Fraud or no?

[Shannon Reynolds]

My property in MD is turning over to a new tenant. My PM sent me a quote that gave me a small heart attack. Upon further inspection, I quickly recognized that the times they were allocating for various tasks were grossly overexaggerated. For instance, changing the battery in a garage remote and reprogramming it. That shouldn't take a professional longer than a couple minutes. They had 2 hours! When I confronted them, they defended their quote, stating that they go off the industry standard and a portion of the labor time is for "testing the system after repairs to ensure safety." To which my response was, "so 5 min to complete, 1 hour and 55 min to make sure the new battery doesn't explode in the remote and burn down the entire neighborhood?"

That was just one example of what I would consider to be fraud by grossly misrepresenting the time required to complete even the simplest tasks...like changing a couple light bulbs...30 min! 😂

Can someone shed some light on this matter? Isn't that some form of Consumer Fraud?

If so, I assume I am obligated to mitigate through my contract, but I declined to allow them to do the work anyway. For me, it's the principal of the matter. They admitted to charging the same for other turnovers, so if it is fraud, it seems like grounds for a Class Action lawsuit? If PMs in MD operate like they do in CO, they are required to keep all client records for 4 years. And the Real Estate Commission would have to investigate any written complaint. If they confirm the complaint, they would turn it over to an administrative judge for ruling. Then the Commission would act according to the ruling...but they can't assign punitive damages. So, who does...I've gone this far down the rabbit hole. I want to see the Queen! Lol. 

[Russell Brazil]

Property managers are not licensed in Maryland.

I don't see any fraud. They're telling you what they charge. You can choose to retain their services, or not. 

[Shannon Reynolds]

Thanks for the reply Russell. I would respond by making the observation that it is not simply them "telling [their clients] what they charge." They charge $XX per hour. What they ARE doing is deceiving their clients by billing them for more time than they are actually performing. An average client is not a certified plumber, electrician, or mechanic. They cannot be expect to know how long certain maintenance tasks require. So, they are at the mercy of the professional to operate with integrity and honesty. If the professional chooses to abuse this trust...is that not fraud?

[John Clark]

You’re not a consumer and they’re not selling consumer goods, so forget the consumer fraud.

Also, they sent you a quote. They told you what they will charge, not what they have spent in terms of time. It’s called “flat rate” billing. Take it or leave it. 

When you talk to the queen, tell her you are given to fits of rage. Find another property manager first, though.

[Shannon Reynolds]

Thanks John. But again...at WHAT point does "flat rate" billing cross over into fraud? 

Assume I own a rental property, but for some strange reason (hypothetical to prove a point) I don't understanding ANYTHING about the process of changing a light bulb. 

If I place complete trust in my PM's knowledge and expertise, but they take advantage of my ignorance, how far does it have to go to become fraud? 1 hour to change 1 light bulb? 2 hours? 4 hours? 10 hours?

You're telling me they could bill me 1000 hours to change 1 light bulb and I have ZERO legal recourse?

[Shannon Reynolds]

John, to circle back to something I just noticed about your explanation of "flat rate" billing, they actually did send me an itemized quote that included 'Labor hour(s)' multiplied by 'Hourly rate.' So...not "flat rate" billing, maybe? Idk.

[Matthew Paul]

There are basically 2 ways to bill doing service work , strictly by the hour , and then a flat rate . By the hour is strictly that , if it takes 4 hours to do a task you get charged for 4 hours , but you wont know the charge until AFTER the job is done . 

Flat rate is assigning a charge to each task , now if they say before the job they charge 2 hours to change a bulb , thats what you pay , if it takes 10 minutes , or all day . 

Is it fraud , no they are telling you the cost up front , you accept or decline . 

Remember a PM company is out to make a profit , they up charge everything they do .

What you are saying isnt unheard of in Maryland , I have heard similar complaints from other landlords in the Anne Arundel county area 

[Russell Brazil]

2 people have told you it's not fraud. You're obviously looking for a different answer even if it's not the correct one. This is called confirmation bias. 

I work closely with the REC, AGs office and the state legislator in Maryland and DC on regulatory and legislative issues around real estate and housing. I had a 2 hour meeting w the AG today actually. You can always file a complaint with the AGs office. I know from experience it will go nowhere because it's not illegal.

If you were charged fees without your permission, or not permitted to be charged in your contract...then that would be illegal. Entering into a contract knowing the costs is a choice you make.

[Theresa Harris]

I would find another PM who charges you for the actual work done.  If the quote they gave you is essentially a to do list, find a handyperson who is capable of doing the things on that list and ask them for a quote.  I agree that they should charge you for the amount of time it actually took.  Fine for an estimate to say it could cost $X, but when you get the bill find out it took less than that and therefore you were charged the lower amount (or maybe it costs what they said), but then you know the costs up front. I'm wondering if the example of changing the battery includes travel time to do a single project?

