Owner wants to switch property manager mid lease.

[Nadir M.]

Hello BP,

An owner of multiple units reached out to me and was interested in my property management company. One of his questions was the transition of the properties from his current PMC to mine. From everyone’s experience, how would that process ideally take place for multiple units? What was the most efficient way to dealing with the transition? What about the current lease in place? 

Any help is greatly appreciated 

thank you 

[Theresa Harris]

Work with the other PM to get deposits and leases transferred.  Let the tenants know how to make rent payments and who to contact with problems.  I'd avoid doing it on the first or last week of the month as there isn't enough time to let tenants know and PMs are busy enough (as you know) with people moving in and out.  I'd also put up a notice and have them call the old PM to confirm the change because there are too many scams going on.

For the monthly fee, prorate it and determine a fair price for transferring funds and setting things up.

[Drew Sygit]

@Nadir M. Depends how professional the current PMC will be about the transistion.

First, have client get all leases.

Then rent ledgers.

Make sure you get a copy of their current management contract, so you understand the Termination requirements - you don't want to break any state agency laws and have the curent PMC file anything against you.

Make sure the client follows the Termination requirements BEFORE you take over.

Suggest the owner emails their Termination notice to current PMC and copies you on the email. Then you can respond to "All" and keep the owner abreast of how their current PMC is cooperating.

No more than 30 days before the Termination Date, you'll want to send an intro letter to the tenants. Be sure to CLEARLY state the date your company is taking over.

Hopefully, it goes smoothly.

[Stephanie Michael]

@Nadir M.,

Transitioning multiple units from one property management company to another can seem overwhelming, but with the right process in place, it can be smooth for all parties involved—owners, tenants, and both PMCs. Here’s how we typically handle the transition for a seamless experience:

1. Communication with the Current Property Management Company

• First, establish open communication with the outgoing PMC to coordinate the transfer of information and documents. Request a full handover of tenant files, maintenance records, current lease agreements, rent rolls, and security deposit information. Make sure they provide all relevant financial data, vendor contracts, and other important documentation for the properties. It is best to provide them with a checklist of items you are requesting.

• Ensure that notice is provided in accordance with any contractual obligations or terms with the current PMC, to avoid any conflicts.

2. Transfer of Leases and Tenant Information

• Review the existing leases to ensure compliance with local laws and assess any terms that may need to be adjusted. Typically, existing leases remain in place until their expiration, and the new PMC assumes responsibility under those agreements. We typically do new leases with any acquired tenants at their next lease renewal.

• Communicate with tenants early in the process, introducing your company as the new property manager. Provide them with contact information, a new rent payment portal (if applicable), and an overview of any changes to procedures.

3. Update Payment Processing

• Work with tenants to transition their rent payments to your system. Ensure that all deposits, rental payments, and other financials are correctly transferred, including any past due amounts or credits that may be in place.

• Coordinate with the former PMC for the transfer of security deposits, ensuring they’re accounted for and properly transferred into escrow. Then provide the required notices to the tenants that your company is now holding their security deposit funds in escrow.

4. Maintenance and Vendor Transitions

• Review current maintenance requests and contracts with vendors. If the former PMC had specific vendor agreements, confirm their terms and see if they can continue under your management, or transition to your preferred vendors.

• Make sure any outstanding repairs or maintenance issues are addressed as part of the transition.

5. Property Inspections

• Schedule property inspections to evaluate the current condition of each unit and ensure that you have a clear understanding of the properties you’ll be managing. Document any deferred maintenance and address it promptly.

6. Ongoing Tenant Communication

• Provide tenants with clear, consistent communication throughout the transition period to reduce confusion or anxiety about the change. Keep them informed of any changes to policies, maintenance requests, or rent collection.

7. Final Reconciliation

• Ensure that all financials are reconciled between the outgoing and incoming management companies, including security deposits, rent payments, and any fees. A final settlement statement should be agreed upon to ensure no discrepancies.

This process ensures that the transition is efficient, minimizes disruption for tenants, and allows you to take over the management of the units with all the necessary information at hand.

I hope this helps, and best of luck with the transition!

Best Regards,

Stephanie Michael

[Nadir M.]

