"Complaint resolution" clause: would like feedback

"Complaint resolution" clause: would like feedback

Rental Property Investor · Leander, TX · Member since 2018 · 183 posts · 264 votes

Hi,

I'm looking for some feedback from the Bigger Pockets community.

I'm looking for a Property Manager to manage a rental property I'm buying in Texas (my first).

I found a local Property Manager with a stellar reputation on Yelp - dozens of 4- and 5-star reviews, and very few complaints. I was impressed! 

Then I discovered a clause in their standard contract labeled "Complaint Resolution."

On the surface it seems reasonable: "Hey, let's try to work things out before we go public with our complaints. And let's keep it civil." But on closer reading it appears to give the Property Manager a permanent veto over anything a customer might say about them in a public forum. So now I'm nervous that their amazing rating average could simply be because they've legally muzzled their unhappy clients, and they only allow their happy clients to post reviews.

So, here is my question: How would you feel about the following clause in a contract provided by a Property Manager - or any other vendor, for that matter?

("Broker" in the text below is the Property Manager.)

COMPLAINT RESOLUTION

Broker shall have an opportunity to resolve any concerns or complaints identified by Owner. Owner agrees to identify in writing any concern or question Owner has regarding the services provide by Broker and to allow Broker an opportunity to resolve such concern. OWNER and BROKER mutually agree, that as additional consideration, specifically the mutuality of this clause, each is prohibited from making disparaging remarks/statements or publications regarding the other to any third party, internet, web-based, cloud based, or “review” type publication site, effective the date of this Agreement. This provision relates to remarks/statements/publications/opinions / evaluations or any other thought process reduced to writing regarding: (1) this Agreement; (2) any parties’ performance under this Agreement; (3) the lease Agreement to which this provision is an addendum to; (4) any duty or obligation or action of or by the Broker that relates to or touches upon the management of this Property. If any dispute arises regarding whether any remark, statement, or publication is disparaging, the parties agree that for purposes of this provision, expressly including the enforcement of this provision detailed below, that any remark, statement, or publication shall be irrefutably deemed disparaging if: (1) the other party requests, in writing, that the writing/publishing party remove the remark and/or publication; and (2) the remark and/or publication is not removed within seventy-Two (72) hours of said requests. OWNER and BROKER mutually agree that damages for failure to comply with this provision shall be liquidated at three hundred dollars (300.00) per day for each remark/statement/representation that is disparaging or is not removed within seventy-two (72) hours of request to remove said remark/ statement/ representation. OWNER and BROKER further agree that enforcement of this provision is appropriate through a temporary restraining order and/or injunctions and permanent injunctions, notwithstanding any rights under the First Amendment to the United States and/or Texas Constitutions or other codified statute, regulation, or code and that any party who prevails on enforcement of this provision, whether for monetary damages or injunctive relief is entitled to recover attorney fees against the other. The parties to this Agreement agree that this provision shall survive the termination, expiration or cancellation of the lease and this Agreement in enforceable at any time should any party publish a remark/statement/publication or other writing which is subject to this provision.

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
8y

I've seen Property Managers that include a similar clause that actually fines the owner/tenant $100 if they file a bad review. 

You know what I would do? I would not hire them and then file a bad review explaining their tactics.

The DIY Landlord Book4.7248 Reviews
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15 Replies

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  • Rental Property Investor · Westbury, NY · Member since 2017 · 6 posts · 3 votes
    8y

    Hmm...such language would concern me. It doesn't mean they are a bad property management company but it certainly gives less value to reviews of the company since it appears you are only receiving reviews from people who had good experiences and nothing from people who may have had bad experiences.

    If I read correctly...a review that they are not happy with has 72 hours to be removed. Perhaps if you check back often you may be able to catch a bad review. Unless of course there really aren't any! ;)

  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    8y
    That appears to block all bad reviews. Did you check the BBB? Not sure they can block that. i would also be concerned that they feel the need to block bad reviews.I would however want to hear from the property nanagers on BP on thier thoughts.
  • Investor · Saskatchewan , Saskatchewan · Member since 2017 · 311 posts · 233 votes
    8y
    Unacceptable. Zero room for negotiation on this point.
  • Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    8y

    Looks like they PM isn't confident in their services...otherwise, no need to eliminate a client's first amendment rights. Easy to have excellent reviews when you prohibit by contract any negative ones. 

  • Attorney · Austin, TX · Member since 2014 · 888 posts · 759 votes
    8y

    I would strike that.  Texas has anti-S.L.A.P. statutes which help dismiss suits from bad, though truthful, publications.  Contract clause against this complicates.

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    8y

    I've seen Property Managers that include a similar clause that actually fines the owner/tenant $100 if they file a bad review. 