[Shannon Reynolds]

Matthew, thanks.

I understand maybe my situation isn't "extreme" enough to highlight the point I'm trying to make.

So I'll try a different approach. 

If I know absolutely nothing about cars and I take my car into a mechanic for an air filter change, if they tell me it will take 10 days to fix and bill me $1,000 for labor...that is fraud? Correct? They are taking advantage of me because I told them I know nothing about cars and they chose crime. This is a valid example of an industry that was eventually exposed as being vulnerable to fraud, and once it was exposed, people were like..."Ah, yeah. That's fraud! Lawyer up." 

So now, let's apply the same reasoning to any industry of your liking within the residential home maintenance world...where IS the line? There HAS to be one. You cannot convince me that a PM that somehow "tricks" a client into approving a 100-hour lightbulb swap for $1,000 is completely immune. There must be a threshold, benchmark, or something when a lawyer is going to review the evidence and say, "Oh yeah, we're about to take these people to the CLEANERS!" 

So if anyone happens to know where that threshold is or where to look...like MD law, codes, statues, regulatory body, etc. That would be helpful.

[Shannon Reynolds]

Theresa, 

I actually re-did the entire quote with realistic labor times for the ones that were simple enough to use common sense. I even provided YouTube links for those tasks of professionals doing them and explaining them in less time than my estimates. Then I gave them Google Maps routes from their office, to Home Depot, to my property, and back to their office...with an hour to procure the few things they would need at home depot...all at their (absurd) hourly rate. Which I would gladly pay, by the way, if they were being honest. Again...none of the tasks were very complex. My conservative estimate with labor and transportation time was about 5 hours. They want to bill 22 hours. And so, this is why I'm curious...I'm sure other clients just take their estimates at face value and approve the work order. So if they only work 5 hours, but bill someone for 22 hours...that feels like a crime if they're charging by the hour. 

I was hoping someone would be able to say, "according to Maryland Real Property Section § 8-203, blah blah blah." (Mic drop)

[Stuart Udis]

Fraud….class action lawsuit….punitive damages….I know we live in a litigious society but my goodness. As others have pointed out the PM submitted a proposal and you had the option to accept or decline. You opted to decline. How have you been harmed? What are your damages?  You repeatedly use the term billed but you were never billed you were given a proposal. You sound like a professional plaintiff. How many times have you “suffered” from a slip and fall accident in a store aisle? 

[Shannon Reynolds]

Stuuuuart! I openly volunteered that I declined the quote and, thus, have not been "harmed." This is more of a fact finding mission. Maybe I want to be a real estate lawyer when I grow up.

Your snarkiness has added nothing.

[Shannon Reynolds]

Russell, sorry, I didn't see your last response at first. That's cool that you work with the AG. I'm looking for understanding and sources, not confirmation. 

So if I understand you correctly, if Person A enters into a contract with Person B to perform Job Z for $100 per hour and B billed A for 10 hours, but later A finds out that B only worked for 1 hour, that is legal. 

Can you provide the source of that information? 

[Chris Seveney]

Quote from @Shannon Reynolds:

My property in MD is turning over to a new tenant. My PM sent me a quote that gave me a small heart attack. Upon further inspection, I quickly recognized that the times they were allocating for various tasks were grossly overexaggerated. For instance, changing the battery in a garage remote and reprogramming it. That shouldn't take a professional longer than a couple minutes. They had 2 hours! When I confronted them, they defended their quote, stating that they go off the industry standard and a portion of the labor time is for "testing the system after repairs to ensure safety." To which my response was, "so 5 min to complete, 1 hour and 55 min to make sure the new battery doesn't explode in the remote and burn down the entire neighborhood?"

That was just one example of what I would consider to be fraud by grossly misrepresenting the time required to complete even the simplest tasks...like changing a couple light bulbs...30 min! 😂

Can someone shed some light on this matter? Isn't that some form of Consumer Fraud?

If so, I assume I am obligated to mitigate through my contract, but I declined to allow them to do the work anyway. For me, it's the principal of the matter. They admitted to charging the same for other turnovers, so if it is fraud, it seems like grounds for a Class Action lawsuit? If PMs in MD operate like they do in CO, they are required to keep all client records for 4 years. And the Real Estate Commission would have to investigate any written complaint. If they confirm the complaint, they would turn it over to an administrative judge for ruling. Then the Commission would act according to the ruling...but they can't assign punitive damages. So, who does...I've gone this far down the rabbit hole. I want to see the Queen! Lol. 

