is it right for the PM to charge that fee in July, when for the entire July month the house was basically vacant?

This is a new PM that I inherited from purchasing the home, and I have had a lot of issues with them. We have another rental with another PM and they don't charge a percentage for the pet deposit we received from the tenant. Maybe the above points are all normal and I am just being suspicious about their operation, but any input would be greatly appreciated.

[Kyle J.]

Since we don't know exactly how your lease with the tenant or your contract with the PM company are worded, it isn't likely that anyone will be able to answer your questions directly.  However, I'll offer some general observations from my reading of your post.

First, your use of the term "non refundable pet deposit" is confusing and contradictory.  By referring to it as a "deposit" it is implied that it is potentially refundable to the tenant.  You even state that "to the tenant I still have to say I have the full pet deposit set aside when they are ready to move out", which further implies that it is a deposit that is refundable when they move out if their pet hasn't done any damage.  However, on the other hand, you also say that it is non-refundable.  Which is it?

If it's truly non-refundable (meaning you're not going to refund it no matter what, even if their pet does no damage), then you should call it a fee instead of a deposit.  And if it's a fee that isn't going to be refunded, then it's income and yours to keep so you don't need to "set it aside for when they are ready to move out".  And if it's income, then maybe your PM was right to keep a percentage of it (though I don't know for sure because I haven't read your contract).

On the other hand, if it were a refundable pet deposit, then I would say that the PM shouldn't keep a percentage of it because it's really not your money or the PM's.  It's merely being held on behalf of the tenant for any damages owed as a result of their pet upon the tenant vacating the property.

Ultimately, you might want to consider clarifying exactly what this charge is and how it's worded because different terms can have different legal meaning.  You didn't mention where the property is located, but I see you're in California.  And in California, a "pet deposit" would be treated under the law (California Civil Code section 1950.5) like a security deposit, and you cannot have a non-refundable security deposit.