    You know what I would do? I would not hire them and then file a bad review explaining their tactics.

    The DIY Landlord Book4.7248 Reviews
  • Property Manager · Ketchum, ID · Member since 2016 · 277 posts · 132 votes
    8y

    I see this requirement to sign as a huge red flag.  I would imagine that something like this was developed as a result of problems that have happened with other owners.  Property Management companies need to build a trust with owners for whom they manage. This would not grab my trust right off...I say pass and thank that beautiful waving red flag for the warning.

  • Rental Property Investor · Leander, TX · Member since 2018 · 183 posts · 264 votes
    8y

    Thanks all for the thoughtful replies. You all seem to have the same reaction I did - a Complaint Resolution clause that gives the Property Manager a veto over anything I might say about him publicly, forever, is a big red flag, a warning that something is not quite right.

    Even if I were to negotiate that clause out of my contract, it wouldn't restore my trust in this Property Manager's on-line reputation. Who knows how many unsatisfied clients are out there who are bound by that clause now?

    Luckily, there are plenty of other Property Managers in the area I'm investing in, so I'll just move on and find someone else.

  • Rental Property Investor · Leander, TX · Member since 2018 · 183 posts · 264 votes
    8y

    Here is some follow-up on this topic. I sent a note to the owner of the Property Management company and received a response. While I don't agree with the owner's response, I thought I'd share it on this thread for those of you who may be interested.

    The note I sent:

    I wonder if you would care to comment on a concern that I'm not able to get past.

    There is a clause in your contract that is unacceptable to me. It is your Complaint Resolution clause. As far as I can tell, the clause gives you a perpetual veto over anything your clients may say about you publicly. So there's no way to tell whether you've had clients in the past who were unsatisfied but unable to share their experience. I'd be interested in your comments about this.

    And, the reply from the owner of the Property Management company:

    Absolutely I'm happy to address it.

    We have found in the past that there are a couple types of customers. One who's willing to collaborate with us to a solution because they actually care about the solution and collaboration and another who enjoys sitting behind a keyboard at 2 a. m after a couple drinks, to be blunt talking trash.

    We are partners in this relationship not simply a business that is disposable. If our partners do not believe we are on their side and partners with them we do not want to pursue the relationship.

    If anybody enters into any relationship but yet does not believe that they truly value the other party I would question their choice. that Clause pushes people to make a decision on whether or not they want to collaborate or not. We are not perfect and we do not claim to be perfect but we own any mistakes we make. We expect others to do the same.

    With that said we need partners who are willing to collaborate with us for solutions not complain about us online. It's each person's decision on which type of relationship they want. Either one that is positioned against those with whom they signed contracts or one that is collaborative to find success.

    I hope that helps. We're on it to win it together, not vocalize discontent. We all get the choice on what we wish to focus.

  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    8y

    @Joel Fine

    What a BS condescending response from them !  I assume it would be fine is I am talking "positive trash" at 2am ? lol

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    8y

    I still wouldn't do it. When I partner with someone, I verbally tell them I will do my best to treat them honestly and fairly. If they have a complaint, tell me and I'll try to work it out. If you are unsatisfied with me and decide to vent publicly, just understand that I intend to defend myself publicly and I typically do so with evidence to back me up.

    I'm always cautious of anyone that has all good reviews because I suspect they are purchased or coerced. I prefer seeing some bad reviews and how the business owner responds to them.

    The DIY Landlord Book4.7248 Reviews
  • Stanley · Member since 2018 · 2 posts · 2 votes
    8y

    Per my, and my attorneys research, this "non disparagement clause" is now illegal in all 50 states. It passed into law on December 14th 2016 and is no longer allowed within ANY form contract after March of 2017.

    Follow the below link for your own research, then google "non disparagement clause now illegal".

    LINK

    Ask the same property manager to explain how they are able to write their own laws? Maybe they have staff that sits on the supreme court??

    LOL

    Cheers!

  • Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    8y
    I’ll take a different approach. Throw out those reviews from your evaluation and keep going. Ask for references, contact your local REI group and find your own references. Then make an informed decision. I agree that the clause is legally sketchy, but there are a lot of companies ‘trying it out’. I have a feeling we’ll be seeing more and more of those clauses in the future.
  • Rental Property Investor · Leander, TX · Member since 2018 · 183 posts · 264 votes
    8y

    Thanks @Josh Loner and @Mike McCarthy for your perspectives. I didn't realize such clauses had been made invalid by law.

    In any event, shortly after my original post, I simply dropped this firm from my list of candidates and found another Property Manager. There is no shortage of PMs who want my business and don't fear negative reviews in my part of Texas!

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