Property Management issue, what should I do?

[Account Closed]

Hey guys, I need some advice. I have a rental property in Indianapolis with some bad inherited tenants, and a very irresponsible property manager. I am out of state for the next few months. When I purchased the property in August I paid the real estate agent $595 set up fee to be my property manager (he offered and I accepted). On sepetember 1st he was supposed to have the new month to month lease signed and rent paid. I texted him on the 5th and he hadnt done anything! So I had to actually call the tenant and finally by Sept 12th they paid rent and signed the contract. Oct comes and no rent paid. We both try to call tenant and phone disconnected. So I wait and see what the manager will do. Absolutely nothing, I don't even know if the house is vacant or not? So today I get an email from him almost a month later saying that he wants to be released from our 6 month management agreement because he said that it has been more of a hassle then its worth and he is done with real estate. I feel like I am entitled to half of the set up fee in return, since he has done nothing as far as management goes other then drive to the house one time to get the contract signed, (I made up the rental contract so can't even say he did that). I just feel like $595 is a lot of money for a simple task. What do you guys think is fair? Thank you!

[Irina Belkofer]

Originally posted by @Account Closed:

Here's the thing - it was going to be under his broker and at the last minute he said that his boss said to just do it on his own. I know these are all red flags and I should have done my homework but honestly I just needed a temporary manager until I return to the area. I was upfront with him about this also.

First of all, his broker is still responsible for his agents business no matter what.

Next, he didn't have the right to do property management if his broker didn't approve it and didn't get some part of his commission - agents don't work on their own, only as AGENT OF A BROKER.

It's not red flags - it's all illegal to start with and you have recourse if you contact Division of Real Estate in the state where business was conducted.

So, if you contact the broker (PM agreement must be sign on the brokerage contract) and tell him the story, I'm pretty sure the broker will refund you 100% of your money. I'd write the check right away rather than dealing with the Division.

The agent AND the broker might have their license suspended for that.

In case if you didn't have anything in writing, get the copy of your check written to the agent and explanation in writing, stating that you're going to send the copy to the Superintendant of the state. 

All real estate professionals are very regulated and their licenses worth much more than few hundred $$.

Finally, next time do it right.....no heist - no waste 

[Account Closed]

Hi everyone sorry I haven't responded! After asking for a partial refund, the very next day the manager went out to the property and got everything straightened out (they were mailing to the wrong address). I have since received both month's rent and everything is OK for now. Once I get back to Indiana in two months then we will be canceling the agreement but for now it's working. I have learned so much from your responses, I really had no idea about how bad this really was. Thank you all for your help!

[Irina Belkofer]

@John Dellinger,  I don't know about your state but in state of Ohio it would be illegal only if you charge money: then you have to be a licensed broker.

Your employees don't have to be licensed to conduct routine work though. LLC is a different entity than you as the owner of the properties.