Can PM Company legally charge tenant monthly administrative Fees

Question

I have a general question about Management Agreement :-

Can Property Management Company legally charge tenant MONTHLY administrative Fees for Pets.   There is a one-time non refundable deposit (administrative fee) per pet that goes to the Property Management company and then a MONTHLY administrative fee charged per pet for a MAX OF 3 PETS.   This ADMINISTRATIVE FEE goes directly to the Property Managers.  Owner/landlord doesn't get a distribution, but a clause in the management agreement states "Broker provides a $750 Pet Damage Guarantee to Owner and collects Pet Administrative Fees from tenants in order to cover the cost of this guarantee." with a condition that Owner should use PM's contractor for rent ready repairs.

Is this valid/legal given that landlord is ultimately responsible for all repairs/fixes to the property.  Please let me know your thoughts on this.

Shannon Allen · Answer

Are you asking as a tenant or as an owner?

If asking as a tenant as long as the fees are detailed in the lease and it is mutually agreed upon it is not illegal.  There could be a grey area if the admin fee wasn't listed in the ad and then added to the lease upon signing.

If asking as an owner there should be a Management Agreement between the two parties.  If the admin fee is not disclosed to the owner I don't know if this is illegal but I would definitely look for a new company.  Increasing the rent for the tenant by adding the admin fee is not in the best interest of an owner (obviously a lower monthly rent will rent faster and more often) and the management company is not looking out for the owner.

In the situation above is the Administrative Fee the same as the Pet Damage Guarantee, it seems like the wording favors the PM company. Most of the time when you hire a PM company you are using their vendors and contractors.

Shannon Allen · Answer

Are you asking as a tenant or as an owner?

If asking as a tenant as long as the fees are detailed in the lease and it is mutually agreed upon it is not illegal.  There could be a grey area if the admin fee wasn't listed in the ad and then added to the lease upon signing.

If asking as an owner there should be a Management Agreement between the two parties.  If the admin fee is not disclosed to the owner I don't know if this is illegal but I would definitely look for a new company.  Increasing the rent for the tenant by adding the admin fee is not in the best interest of an owner (obviously a lower monthly rent will rent faster and more often) and the management company is not looking out for the owner.

In the situation above is the Administrative Fee the same as the Pet Damage Guarantee, it seems like the wording favors the PM company. Most of the time when you hire a PM company you are using their vendors and contractors.

There are lots of regulations between tenants and landlords but there are not as many for Owners and PM Companies.  You don't need a license, continuing education or even a degree to be a PM company.

Shannon Allen · Answer

@Matt Devincenzo

I updated my post! Thank you for the information!

Nathan Gesner · Answer

Yes, it's completely legal. I have a similar program in my management company but I cover up to $1500 in pet damage and $1500 in Tenant damage after applying the deposit. That's $3,000 above the deposit, which will cover 99.9% of all turnovers.

Drew Sygit · Answer

@Stan Mend seems  your upset and think you're being taken advantage of!

Check your management agreement.

Also, there are several fees many in the PMC industry charge to tenants that owners get no part of.

Stan Mend · Answer

Thanks Shannon and Jeff,

i posted this question as a owner.   I signed the agreement without explanation of how the word "administrative" before "pet fees" work.  I was told one thing but obviously it meant something else.  It sounds more like "Pet Rent" when you collect it from the tenant on monthly basis in addition to the one time non refundable "Administrative" pet fee.  These are charges that stay with the PM for a limit of up to 3 pets.    Ultimately the pet damage could be greater than the Guarantee, and the guarantee doesn't really mitigate the risk since the Security deposit would first be utilized first before tapping into the guarantee.   It doesn't sound fair to me, since I never heard of such peculiar fees.

Jeff Copeland · Answer

From your post, it sounds like this is something you agreed to in your Property Management Agreement.

And if I understand you correctly: The tenant pays a fee to the PM, and the landlord get $750 in pet damage protection. What's not to like if you are the landlord?

(And if you are the tenant, pet fees are very common, and should be agreed upon in your lease - Beyond that, it's really none of your concern what happens to them on the back end).

From a more general perspective, PM's charge fees to tenants all the time: Application Fees, Lease Admin Fees, Pet Fees, Resident Benefits Programs...the list goes on and on. Some of these pass through to the landlord, some stay with the PM, some are split - all according to your PM Agreement. There's nothing unusual or illegal about this.

Can PM Company legally charge tenant monthly administrative Fees

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