Quote from @Stephanie Michael:

@Nadir M.,

Transitioning multiple units from one property management company to another can seem overwhelming, but with the right process in place, it can be smooth for all parties involved—owners, tenants, and both PMCs. Here’s how we typically handle the transition for a seamless experience:

1. Communication with the Current Property Management Company

• First, establish open communication with the outgoing PMC to coordinate the transfer of information and documents. Request a full handover of tenant files, maintenance records, current lease agreements, rent rolls, and security deposit information. Make sure they provide all relevant financial data, vendor contracts, and other important documentation for the properties. It is best to provide them with a checklist of items you are requesting.

• Ensure that notice is provided in accordance with any contractual obligations or terms with the current PMC, to avoid any conflicts.

2. Transfer of Leases and Tenant Information

• Review the existing leases to ensure compliance with local laws and assess any terms that may need to be adjusted. Typically, existing leases remain in place until their expiration, and the new PMC assumes responsibility under those agreements. We typically do new leases with any acquired tenants at their next lease renewal.

• Communicate with tenants early in the process, introducing your company as the new property manager. Provide them with contact information, a new rent payment portal (if applicable), and an overview of any changes to procedures.

3. Update Payment Processing

• Work with tenants to transition their rent payments to your system. Ensure that all deposits, rental payments, and other financials are correctly transferred, including any past due amounts or credits that may be in place.

• Coordinate with the former PMC for the transfer of security deposits, ensuring they’re accounted for and properly transferred into escrow. Then provide the required notices to the tenants that your company is now holding their security deposit funds in escrow.

4. Maintenance and Vendor Transitions

• Review current maintenance requests and contracts with vendors. If the former PMC had specific vendor agreements, confirm their terms and see if they can continue under your management, or transition to your preferred vendors.

• Make sure any outstanding repairs or maintenance issues are addressed as part of the transition.

5. Property Inspections

• Schedule property inspections to evaluate the current condition of each unit and ensure that you have a clear understanding of the properties you’ll be managing. Document any deferred maintenance and address it promptly.

6. Ongoing Tenant Communication

• Provide tenants with clear, consistent communication throughout the transition period to reduce confusion or anxiety about the change. Keep them informed of any changes to policies, maintenance requests, or rent collection.

7. Final Reconciliation

• Ensure that all financials are reconciled between the outgoing and incoming management companies, including security deposits, rent payments, and any fees. A final settlement statement should be agreed upon to ensure no discrepancies.

This process ensures that the transition is efficient, minimizes disruption for tenants, and allows you to take over the management of the units with all the necessary information at hand.

I hope this helps, and best of luck with the transition!

Best Regards,

Stephanie Michael

Stephanie, 

thank you so much! This was perfect and so detailed  

[Adam Bartomeo]

We have taken on lots of owners from other property managers. There are several steps that we take when in this transition.

1. The owner communicates the transition to the current PM and then you contact them after. The owner may have to 60+ days notice.

2. Get all of the necessary info - leases, contact info, tenant ledgers, inspections, amounts of security deposits and advanced rents.

3. Enter all of the info into your software ASAP so you are ready.

4. Physically collect all of the security deposits, advanced rents, keys, and any other items.

5. We always start clean at the beginning of the month unless there is a real need to start mid-month.

You will have to use the leases that are in place and can transition the tenants to your leases as each lease expires.

[Nadir M.]

Quote from @Drew Sygit:

@Nadir M. Depends how professional the current PMC will be about the transistion.

First, have client get all leases.

Then rent ledgers.

Make sure you get a copy of their current management contract, so you understand the Termination requirements - you don't want to break any state agency laws and have the curent PMC file anything against you.

Make sure the client follows the Termination requirements BEFORE you take over.

Suggest the owner emails their Termination notice to current PMC and copies you on the email. Then you can respond to "All" and keep the owner abreast of how their current PMC is cooperating.

No more than 30 days before the Termination Date, you'll want to send an intro letter to the tenants. Be sure to CLEARLY state the date your company is taking over.

Hopefully, it goes smoothly.

Thank you so much. 

[Jake Knight]

We get about half of our properties from other companies that are tenant occupied so this is very common in my market.  We ask for four main things:

1.) lease and other pertinent docs

2.) Tenant contact information

3.) Deposit(s)

4.) keys

Typically, there is an agreed upon date that they official transition will take place. Ideally, this would be the 1st of the month so you can collect the rent. The most common duration in my market is 30.  Work with the former PM to get the necessary information before that date and reach out to the tenants.  Beyond that, if it's a multi family, make sure you understand if there is a common utility service you need to put your name on so there is no service disruption.  Let me know if you have any questions!