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When Property Management Goes Wrong

791 views March 6, 2024 Karina Jugo 3

Property managers play a pivotal role in efficiently managing real estate rental investments. They handle a wide range of responsibilities aimed at maximizing the property’s value and minimizing the landlord’s stress and involvement in day-to-day operations. Property managers oversee various tasks, including property maintenance, tenant relations, financial management, and legal compliance.

Property managers take charge of property maintenance, ensuring that the premises are well-maintained, safe, and compliant with regulations. They conduct routine inspections, facilitate repairs, and coordinate contractors when needed. By maintaining the property’s condition, property managers uphold its market value and attractiveness to potential tenants.

Tenant relations also fall under a property manager’s purview. They handle tenant screening, lease agreements, move-ins, and move-outs. Effective communication with tenants ensures smooth interactions and timely rent collection, reducing the likelihood of conflicts and vacancies.

Financial management is another critical aspect of property management. Property managers handle rent collection, financial record-keeping, and budgeting for expenses. They provide landlords with financial reports that offer insight into the property’s performance, enabling informed decisions.

Property managers also navigate legal complexities. They stay updated on local housing laws, tenant rights, and eviction procedures. This knowledge ensures that the property and its operations remain compliant, reducing legal risks for landlords.

In a nutshell, property managers act as intermediaries between landlords and tenants, overseeing property maintenance, tenant interactions, financial management, and legal compliance. By shouldering these responsibilities, property managers help landlords optimize their real estate investments while relieving them of many operational burdens.

Possible Landlord-Property Manager Issues

Conflicts may arise between landlords and property managers, which in some cases have resulted in legal actions. Specific details may vary, and the outcomes may differ based on various factors, including local laws and circumstances. Here are a few examples:

  1. Negligence in Property Maintenance: If a property manager fails to properly maintain a rental property, resulting in damages or safety hazards for tenants, the landlord might take legal action to hold the property manager accountable for the negligence.
  2. Financial Mismanagement: Conflicts can arise if a property manager mishandles financial matters, such as misappropriating funds, failing to provide accurate financial reports, or not properly accounting for rental income and expenses.
  3. Miscommunication or Non-Disclosure: If a property manager fails to communicate important information to the landlord or tenants, or if they don’t disclose relevant details, such as potential repairs or legal issues, it can lead to conflicts and legal disputes.
  4. Breach of Contract: Disputes can arise when a property manager breaches the terms of the management agreement, such as not fulfilling agreed-upon responsibilities, not meeting performance targets, or not following proper procedures for tenant eviction.
  5. Tenant Relations Issues: Conflicts between tenants and property managers can escalate, leading to lawsuits. This could involve allegations of discrimination, wrongful eviction, or failure to address tenant complaints.
  6. Improper Tenant Screening: If a property manager fails to conduct thorough tenant screenings, allowing problematic tenants to move in, the landlord might pursue legal action if it results in property damage or disturbances.
  7. Misuse of Security Deposits: If a property manager mishandles security deposits, such as not returning them appropriately or without proper justification, it can lead to legal disputes with both tenants and landlords.
  8. Unauthorized Repairs or Expenses: If a property manager makes unauthorized repairs or expenses without the landlord’s approval, conflicts can arise over financial matters and the proper allocation of funds.
  9. Failure to Comply with Laws: If a property manager fails to adhere to local housing laws, fair housing regulations, or other legal requirements, it can lead to legal action from tenants or governmental authorities.
  10. Conflicts Over Lease Agreements: Disagreements can occur if a property manager enters into lease agreements that the landlord did not approve, resulting in disputes over the terms of the lease and responsibilities.

It’s important to note that many conflicts between landlords and property managers can be resolved through negotiation, mediation, or arbitration before reaching the court. Legal actions are generally considered a last resort, as they can be time-consuming, costly, and emotionally draining for all parties involved.

Landlord Options When Property Managers Fall Short

If a landlord finds that their property manager is not performing their obligations efficiently, there are several steps they can take to address the situation. It’s important to approach the situation thoughtfully and professionally to ensure the best outcome.

