Discontentment may be one of the reasons why rental property owner and a property management company relationship do not succeed. If this occurs, take urgent actions to bring the service to an end. But, make sure you do not stray from the terms of the management contract you are in to avoid a more severe legal problem, breach of contract in particular. The following are the do’s and don’ts in terminating a management agreement.
Issue Proper Notice
One must first, examine the management contract under termination clause, as to the required number of days before releasing a notice to terminate a contract. Make sure you are within the 30 and 90 days notice (which most contracts require) limit to avoid these two things to happen: nullity of your termination request or you will be accused of breach of contract if you still persist on terminating the agreement. You may even end up being sued.
Set Your Notification in Writing
Ensure your notification to terminate the management contract is in writing. You can send the notice by means of certified mail; state when the effective date be of the contract termination. File it as a proof it was sent. And most importantly request a return of the acknowledgment receipt as to confirm that the property manager is able to receive the notice.
Never Terminate if You Do Not Have any Ground and Your Contract Demands So
Upon approving a management agreement, obviously you want to look for one that does not require cause to terminate the agreement. In the case however, your contract requires cause, there must be a strong ground as stated in the agreement, to cancel the contract. Example of the so-called cause is an inappropriate storage of the security deposits according to state regulations by the property manager. Still if you insist to terminate a contract in the absence of cause, your request may be disregarded, or worst be sued for breach of contract.
Take into consideration the Costs Involved
Check the conditions of your agreement. Giving proper notice does not end there, some contracts charge a fee for the early termination of the contract. The fee can be as much as the management fee for what is left of the contract. The owner is being held accountable for paying all costs incurred by the manager during and until the termination of the contract take effects.
Notify Your Tenants of the Change in Management
Occupants have the rights to know every change in the management. Either the owner or the property management company, depending on what is stated in the contract, is authorized to inform the tenants that you ended up dealing with the current management company. Again the best way to do this is through writing, which must contains information on who will supervise them from this time on. Stipulate too, where their security deposits will be held.
Terminate the Contract if the Manager Do Break the Contract
If ever the management disobeys the terms and conditions of the signed contract, the decision is yours whether terminate the contract or not. Once they have destroyed your trust, of course it will be hard for you to still hand over them the management of your property.
Extend Reasonable Time to Claim Funds due You
You must wait one to two months grace period until you receive all funds owed to you. Give the manager an adequate time to verify if they have available funds to pay all expenses owed so that they can settle on the amount due you.
Funds owed to you will include monthly rental collection, any amount in the reserve fund you have established and any miscellaneous income, such as revenue from a cell phone tower or billboard. The management company is also in control of passing on the tenants security deposits to you or to the new management company you are using. Make sure they are kept in the proper account in conformity to your state laws.
Preserve Copies of All Important Documents
Make sure you are able to keep copies of all leases, files of security deposits records and a total income statement and expenses. You need to obtain said documents as soon as possible upon termination of the contract. No lag of more than three or four days to be considered.
Never make it Personal
Focus solely on the numbers and the results. Do not let personal relationship intervenes the actual results the property manager is trying to achieve. Meaning to say, even if you personally like the property manager, but thinks they are not suitable to the position as such, for instance low production as to number of occupancies convinced or delayed response on the maintenance requests. Maybe it is high time to untangle the bond by employing someone who could be of full advantage to your business.