Furious with our property management company

[zoebartlett]

Sorry to vent but this is really bothering me, and I'd love advice about how to handle this situation. This is kind of long...

My husband and I own a condo, our former residence, and we're now renting it out and using a property management company to oversee the interior of the condo. Our tenant is great, a very lovely woman, and we have no problem with her. We have had issues with the management company's lack of communication with us at times, however. I had spoken to the owner and he had reassured me that they would do much better. They appreciate our business, yadda, yadda...

We just received January's rent check and it was significantly lower than what it should have been. Wondering why, my husband called the company and spoke to the person in charge of billing. Here's what happened.

Our tenant had asked our property management company last month if she could send in a lower rent check for January than what she pays each month. She said she's planning on paying it in full over the next two months.

The woman at the management company apparently tried to e-mail me last month to ask our permission but I never received the message. She spelled my first name incorrectly, so the message was sent to someone else. This woman thought it was weird when she never heard from me after a few days, one week, and then two weeks went by because I always reply quickly to e-mails.

Instead of e-mailing my husband or calling one of us, this woman made the decision on her own to agree to our tenant's proposal. I am beyond livid. It's not this woman's finances that are affected. It's ours. I called the owner of the company this morning and I'm waiting to hear back from him.

If you were in this situation, what would you do?

1. Demand that the management company pay us the money and they'll get paid when our tenant repays monies owed.
2. Terminate the relationship with this company? f we go this route, I have to look into the process.
3. Understand that mistakes happen and let it go. For now.
4. Something else I haven't mentioned.

 

[lucyandroger]

Assuming there is nothing in your agreement with the management company giving them authorization to make such decisions for you and since you have already had issues with this company in the past, I would do #1 followed by #2.

 

[mayerling]

I completely understand your frustration. You have every right to be upset; it's really not their decision to make. I have a question regarding the tenant though. As you mentioned, you have no problems with the tenant and you think she's a lovely person; do you think that if you ask the management company to reimburse you in full they might start hounding her for the money even though they agreed to her proposal?

 

[davi_el_mejor]

Assuming there is nothing in your agreement with the management company giving them authorization to make such decisions for you and since you have already had issues with this company in the past, I would do #1 followed by #2.

Agreed.

 

[zoebartlett]

Lucy -- I just checked the agreement and this is how it's worded. I hate legalese, by the way!

"Repairs: To take charge of repairs, decorating and alterations and to purchase supplies therefore. Manager agrees to obtain Owner's prior authorization for any and each expense item in excess of $_________ ($250 minimum) except monthly or recurring operating charges or emergency repairs, or in the event the owner is not reasonably available for consultation, if the Manager deems such protection of the property from damage or to perform services to the tenants provided for in their lease."

It's badly worded, and while my issue doesn't pertain to a repair, I thought the above section might apply. Not sure.

Then there's this section:

" Rents: To collect rents and disburse security and other deposits; to deposit all receipts collected for Owner in a trust account with qualified banking institution. Manager shall not incur any liability for bankruptcy or failure of the depository."

 

[zoebartlett]

I completely understand your frustration. You have every right to be upset; it's really not their decision to make. I have a question regarding the tenant though. As you mentioned, you have no problems with the tenant and you think she's a lovely person; do you think that if you ask the management company to reimburse you in full they might start hounding her for the money even though they agreed to her proposal?

Thanks Mayerling. I'm not sure. I don't think so. The woman I spoke with was very understanding of our tenant's situation (as my husband and I are, but still...), and I don't see her hounding our tenant incessantly.

 

[lucyandroger]

Zoe - Those provisions don't provide authorization for what was done. Is there a rights/powers of the property manager section? Or a section on communications between you and the property manager?

 

[Italiahaircolor]

Okay, this is complicated.

I would contact the company and give them the list of errors they made when accepting this deal, namely being that they didn't attempt to contact you in any other means than one e-mail.

Secondly, I would ask THEM what they intend to do about it. They made the mistake, they get to make it right. If it's agreeable to you, then it's done--and I doubt the same mistake would ever happen twice. If it's not agreeable to you, then I would present them with one option that would make you happy. If they can make that work, great...if not, then legally I believe you're able to cut ties with them.

Sorry this happened. Good luck!

 

[zoebartlett]

Lucy -- Here's what there is:

-- a leasing section which talks about executing and renewing leases, instituting legal action if necessary.
-- maintenance
-- service contracts
-- disbursements
-- periodic statements
-- management fees
-- hold harmless: injury liability and legal actions between the owner and manager mumbo-jumbo
-- data and records: all records, data, documents are to be available to the manager
-- assignability
-- terms


"Terms: This agreement supersedes all pevious management agreements, both verbal and written. This agreement will be for a period of one year, starting from the execution date and will be automatically renewed, annually, from the original execution date, unless written notice is received 30 days prior to renewal. If owner prematurely terminates agreement for an reason, owner will pay to manager the balance of three months management fees. Upon termination, all monies due owner, if any, will be returned within 30 days."

