Breaking a Property Management Contract

[Shanah Bell]

I need to break my contract with my Property Manager, but I am unsure whether or not my reasons have legal standing. It says that unless it is for legal reasons, I will be charged the remaining property management fees for the year from the date the contract is broken. 

But, my reasons are that they have been charging me more than our contract amount of 8% for multiple months now and have not responded to my requests to refund the money. As well as the fact that they have taken money out of my owner's draw for work done to the property last year, but I just got a letter from the vendor stating they still haven't been paid by my PM. My PM responded once saying they have had communication issues with that vendor so they aren't paying them until they get it straightened out. I spoke with the accounting department for the vendor who tells a different story and says that my particular PM has been horrible to work with and won't pay them for work done for multiple properties, even after sending multiple communications. This is why they sent letters to the owners of the properties instead, trying to recoup some of the money owed.

My PM also refuses to send me itemized reports of what I am getting for my owner's draw and why. It is just a random number each month, so I feel like they are skimming off the top.

Do these reasons count as legal reasons to break my contract?

Any advice would be appreciated!

[Nathan Gesner]

If what you posted is correct then I would argue you have a right to cancel without penalty. Here's how I would proceed:

1. Send a letter to the PM via certified mail. Demand a written response within 14 days. If the response is not received within 14 days, or is unsatisfactory, you intend to terminate the agreement and sue to recover the lost funds.

2. If no response, contact an attorney and have them draft the termination letter as well as a demand for payment of any moneys owed.

3. At the same time, or shortly thereafter, I would contact the North Carolina Real Estate Commission and verbally explain the situation. Have a copy of your PM agreement, any invoices, etc. Give them the facts. They will typically reach out to the Broker and "motivate them" to fix the issue. If the Broker refuses and you still feel you are justified, you can file a formal, written complaint.