PM not collecting utilities from tenant

[Andre' Arceneaux]

Good Evening,

On a SFH I have as an out of state owner, I have noticed that PM has not collected utilities from tenant since they've moved in (going on 4 mos now).

I pay from my account on an auto deduction and expect reimbursement .. yet the only item paid has been rent. I recently communicated with them about the issue and they responded, showing the payments (which are mine), and the payments on the ledger show them being deducted .. FROM RENT!

I explained this nonsense in detail as to what the tenant is paying, and how the books appear in relation to that. I stated, either the rent is being paid and the utilities aren't, or the utilities are, and the rent has never been paid in full.

They didn't respond to the most recent email as it contained details as to how this accounting is being broken down via PDF, and tenant has only paid rent amount every month, and PM is not reimbursing me for prepaid utilities.

How should I handle this?? I want to fire them immediately, yet I have no idea if this constitutes a breach in the landlord broker agreement on their behalf.

Plus, I cannot self manage with the distance.

I am in California, the property is in Ohio. If I were required to give 30 days as contract states, I'd wonder if it's feasible to wait to month 7, even at this pattern, that way I will not be on the hook for any fees in breaking the agreement, if that's the case (bound by the agreement, even if not collecting utilities to reimburse to me).

They've had some other mild gaffes (communication, errant charge for landscaping I never authorized, never reimbursed me the small charge, large lapses in communication response - most recent was 12 days, and they only responded when I mentioned this fact) ... many things are gradually adding up and overall it doesn't look too good on their end.

Any suggestions as to how to go about this???

[Eric H.]

Greetings @Andre' Arceneaux,

Hire slow, fire quickly. It seems as if they have given you enough signs that they are not the right fit for you.

Read the agreement to see if firing them constitutes a breach. If so, it becomes about math at that point. How much money do you think you will lose by keeping them around until the 'cancellation fee period' is over? What is that amount in comparison to the cancellation fee? Another thing to consider is the hassle factor. Yes it's going to be a hassle looking for another property manager but it's also going to be a hassle dealing with an incompetent one that is currently losing you money. Choose your hard.

What does your lease say about utility payments? Does it state that it's the tenant's responsibility?

I wish you the best!

Peace!

[Theresa Harris]

@Andre' Arceneaux  Call your PM and talk to them.  They've had time to fix this, so give them 2 weeks to get it sorted or tell them you will find another PM.

[Patricia Steiner]

Let's look at this in a slightly different way:

Your tenant has failed to pay utilities.  Therefore the tenant is in default and is subject to eviction.

Your PM has failed to issue a Notice To Quit for the non-payment.  

So first things first: the tenant has failed to pay and secondly the PM has allowed it to continue.  Technically you could have an issue in evicting when the lease has not been enforced so time is of the essence.

First check your lease to make sure that it is clear about Rent PLUS Utilities.  

Then - via certified mail with proof of delivery - send your PM notice of their failure to perform and cite your disappointment with their failure to communicate.  Send a copy of the lease and highlight the utilities noted.  Be sure you're sending the letter to your PM and the CEO if it's a corporation.  Include a Notice To Quit - in the tenant's name - indicating default in the amount of the utilities.  Advise that you will send that Notice To Quit to tenant within 3 days should the PM fail to act/respond.  Share that their failure to enforce the lease is also a violation of their contractual and professional obligation to you.  

And, this is really important:  Be factual.  Be unemotional. Don't rant.  One liners.  Don't fire them.  It's "attached is the lease indicating rent PLUS utilities is due monthly. Utilities have not been paid by the tenant nor remitted to me in "x" months. As such the tenant is in default. Enclosed is a Notice To Quit that I will send to the tenant directly within 3 days should you not choose to perform and enforce the lease.  This failure to perform is a violation of our contractual agreement and of your professional duties.  The lack of communication with me is not only disappointing but demonstrates your unwillingness to resolve this and other issues.  Please contact immediately in regards to this matter."  (Yes, we hate them and they suck...they know it; no need to share).

If you don't hear from the PM in 3 days, send the Notice To Quit to the tenant instructing that the utilities are to be paid up-to-date directly to you in order to avoid eviction.  I bet you get paid fast.  Then fire the PM under the terms of your contract.

If you do hear from the PM right away, ask them how they intend to correct this situation immediately.  Listen.  If you can change managers within the company, do it.  This one has proven to be unprofessional and quite frankly, not good at this. 

This is your business.  Be business-like and get your money.  Expect your PM to perform and don't let months go by without being paid the full due you.  Please let us know when you have your money and your PM's attention.  It'll happen very quickly. 

[Joseph Firmin]

If the expectations you've set up front (if you did this clearly, incl. communication) have been breached, then you should immediately call the next PM on your list of "good" PMs in the area. I have backups vetted just in case something goes south.

[Andre' Arceneaux]

@Patricia Steiner Thank you. I believe you're absolutely right with regard to leaving emotion out of it and simply sticking with the facts.

[Tchaka Owen]

@Andre' Arceneaux - any good reason you keep the utilities in your name?

[Andre' Arceneaux]

@Tchaka Owen water/trash/sewer (approx 100-110/mo) .. utilities must be in the owner's name, with a distinction of the fact that the property is a rental, so utilities (electric, gas) are paid directly by tenant or they're shut off .. water trash and sewer must be in owner's name and per rental agreement tenant is responsible for as owner pays and tenant is to reimburse via PM

[Nathan Gesner]

Dear Property Manager,

I'll keep this simple:

Utilities are not included in the rent. You were hired to collect rent and utilities but have failed to do so for the last four months. I am giving you 14 days to provide me a written explanation of how you intend to reimburse me for the missing payments and ensure future payments are made in full.

I await your response.

If they fail to respond, fire them. I would also ensure you have all documentation straight showing their responsibility and that you file a complaint with the state board.

I'm willing to bet the PM forgot to tell the tenants they owed utilities and now the PM is in a bind. If they are unable/unwilling to collect from the tenant, they should pay out of pocket.