 

[zoebartlett]

Okay, this is complicated.

I would contact the company and give them the list of errors they made when accepting this deal, namely being that they didn't attempt to contact you in any other means than one e-mail.

Secondly, I would ask THEM what they intend to do about it. They made the mistake, they get to make it right. If it's agreeable to you, then it's done--and I doubt the same mistake would ever happen twice. If it's not agreeable to you, then I would present them with one option that would make you happy. If they can make that work, great...if not, then legally I believe you're able to cut ties with them.

Sorry this happened. Good luck!

Thanks Italia! My husband isn't as annoyed as I am, and he thinks that as long as we get what is owed to us next month as promised by our tenant, we should forgive the rental company for their error. I'm not as forgiving though.

Ironically, the amount owed to us roughly equals the same amount that we'd have to pay the company if we break our agreement with them early.

Since we live nearby, I'm willing to cut ties with this company and become landlords ourselves. My husband isn't willing to consider this at all. If I make the decision to part ways with this company, he wants us to have another management company in place before we part ways. The only way he's willing to not go with another company is if we move back to the condo ourselves once our lease ends. That's a whole other issue though.

 

[tina sparkle]

the thing i would be more worried about is the issue of the tenant not being able to pay her rent in full. that is more worrisome to me than the management company accepting her offer. if you decide to take over the running of the property i hope you can find a more reliable tenant, who pays in full each month.

 

[zoebartlett]

the thing i would be more worried about is the issue of the tenant not being able to pay her rent in full. that is more worrisome to me than the management company accepting her offer. if you decide to take over the running of the property i hope you can find a more reliable tenant, who pays in full each month.

Thanks Tina. That concerns me too. That's one reason to work with a property management company -- they'll do the leg work in terms of serving eviction notices (if needed) and then finding a new tenant. Since my husband and I don't have any experience with this, we'll probably work with someone.

I've been calling around and although it's hard to find someone in my area who does this for small individual condo units, I had luck. I feel a little better knowing that if we do cut ties with the current company, we do have another one to work with.

ETA: FWIW, we would have accepted our tenant's request but I find it inappropriate that the co. made a single attempt to contact us and then made the decision on their own.

 

[lucyandroger]

Hey Zoe - Without actually reviewing the agreement, it seems you have pretty good argument that the property manager didn't have authorization to make the agreement with your tenant on your behalf. I can't give you legal advice, but you should look into whether you'd actually have to pay the termination fee since the management company may have breached the contract by not properly collecting rent as required by the agreement. Just something to think about and look into.

Edited for clarity.

 

[zoebartlett]

Hey Zoe - Without actually reviewing the agreement, it seems you have pretty good argument that the property manager didn't have authorization to make the agreement with your tenant on your behalf. I can't give you legal advice, but you should look into whether you'd actually have to pay the termination fee since the management company may have breached the contract by not properly collecting rent as required by the agreement. Just something to think about and look into.

Edited for clarity.

Thanks so much Lucy! I appreciate your advice. I'll definitely look into whether or not we'd have to pay the termination fee.

 

[Octavia]

Zoe, IIRC you were thinking about ditching this management company awhile ago when they screwed you over on some repairs or something...so my opinion is, their time is more than up. If you can't trust them to manage the property in accordance with the agreement and do a good job of it, what are you paying them for? I also ditto lucyandroger 100%, I think her reasoning is spot-on.

 

[zoebartlett]

Octavia -- you're right. I would have ditched them long ago but my husband didn't agree with me, so we stuck with them. Now he's pretty much on the same page as me (in that he's not as annoyed as me but he's willing to switch). Thanks for chiming in!

 

[Allison D.]

My take on this is a bit different.

To me, the issue is about the ongoing lack of communications and less about the specific tenant/payment issue. I do realize this impacts your finances, but then again, what would have been the alternative? Eviction? That would seem silly considering that 1) she's a good tenant as a rule, and 2) by the time your management company could bring eviction proceedings (ESPECIALLY in winter), tenant would likely be current anyway negating the action. It just seems pointless, and your mgmt company probably recognized that. The goal is to get the rent due, and the fastest way to get that in this particular instance would be to allow the proposed arrangement since it's short term.

The piece I think is actionable is that you've had communication issues previously w/mgmt company, you've asked them for improvement, and it appears that isn't happening. To me, that's the piece to fix. You didn't mention when your existing annual term with them expires, but with the 3-mo penalty, if your remaining term is less than 6 mos, I'd likely just let the balance of the term run through and provide the requisite written notice to terminate the renewal when it's coming due. I'd use this time in the interim to fully vette other property management options that are more aligned to your expectations. If the remaining term is more than 6 mos, then I'd probably consider early termination and accept the 3-mo penalty as the cost for my improved piece of mind with a new mgmt company.

