File a complaint or Law suite against Property Manager

[Sankar Reddy]

Hello Experts out there, I need help/suggestion on the issues I have with my Property Management Company. Should I complain to TREC or take them to small claims court or sue them or do all of them?

Properties and the Management Company are located in Texas.

I have an agreement with a property management company for more than a year. Now I decided to change to a different management companies for various reasons. Our initial contract for 1 year for each property, then monthly after that. I gave a 30 day notice to terminate. They charged management fee for all the remaining leases for all my units including months post termination.

Per contract they charge me for new tenant fee of 65% first month lease and monthly fee for managing each tenant each month. I terminated the contract with them after the initial 1 year term, why do I still have to pay management fee for the remaining months they are not managing? In this situation I end up paying 2 property managers. Here is the termination clause from my ageement.

12. FEES UPON TERMINATION: At the time this agreement ends, Owner must pay Broker:

A. all amounts due Broker under this agreement; and

B. if the Property is leased to a tenant on the date this agreement ends and Owner terminates this

agreement, an amount equal to the lesser of:

(a) the management fees that would accrue over the remainder of the term of the lease; or

(b) $ .

If more than one property or unit is made part of and subject to this agreement, this paragraph applies only

to those properties or units then leased and applies to each property or unit separately.

Other issues I have with this property manager is that I was charged 14.286% extra management fee than what was in the agreement for all my properties. This money wasn't refunded even after I informed. This management company also managed one of my properties without an agreement and charged accelerated management fee for that property as well without having a proper clause that supports the charge!

Some other minor issues with this company are too many accounting errors, poor responses, performing work for the amount exceeding the amount mentioned in the agreement without notifying owner, in most cases splitting the work into small pieces to bring the amount below the amount mentioned in the agreement so that they don't have to notify landlord.

Please help me what to do, if I will have chance to win against the management company.

Thank you!

[Soh Tanaka]

I'm sorry you are going through problems. A company like this is one of the reasons why property managers get bad names.  

That said unless I'm reading wrong, as far as paying the management fees, even though you terminated, per B.(a), don't you owe fees till the end of the lease?

[Soh Tanaka]

I'm sorry you are going through problems. A company like this is one of the reasons why property managers get bad names.  

That said unless I'm reading wrong, as far as paying the management fees, even though you terminated, per B.(a), don't you owe fees till the end of the lease?

[Sankar Reddy]

Thanks for the response @Soh Tanaka.

Yes, that is what is the gray area which I didn't understand. Not sure if the clause kicks in only when there is amount mentioned!! Need some expert advice here. This is very unfair to get charged for reminder of the lease term even after getting paid for more than a year for management fee, 75% tenant placement fee on the first month. I was charged for 11 units total for few thousand $$

[Bruce Scannell]

The way it reads, they are due the management fees till the lease expires. Have you already signed up the new management company? How much longer is lease term? Unless you can show they charged fees outside of what the contract allows, it sounds like you might be stuck. If it’s quite a bit then maybe it would be smart to talk to a RE attorney, maybe they could do a free consult at lease. Not all PM companies are created equal, but a lot of the contracts are similar, and now you know what to look out for and possibly challenge

[Sankar Reddy]

Originally posted by @Bruce Scannell:

The way it reads, they are due the management fees till the lease expires. Have you already signed up the new management company? How much longer is lease term? Unless you can show they charged fees outside of what the contract allows, it sounds like you might be stuck. If it’s quite a bit then maybe it would be smart to talk to a RE attorney, maybe they could do a free consult at lease. Not all PM companies are created equal, but a lot of the contracts are similar, and now you know what to look out for and possibly challenge

 Thanks for the response @Bruce. Yes, new management just took over. I have 11 units with leases terms ranging from 1 month to 11 months. Some of them are actually on renewal from original lease. Yes, I did ask new management company to remove that entire clause before I sign. Learning lessons :)