 Typically there may be a min. charge - for example for travel to a property etc. As mentioned you can use someone else. Is that fraud- no. its like someone wanted to charge me $1000 to install a dishwasher. I said no. 

When you say it takes five minutes to change a lightbulb, is the management company living at the property and within the unit. If I asked Russell to come change my lightbulb, it would take go to the property, confirm the type of bulb, then go to the store and get a bulb, then go replace it and drive to the next property. Sounds like more than 5 minutes to me.

Regarding a class action, people are starting to get sue happy now that the easy money is not flowing. People need to realize to get class action status is near impossible in many instances and the attorneys make all the money. Would never recommend someone go class action. 

[Adam Bartomeo]

Class action lawsuit for sending you a quote... You may be overreacting here...

[Russell Brazil]

"I was hoping someone would be able to say, "according to Maryland Real Property Section § 8-203, blah blah blah." (Mic drop)"

You're asking to prove a negative, which is the 2nd logical fallacy you've made in this thread. Civil laws are written to state What is illegal, not to affirmative state what's legal. But you've had numerous experts in this thread, including lobbyists and lawyers tell you you're wrong, why you're wrong, and you continue to refuse the expert advice. Good luck.

[Shannon Reynolds]

Okay, but, again...where is the line? 

What if I have a camera pointing directly at my sink (recording laws aside) and a plumber, who bills by the hour, quotes me for 10 hours of work. I dont know any better, so i agree to the work order. Then he sends me a bill for 10 hours, but I later see that he unclogged my sink in 5 minutes. Maybe that is legal...idk, I kinda feel like no one wants to address that question directly. I'm not talking about flat-rate or justifiable scenarios...just straight up lying to the client. 

Everything on Google says charging for labor not performed, or "padding," is never legal. But, people in this forum would argue otherwise. Obviously, proving the padding ever happened is a different hurdle...which I'm not entertaining. But hypothetically, if you did prove it...?

[Shannon Reynolds]

"Civil laws are written to state What is illegal" - Russell Brazil

This is what I'm asking for, my guy. Where are the laws that regulate illegal activities in this industry. Maybe you can ask the AG, since you're not sure? ;)

"Numerous experts, including lobbyists and lawyers" have been happy to tell me I'm wrong, but failed to adequately explain or even attempt to explain why I'm wrong. 

I don't even know what I'm wrong about...I keep saying over and over, "does anyone know where I can find the official source?" 

I am sorry you didn't appreciate my forum discussion though, Russell. I'm sure you're very knowledgeable and you've been doing this for so long, you have forgotten how us new people need to "trust, but verify" still. It's not a reflection on you. 😁

[Jay Hinrichs]

Quote from @Russell Brazil:

"I was hoping someone would be able to say, "according to Maryland Real Property Section § 8-203, blah blah blah." (Mic drop)"

You're asking to prove a negative, which is the 2nd logical fallacy you've made in this thread. Civil laws are written to state What is illegal, not to affirmative state what's legal. But you've had numerous experts in this thread, including lobbyists and lawyers tell you you're wrong, why you're wrong, and you continue to refuse the expert advice. Good luck.

this kind of reminds me of my interaction with new home buyers. and they want to say swap out a light fixture they saw at home depot for 30 bucks.. and I charge 500.00  for one home depot items many times are not certified legal in the state they can sell them but if I get sued because it caused a fire and it was not state approved I am screwed.. ( been there done that one time and you only do it one time). And so you have to take the time to go buy a new fixture and then your electrician has to install it takes maybe 5 minutes but he charges 100 bucks or more and we need a profit for our time.. so you can see how changing a 30 dollar fixture can run 500.00 or we just say no cant do that.. PM's need minimum time charges other wise they go broke.. and agree with Stuart your watching to much TV..

[Shannon Reynolds]

Got it, Jay. Flawless logic. Very wise.

[Shannon Reynolds]

Here's what ChatGPT, Esquire has to say on the matter. 😁 Again, I was just curious and fueled by annoyed, frustration when I wrote my first post. I appreciate those of you who were sympathetic to the situation and legitimately tried to be helpful...the rest of you, thanks for the laughs. 😝

"Yes, a Property Management company that performs tenant turnover maintenance and bills by an hourly rate could be subject to Maryland Criminal Law Code § 7-104 if they are found to be intentionally inflating labor times for work orders.

### Relevant Aspects of § 7-104:

- **Theft by Deception**: Under § 7-104, theft includes obtaining property or services by deception, which involves knowingly providing false or misleading information to obtain something of value. In this context, billing for more hours than were actually worked would constitute deception, as the property management company would be receiving payment for services not actually rendered or overcharging for the services performed.