I do agree with D about not taking it on yourselves; it's not worth it to be obligated to hike down to that rental every time something may go awry, and the time/aggravation factor would likely overshadow any possible savings you might realize. Sometimes, it's just worth it to have someone else handle the minutae for you, and I'd agree with him on that one.

 

[zoebartlett]

My take on this is a bit different.

To me, the issue is about the ongoing lack of communications and less about the specific tenant/payment issue. I do realize this impacts your finances, but then again, what would have been the alternative? Eviction? That would seem silly considering that 1) she's a good tenant as a rule, and 2) by the time your management company could bring eviction proceedings (ESPECIALLY in winter), tenant would likely be current anyway negating the action. It just seems pointless, and your mgmt company probably recognized that. The goal is to get the rent due, and the fastest way to get that in this particular instance would be to allow the proposed arrangement since it's short term.

The piece I think is actionable is that you've had communication issues previously w/mgmt company, you've asked them for improvement, and it appears that isn't happening. To me, that's the piece to fix. You didn't mention when your existing annual term with them expires, but with the 3-mo penalty, if your remaining term is less than 6 mos, I'd likely just let the balance of the term run through and provide the requisite written notice to terminate the renewal when it's coming due. I'd use this time in the interim to fully vette other property management options that are more aligned to your expectations. If the remaining term is more than 6 mos, then I'd probably consider early termination and accept the 3-mo penalty as the cost for my improved piece of mind with a new mgmt company.

I do agree with D about not taking it on yourselves; it's not worth it to be obligated to hike down to that rental every time something may go awry, and the time/aggravation factor would likely overshadow any possible savings you might realize. Sometimes, it's just worth it to have someone else handle the minutae for you, and I'd agree with him on that one.

Thanks so much for your advice, Allison! I agree with everything you've said.

You're right -- this is more about the communication issue than it is our tenant/her payment. I like our tenant and I understand that things happen. I'm not upset with her at all. We would have agreed to her proposal, it's just that I expected the company to make more of an effort to contact us.

Our tenant's lease ends in September so that's technically when our agreement would expire.

I do see your point about not taking on the property ourselves, and I have told D. that I'm fine with it.

D. mentioned that our other option is to move back in when our tenant's lease is up in the fall. We'd save money, which would be nice. The condo is just soooo small and we've definitely outgrown it.

Ack, the owner of the co. just phoned me and apologized profusely and promised to do better. He is a nice guy, and he said that he's appreciative of our efforts to let him know what areas we have concerns with and what they could improve upon. I'm hopeful each time we talk that things will get better, but then something else happens. Ugh -- I just don't know what to do.

 

[Italiahaircolor]

Okay, this is complicated.

I would contact the company and give them the list of errors they made when accepting this deal, namely being that they didn't attempt to contact you in any other means than one e-mail.

Secondly, I would ask THEM what they intend to do about it. They made the mistake, they get to make it right. If it's agreeable to you, then it's done--and I doubt the same mistake would ever happen twice. If it's not agreeable to you, then I would present them with one option that would make you happy. If they can make that work, great...if not, then legally I believe you're able to cut ties with them.

Sorry this happened. Good luck!

Thanks Italia! My husband isn't as annoyed as I am, and he thinks that as long as we get what is owed to us next month as promised by our tenant, we should forgive the rental company for their error. I'm not as forgiving though.

Ironically, the amount owed to us roughly equals the same amount that we'd have to pay the company if we break our agreement with them early.

Since we live nearby, I'm willing to cut ties with this company and become landlords ourselves. My husband isn't willing to consider this at all. If I make the decision to part ways with this company, he wants us to have another management company in place before we part ways. The only way he's willing to not go with another company is if we move back to the condo ourselves once our lease ends. That's a whole other issue though.

I think it's great that the owner of the company got back to you and is willing to improve upon what he can...that's a definite plus.

Being that landlord yourself is a HUGE responsibility. If this is something you really want to consider, I'd look at all the other threads concerning what goes into successfully managing a property. I did it for a few years and it was a lot (and I'm a very laid back owner, BTW)...I think, if you've never done it before and screwed up rent frustrates you, your husband is right...don't get into the micro managing.

Are you able to have contact with the renter to discuss terms? If so, I think that a very viable solution--just to put yourself in a better place. Let her know that while you're flexible and while you do hire out help to run the property, any "money matters" must be addressed to you as well as the company because it directly effects you and you need to be in the loop at all times. It's not that you wouldn't accept deferred payment, but that you're carrying the house along with all your other expenses and need to know *exactly* what is going on. Remember, this is a business and should be handled in accordance with your personal expectations, for example, if your paycheck was going to be deferred over the course of two months, that's information you'd need to know.