Here’s a detailed explanation of what landlords can do:

  1. Review the Management Agreement: The first step is to thoroughly review the management agreement that was signed between the landlord and the property manager. This agreement outlines the roles, responsibilities, and expectations of both parties. It will help you understand the specific obligations the property manager agreed to perform.
  2. Communicate Concerns: Initiate a conversation with the property manager about your concerns. Sometimes, communication breakdowns or misunderstandings can lead to performance issues. Explain your observations and provide specific examples of where you feel their performance is lacking. It’s important to be clear, respectful, and open to hearing their perspective as well.
  3. Document Issues: Keep a detailed record of the issues you’re facing. This might include instances where maintenance requests weren’t handled promptly, problems with rent collection, lack of communication, or any other aspects of their responsibilities that aren’t being met satisfactorily. Having a documented history of issues will be helpful if you need to escalate the matter.
  4. Request Improvement: If your initial conversation doesn’t lead to satisfactory changes, express your expectations for improvement in writing. This could be in the form of an email or a formal letter. Clearly outline the specific areas where you expect better performance and set a reasonable timeframe for improvement.
  5. Schedule a Meeting: If the property manager continues to underperform, consider requesting a face-to-face meeting to discuss the situation in more detail. During this meeting, you can go over your concerns, expectations, and potential solutions to address the issues.
  6. Escalate to Management Company: If the property manager is part of a larger management company, you can escalate the matter to their superiors within the company. Explain the issues you’ve been facing and provide evidence to support your claims. Management companies typically want to maintain good relationships with property owners and may take steps to rectify the situation.
  7. Review Termination Clause: Check the management agreement for any clauses related to the termination of the contract. There might be specific terms under which you can terminate the agreement if the property manager fails to meet their obligations. Follow the procedures outlined in the contract for termination, which might involve providing written notice within a certain timeframe.
  8. Consider Legal Advice: If the property manager’s poor performance has led to significant financial losses or legal issues, you might want to consult with a legal professional specializing in real estate law. They can provide guidance on potential legal remedies available to you.
  9. Find a Replacement: If you decide to terminate the contract with the property manager, start searching for a replacement. Look for recommendations, interview potential candidates, and ensure that the new property manager’s responsibilities are clearly outlined in the new agreement.
  10. Review Future Contracts Carefully: When hiring a new property manager, make sure to review the management agreement carefully and ensure that it includes specific performance metrics and consequences for failure to meet those metrics.

A Final Word

Conflicts between landlords and property managers can arise due to a variety of reasons. Differences in expectations, miscommunication, and financial matters are common triggers. Landlords may feel their properties aren’t being properly managed, leading to disputes over maintenance, tenant relations, and financial reporting.

Poor communication can result in misunderstandings about responsibilities and decisions. Financial conflicts might stem from mishandling of funds, unauthorized expenses, or disagreements over fees. Legal compliance issues, tenant disputes, and breaches of contract can also contribute to conflicts.

Ultimately, conflicts often emerge when there’s a breakdown in the relationship’s trust, shared goals, or adherence to agreed-upon terms, leading to frustration and the potential for legal actions. Remember that the specific steps you take will depend on the terms of your agreement, the severity of the issues, and your desired outcome. It’s important to approach the situation professionally and to prioritize finding a solution that benefits both parties. Better yet, invest in a reliable property management software to simplify the entire rent process!

Authors

  • Karina Jugo

    Karina Jugo is a content administrator at RentPost who works directly with real estate and property management experts to create resources and guides for property managers. She has more than 15 years of experience in content research and writing for various industries.

  • Jacob Thomason

    Jacob Thomason is the CEO and co-founder of RentPost, software platform providing property managers, landlord or owners with the tools necessary for property management. Jacob is a software entrepreneur with with a vast array of expertise ranging from business concept design to software architecture and development. He is running RentPost for more than 14 years and helping property managers and property owners.

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