Blog Post
Simple Steps to Change Mangement
Renee Worthen • May 13, 2020
Change is Not Always Easy but here are some steps to help you through.
When you find yourself in the position of needing to end a property management agreement it may be difficult to bring yourself to make the break and move on. Whether it is a financial decision or feeling as if you have been failed it is not an easy conversation to have. As you may already know everyone is afraid of change, it is natural and seems hard to move forward even when you know it is the right thing to do.
Here are some steps to help make your transition a bit easier to manage.
- 1. Make sure you understand your contact terms before ending the agreement abruptly. You want to ensure that you are able to make a clean break. You will want to know your legal rights.
- 2. Focus on the numbers and the results. Don’t make the issue personal. If you feel that you are not a good fit for any particular company, it is okay to move on.
- 3. “Just Cause”: if management has violated the terms of the agreement, it is best to move quickly. Investment property is tricky and if management has put your rental property or tenants in jeopardy you don’t want to wait to end up in court before making a change. Many contacts do not require “just cause” and may allow for mutual agreement to terminate without specified reasons.
- Example of “Just Cause” could be – failure of the property manager to return a tenants security deposit according to state laws or failure to follow fair housing guidelines.
- 4. Required Notice: Review the termination clause in your management agreement for specific details on how much notice must be given. Instructions may also include the method of delivery for the notice. Most contracts will indicate a specific time 30, 60 or 90 days will be required.
- Notice to terminate should be in writing not email. It is best to send notice via certified mail with return receipt requested. This keeps a record of the termination request for your files.
- 5. Cost of Termination: Some agreements will include some sort of fee for ending the contract. These fees can range from a few hundred dollars to the entire management fee for the remainder of the current lease agreement. Make sure you understand the charges and it may be helpful if you negotiate the fees if needed.
- 6. Request all copies of the lease agreement, security deposits, tenant ledger and owner statement are provided immediately upon termination if not before. There is no reason for this to take more than a few days once you have provided proper notice.
- Expect to wait 30-60 days after the contract terminates to receive any funds that are still due to you. The manager will need to ensure all invoices are paid and no outstanding balances are owed. Tenant security deposits should not be used for any outstanding owner charges and should be released in full to you or the new management company you have selected. Be sure they are accounted for according to your state and local laws.
I hope that you do not find yourself in the position of “ending” a management relationship, but if you do, you can get thru it quickly and easily with the help of these easy steps.
This information is provided as a guide and not to be considered legal advice. It is always in your best interest to seek professional legal advice on contract matters.
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