Property Manager & Tenant Nightmare

[Account Closed]

I’ll start out by saying I’m new here, and have spent a few hours reading through posts. I’m glad to find a forum that allows discussion and advise on all things related to real estate.

Having said that, I’m have recently found myself in a very distressing position with my current property manager and one of my properties.

A little background:

I live in Houston and have been using a medium-sized regional property management company with decent to good results for the past 4 years to manage 2 single family properties. Whenever problems have occurred, they generally worked with me to resolve them. Not perfect, but not worth cancelling our Property Management Agreement.

At the beginning of this year, a tenant at one of the properties moved out early which required me to work with the property manager to find a new tenant. The company is responsible for finding and vetting potential tenants and the overall experiencer me is hands off. The new tenants moved in at the beginning of March.

Now in the meantime, the company I’m contracted with was acquired/merge with a larger property management company based in California. The new contract I signed only stated that this new compony would function in place of the old one and that all previous agreements and contracts would be maintained. Ok, so far, so good.

Moving back to the property itself, everything had been going well for months from March through April with the tenant making the $1400 payments and my portion minus property management fees going into my bank account each month. In the middle of May, I noticed that I did not receive any funds (usually deposited around the 10th of each month) and reached out to my property manager. She seemed confused and told me she would investigate and reach out to me with updates. Several days go by and I inquire again but she’s not responding. I finally call the Houston office and request help, of which I get from another colleague of hers who informs me that the May payment was not received due to NSF. I’m still not getting updates from her no matter how hard I try. It gets to be late May at this point.

I finally get ahold of my assigned property manager, who tells me things are much worse. It seems that the March and April payments that were made were done by credit card and the tenant has issued chargebacks for these months. I was shocked - what do you mean credit card payments? The original company, pre-merger, didn’t accept credit cards, and I was never alerted to any change in payment processing. I double checked my PMA and it doesn’t get into the nitty gritty of how payments are processed. Hmm….

Needless to say I was pretty upset because now I’m being told that all 3 months the tenant has lived in my property has basically been for free to them and I’ve had no air coverage from the property management, no heads-up this was going on, and when I dug deeper her story started to change about when they found out and that it was only recently discovered. But keep in mind, at this point it’s the very end of May and the May payment was already NSF with me trying for weeks to get to the bottom of things.

Now the kicker, we move into June and surprise surprise, the tenant hasn’t made the June payment by the deadline. I’m now livid. To add to this, my property manager tells me that I am responsible for paying their company back the March and April rent because the CC chargeback took the money from them after the fact. She shrugged off my concern and tells me that her company essentially payed me out money they never had, and retroactively, I now owe them the difference. What?!?! I told her that I wasn’t even aware of credit card payments now being allowed and I surely would have moved my business elsewhere, because how insane is it to accept credit cards for rent? She actually AGREES with me and says it’s crazy that they would accept credit cards, and to add insult to injury, tells me she’s now just finding out this is an payment option for tenants and blames the company merger on the change. Again with a sigh and a shrug.

She tells me the tenant has agreed to pay all back rent by June 10, which I’m skeptical of and voice to her, but at this point I’m thinking it’s worth a shot. Today is June 10, and after numerous attempts to reach her she finally emails me and says they did not pay, as agreed, and they will be starting eviction proceedings.

Please someone correct me if I’m wrong, but this is clearly a case of fraud by the tenant and at the very least a case of negligence (or worse) by the property management company.

I try to reach her boss, the regional director of the area, and get no responses. I then try to have her facilitate a meeting to which she replies “I’m not sure what value he could add here, because he doesn’t know the background of what’s going on”. (Seriously she told me this. My response was not pleasant.) I even try to send messages to the founder of the new parent company in California listed on their website, detailing my problems and asking for help. I don’t know if that avenue will be fruitful but I’m trying all options at this point.

Honestly, what are my options here? I am getting nowhere trying to reach an agreement with the property management company as they have basically turned a cold shoulder on me and only seem to give me the bare minimum (when they do respond) or change the details of the story each time we talk (examples: “we just found out late May this was a problem” to the next conversation “we cut off their ability to pay with credit cards in April after they issues chargebacks” to “I just found out we accept credit cards”). There hasn’t been any transparency in this process or accountability, or even professionalism, and now I’m being told the missing money needs to come out of my pocket?!?

Honestly, what are my options here? I know there is always a legal option, but I’m not eager to jump to that and I’m not sure exactly how that would be framed, honestly. Has anyone ever experienced anything like this?

Thanks in advance. - Ty