My landlord, who frequently travels to Japan, just selected a tenant to be the property manager. Can the owner ask me and the other tenants to put the rent money orders in the new property manager’s name, without the property manager being on any of the tenants’ leases?
– Los Angeles, California
In most cases, this is not a problem. Landlords frequently hire property managers to act on their behalf and take all manner of actions, including collecting rent. Leases are generally assignable, meaning they can be transferred to whoever owns or manages the property should those change before the lease has ended. While the lease cannot be changed in a material way just because there’s a new owner or manager, the new owner or manager can simply take over the roles of their predecessors and execute the leases already in place.
Since you reside in California, we can identify some specific requirements related to your question. According to the California Department of Consumer Affairs, the lease must specify who is to receive rent payments and the location at which you can make these payments. In addition, the lease must disclose the name, address, and telephone number of the authorized manager of the rental property and an owner (or an agent of the owner) who is authorized to receive legal notices for the owner.
But the California Department of Consumer Affairs also states the following: “This information can be posted conspicuously in the building instead of being disclosed in the rental agreement or lease.”
Whenever there’s a third party involved with rent payments, such as an individual acting as a property manager directly for the owner, there’s always a risk of theft or loss. In your case, the risk is elevated, because the newly-appointed property manager is an individual tenant selected by the landlord, rather than a licensed and bonded professional property manager carrying errors and omissions insurance and layers of commercial liability coverage. So you and your fellow tenants should protect yourselves against the possibility that this manager could steal or lose your money.
So how can you protect yourselves?
First, don’t pay cash. You don’t have to. California Civil Code Section 1961-1962.7 says the landlord can’t require their tenants to pay cash unless they’ve had a check returned by the bank within the last 90 days. Instead, use a traceable form of payment that allows you to prove that you made your timely rent payment. These traceable forms of payment include personal checks, transfers to the landlord’s bank account or money orders with a signed receipt.
The landlord picked the property manager – you didn’t. If the property manager turns out to be unprofessional and unscrupulous, that’s the owners’ problem, not yours as a tenant.
If your rent mysteriously goes unpaid and the owner tries to evict you, the worst that will happen is you will be called to a court hearing. If you show up with proof that you paid the rent to the individual named by the landlord to be their property manager, the judge will likely tell your landlord:
“Eviction denied: work it out with your manager. The tenant kept up their end of the deal and did not violate the terms of the lease.”
Please note: If you have reservations about the property manager, make sure to tell your landlord. They need your eyes and ears just as much as they need the manager’s.
Writing about personal finance and investments since 1999, Jason Van Steenwyk started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.