- **Fraudulent Intent**: To be subject to § 7-104, there must be intent to defraud. If the property management company knowingly inflates labor times with the purpose of increasing their billing amount, this would likely satisfy the intent requirement.

### Potential Penalties:

- **Restitution**: The company could be ordered to pay restitution to the affected parties, typically in the amount of the overcharge.

- **Fines and Imprisonment**: Depending on the value of the fraudulent billing, penalties could include fines or imprisonment. For example, if the value of the fraud is over $1,500, it could be considered a felony, which carries more severe penalties.

- **Civil Liability**: In addition to criminal penalties, the company could also face civil lawsuits for fraud, where the affected parties could seek compensatory and possibly punitive damages.

Given the potential legal consequences, it would be advisable for any property management company in such a situation to consult with legal counsel to ensure their billing practices are compliant with the law and to address any issues related to past billing practices." - ChatGPT

[John Clark]

Quote from @Shannon Reynolds:

John, to circle back to something I just noticed about your explanation of "flat rate" billing, they actually did send me an itemized quote that included 'Labor hour(s)' multiplied by 'Hourly rate.' So...not "flat rate" billing, maybe? Idk.

They are telling you the hours they will charge and the rate they will charge. No fraud. 

just so you know, that’s how auto mechanics work too. You get charged X hours per task regardless of how long it actually took to perform. Is that a fraud? Otherwise they could never give you an estimate.

You are not a consumer. 

is the property manager rapacious? Probably. Committing fraud? No.

[James Wise]

Quote from @Shannon Reynolds:

My property in MD is turning over to a new tenant. My PM sent me a quote that gave me a small heart attack. Upon further inspection, I quickly recognized that the times they were allocating for various tasks were grossly overexaggerated. For instance, changing the battery in a garage remote and reprogramming it. That shouldn't take a professional longer than a couple minutes. They had 2 hours! When I confronted them, they defended their quote, stating that they go off the industry standard and a portion of the labor time is for "testing the system after repairs to ensure safety." To which my response was, "so 5 min to complete, 1 hour and 55 min to make sure the new battery doesn't explode in the remote and burn down the entire neighborhood?"

That was just one example of what I would consider to be fraud by grossly misrepresenting the time required to complete even the simplest tasks...like changing a couple light bulbs...30 min! 😂

Can someone shed some light on this matter? Isn't that some form of Consumer Fraud?

If so, I assume I am obligated to mitigate through my contract, but I declined to allow them to do the work anyway. For me, it's the principal of the matter. They admitted to charging the same for other turnovers, so if it is fraud, it seems like grounds for a Class Action lawsuit? If PMs in MD operate like they do in CO, they are required to keep all client records for 4 years. And the Real Estate Commission would have to investigate any written complaint. If they confirm the complaint, they would turn it over to an administrative judge for ruling. Then the Commission would act according to the ruling...but they can't assign punitive damages. So, who does...I've gone this far down the rabbit hole. I want to see the Queen! Lol. 

 5 min to do the job? 

So they didn't have to write up a quote? 

They didn't have to write up a work order? 

They didn't have to assign the job to a tech? 

They didn't have to drive to the store?

They didn't have to buy the batteries from the store? 

They didn't have to drive to the job?

[Steve Vaughan]

I've been on both sides: self-managed 3 dozen for 19 years, then had a PM for half my last 2 years.  

If they did it right, without upsetting your tenant, it's a win.  Stroke the $90 or whatever check and move on.  Or self-manage. 

What got me to tap out and exit was the lack of willingness to do repairs/replacements a new way.  I was being billed to repair and find replacement covers for 1970s style 4ft flourescent lights in kitchens.  Ballast repair ($150) and a tech driving from store to store to replace covers.  WTF?  Here's a stack of $25 LED fixtures genius.  Swap em out at turnovers already. 

That type of thing and a $500 quote to replace a leaking irrigation valve that took me 4 minutes to fix forced me to throw my hands up and sell by owner.  That and the incredibly low cap rate in '22. 

I liked the way they could swap an appliance at my cost, but most things you're paying for convenience and anonymity.

[David M.]

Just because something is expensive doesn't mean it's fraud.  Yes, car mechanics do it all the time.  Had anything repaired at a dealership lately?  They charge $400 to diagnose a check engine light!

When you need others to do these things for you ( change lightbulbs and batteries?!?), expect to pay market rate.

I also operate a car detailing shop.  With inflation and rising costs of everything associated with running the business, detail prices have risen to a high level.  Am I defrauding customers? No.

It seems like this has become personal for you.