Do I have any recourse if a property manager mishandles a rehab?

Question

I'm a first time landlord with a SFH that needs rehab. I prefer not to overlook the rehab process myself, so I was thinking of just leaving and handing over the house to a PM I've met with. She'd get estimates, and while I'm abroad I'd agree to whatever work I want to have done. Then she'd oversee the work.

I am nervous about this, though, since I will be so far away. Do I have any legal recourse if things go wrong?  I got a bit of a bad feeling when I suggested waiting a year to have the ceilings scraped and she said, "It's best to do them now, before having the flooring replaced, because *something* always gets messed up when ceilings are scraped." I was thinking, "Isn't it your job as a good PM to make sure things *don't* get messed up?" Similarly, when discussing whether to leave the washer/dryer, she said, "Well, if you leave the ones that are already in the house, that'll reduce dings on the walls from the tenants moving theirs." Again, I don't know if I'm dealing with a "slacker" PM here, or if this is standard for PMs. I don't yet have a contract with her and could choose someone else.

Also, I'm in CA, where arbitration clauses seem to be included in the standard contract. Does anyone have experience with PMs being open to having that clause removed?

Peter MacKercher · Answer

@Dina Harleth Her responses sound reasonable to me too. Good PMs are prepared for bad scenarios, but no one can protect you from every bad outcome. You'll never remove all risks.

The sequence of doing ceilings then flooring is just the way you'd approach doing those two items, and that's speaking from my experience as a GC and a PM. On the W/D and dings -- I'm not sure if you expect your PM to oversee move-ins and move-outs for each tenant to minimize dings, but the recourse there is the tenant's deposit, so this sounds like a non-issue and you got advice on how to decrease some turnover time and potential cost.

On the rehab you're essentially asking for a workmanship guarantee. I'd hope that is a standard in your market. If you haven't had that conversation explicitly then that's they keyword to bring up.

Mindy Jensen · Answer

@Dina Harleth , I don't see anything wrong with her responses. Something always gets messed up during rehab. If you do your floors first, then the ceilings, the ceilings will get the floors dirty at the least. A worker could drop a tool on the new floor, etc. If you know you're doing both, do the ceiling before you do the floor.

Also, your tenants will not love your property as much as you do. Dings happen, and by reducing the number of things they're moving into the property, you reduce the dings in the walls.

That said, I don't know if you having a long distance rehab going is the best choice for you. Her job as a good PM is to make sure your rent is collected on time every month, and to make sure she places good tenants in your property. If you can find someone to do both of those things, keep them as long as  you can.

Aaron K. · Answer

As others have stated the PMs responses seem reasonable and with the ceiling going before the floors you keep the debris from making your new floor dirty.  Try to pay as close attention as you can to a rehab, request pictures and review estimates/ bills to make sure they are reasonable, that is about the best you can do from a distance.

Rob D. · Answer

Your PM is right. Ceiling scraping is messy dirty and easiest to do when the house is empty. IF you just have to do it when someone is there I know a great company that does that. I’m not sure if I can state them on here do PM me. Same with the washer dryer.  If anything gets “messed up” you backcharge the contractors that messed things up.

You really need to understand and visualize  how a rehab is going to be done. Easiest way to visualize it is from the dirtiest messiest job as being done first to the  cleanest job being last.

All your removing of old whatever , sanding cutting scraping filling nailing is done first. Then the paint and finish trim, carpet counters and finally appliances.

Pm me and I’ll give you my phone number. You can pick my brain anytime after 4:00 pm on construction related things.

Btw in Ca if the person doing a job over 500 bucks has to be licensed. Your PM is acting as a contractor as far as theclaw is concerned. They should be licensed bonded and insured. If they aren’t I would be cautious. Make sure you get a CLEAR scope of work and costs. There will be some extra costs depending how deep a renovation you do. I used to have a consulting business where I helped homeowners deal with contractors.

Aaron K. · Answer

@Dina Harleth I am going to assume that your PM is also a licensed Realtor and is using the California Association of Realtors standard contract, if this is the case they will almost certainly not be willing to change it partially because it is against the California Association of Realtors terms of service and could also affect the contract as a whole.  If your PM is not licensed and/ or using this agreement that might be a larger concern.

Dina Harleth · Answer

@Mindy Jensen @Peter MacKercher @Aaron Klatt Thanks, I really appreciate the responses. I feel better about going with this particular PM. What about the arbitration clause? Is that something to not worry about? My attorney said I should try to have that removed...

Do I have any recourse if a property manager mishandles a rehab?

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