Property Mngmt gone wild

[Toby Mims]

I only have an old 12 month lease from my property management company that has already expired years ago.

There has never been another contract signed by me or my tenant (I've verified this with the tenant).

My property manager is getting old and is having health issues. There has been no more communication with him. His daughter is a realtor and has tried to take over, but now their office is closed down. Their brokers license is showing up on the state website as "Inactive" and so is his daughter's realtor license. This is in the state of Georgia.

Our tenants have paid two months of rent that we have not received from the property manager. We are now seriously looking and thinking about switching to a different property management company.

Does anyone know if we are still required to give a 30 day notice and continue to lose out on rent that is being paid on time?

Would like to get some feedback please. Thanks.

[Theresa Harris]

Have you tried contacting the tenants directly?

[Toby Mims]

@Theresa Harris Yes I have. They said they have been putting the rent in a drop box to pay the rent at the closed realty office. They also haven't been able to reach the property manager.

[Toby Mims]

@Theresa Harris *Continued*- the property manager

[Nathan Gesner]

Quote from @Toby Mims:

Why have you stayed with them when their license is inactive?

Contact your tenant immediately. Find out if they paid by check. If they did, have them cancel those checks and send you new ones for them missing months of rent.

Contact the Georgia Real Estate Commission and file a complaint against your current property manager. Even if their license is expired, the commission may be able to reach them and motivate them to send funds to you and communicate long enough to get control of your property back.

Start looking for a new property manager. Yesterday.

Remember: cheaper doesn't mean you'll make more money.

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Try interviewing at least three managers.

1. Ask how many units they manage and how much experience they have. Feel free to inquire about their staff qualifications if it's a larger organization.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, a leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Consider all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. A tenant complaining online might indicate that the property manager handled them appropriately, so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything possible to expose properties to the broadest possible market? Are their listings detailed with good-quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

[Theresa Harris]

Quote from @Toby Mims:

@Theresa Harris Yes I have. They said they have been putting the rent in a drop box to pay the rent at the closed realty office. They also haven't been able to reach the property manager.

 I'd tell them next time to put a note in an envelop saying that as they can't get hold of the PM, they are sending the rent directly to the owner and include all of the contact info (yours and theirs).  Have the checks been cashed that they left in the drop box?  Then have them pay you directly.

[Adam Bartomeo]

If they closed the business then you do not have to give them any notice. Have the tenants cancel any payments that they have made to them and have them start paying you directly. The PM is still responsible for giving you any monies owed from rent and/or security deposits. I would move very fast on this!

[Kevin Epp]

That's wild.

Would concur to tell tenants to cancel checks if they haven't been cashed yet.

Moving PMs: Don't quote me on legal ramifications of this, but if the contract with your PM has expired, triple check if you have to provide them fees/notice of cancelling the agreement. Maybe do it officially for good measure. Then move to a new PM.

Request security deposits and any other deposits (pet, last month rent, etc.) back from the PM. That is the tenants money.

Can't get hold of them? Start a public records inquiry at the local/county level. Find out where they are. If there are other implications beyond what you're saying here, and absolutely have to get in touch and/or get money (security deposits, etc.)...there's always private investigators.

[Lynn McGeein]

@Toby Mims when our first manager stopped communicating, we interviewed companies with several licensed managers so if one had issues, it didn’t disrupt business. They helped us contact the real estate board and got the old manager to transfer all security deposits and back rents over to them. We sent old manager a formal letter stating she was not performing so we were hiring new management. No matter how good one person is, a single licensed manager, even with assistants, doesn’t work because you’re one family issue away from them keeping your money. The assistants were not allowed to sign checks or disburse funds.

[Drew Sygit]

@Toby Mims you need to hire a new PMC ASAP!

Get rid of your inertia and do something!

[Toby Mims]

@Lynn McGeein Thanks for the advice! The property manager is supposedly mailing us the final rent check, but has told us that she is sending the tenant their deposit. Is the deposit supposed to be taken out of escrow and given back to the tenant, so the tenant can give it to the new property manager?

[Toby Mims]

@Drew Sygit Thanks Drew, I'm on it.

[Lynn McGeein]

Quote from @Toby Mims:

@Lynn McGeein Thanks for the advice! The property manager is supposedly mailing us the final rent check, but has told us that she is sending the tenant their deposit. Is the deposit supposed to be taken out of escrow and given back to the tenant, so the tenant can give it to the new property manager?

 Toby, Maybe in your state they return it to tenant, but that seems reckless on old manger's part. What if there are already damages to the property that you could have deducted and tenant keeps whole thing rather than submitting to new management? Your new management should know what the rules are.  When we did it, new management had old manager transfer all funds held in relation to our account to the new management, including existing security deposits.  In NC, we must inform tenants of where security deposit is held within x days (think it's 30), so new management then informed tenants where security deposits were now being held.  Seems much safer for everyone involved.