I'm glad to see you've cooled off a bit. You're probably much like me in regards to that, I burn hot and fast when things that are negative catch me off guard. In the future, another thing to consider is this...if you're going to renew your lease with your current tenant or someone else, add 3% to the monthly rent you charge for incidentals. Set that 3% aside in a separate account for occasions such as this.

 

[smitcompton]

Hi Zoe,

The Prop. Mange firm really had no authority to change the rent. If anything, they should have told the tenant they were unable to get in touch with you, and so could not make any adjustment in the rent. They might make good on it. In any case there are very few companies that would/and/or take on small condos. If I were you i would listen to your husband on this. You have a nice arrangement, one that might not be replaceable.

Point out to them that they have no right to change the contract terms. They should have said no. Watch your tenent now.

Annette

 

[suchende]

While it doesn't feel good to not have a say, if your tenant had not asked permission and just paid less rent, you would be in the same position and not have any recourse with the management company. I agree that the bigger concern is with your tenant's financial situation.

 

[Mara]

Agree with Allison.

What I would do is first, put a process in place for communication with the property management company. Tell them this is how they should handle communication with you and have them agree to it via email or in some form of writing. aka email first, if no response in X days, follow up with another email and a phone call, and that you have to have either verbal or written agreement to do something like this. That way you won't be surprised again.

I'd also ask them what they will do about the financial aspect to help you through the rest of the month. Though in the future you may want to keep more funds on hand in case something else arises... what if the tenant just decides to up and give 30 days notice and leave? You'd be in a big pinch if you didn't have enough of a backup to pay the other mortgage for X # of months 'in case'. So possibly try to sock away more for the future so that if this did happen again you wouldn't be as affected.

Thirdly, I'd talk with either the prop management company or the tenant directly about her finances. Is this going to be a one time thing or is there a bigger issue you don't know about. That would probably also set your tone for the future, aka do you keep her, find another tenant, look into selling the property etc etc.

Fourth, I'd start researching new prop management companies or get some friend's recommendations, just to keep in your back pocket. If your future dealings with the current place are unsatisfactory, then you will have a backup ready to go.

 

[MichelleCarmen]

Agree with Allison.

What I would do is first, put a process in place for communication with the property management company. Tell them this is how they should handle communication with you and have them agree to it via email or in some form of writing. aka email first, if no response in X days, follow up with another email and a phone call, and that you have to have either verbal or written agreement to do something like this. That way you won't be surprised again.

.

Get everything in writing which is on paper. Don't rely on verbal agreements or emails as you never know what may or may not be accepted if anything goes to court.

Just an example - with one landlady we delt with, she never contacted me within the 14-day window she had to inform me how much of our damage deposit would be returned. I sent her two emails regarding this and she sent me a FAKE forward claiming that was the email she had sent. Well, it was so obviously made up and I did call her on it and a check magically appeared within a few weeks. Between that time, I had contacted an advacy group and looked online and sometimes emails don't hold up. ETA - which would have meant mine wouldn't have either. Since I gave notice by email, she legally could responded with email also. The ONLY reason I was able to get my $ back quickly was because she sent a fake email and was concerned I could prove it in small claims court (which was where I was planning to take her).

 

[zoebartlett]

Thanks so much Italia! I have cooled off a lot since posting, and I do see things from a slightly different perspective now.

I do have our tenant's e-mail, so I suppose I could write to her and ask that she include us directly when asking about matters such as this in the future (if it ever comes up again).

Thanks Annette! I'm very close with my mom, and when when I told her about this, we both felt the exact same way you did in your post. My mom said she would have demanded that the company pay us the money owed (since they took it upon themselves to agree to something before getting our approval), and then our tenant could just reimburse them.

I have spoken to an individual who looks after properties (he's also a realtor and does property management on the side), and when I told him what had happened with our current company, he said that he would have done the same thing. Bottom line -- we need to trust whomever we work with to act on our behalf, and if they can't get a hold of us, they'll act in whatever way they see appropriate. The alternative in this case would have been for the company to say no to our tenant's proposal and possibly risk her bailing on the rent altogether. We would have been in a much worse situation then, as Allison pointed out.

Suchende -- I do see your point, and you're right. When I first posted this, I was so frustrated, but I've calmed down and I see that there's a bigger issue to this.

Thanks Mara! We really should have put a communication system in place well before all of this. I guess I thought it would be a no-brainer to make an effort to contact us using all methods (e-mail both of us and if that didn't work, call both of us), but apparently, it needed to be said. We have made a plan now and notified the company. Thanks for the suggestion. We do have money socked away for emergencies, etc., but it was just the principal of the thing, if that makes sense. I have researched alternative companies, well, one, and he's in our back pocket so to speak. We will most likely change companies soon. I just want to get our money back before hand. I appreciate all your advice.

Thank you MC! We will definitely get things in writing.