Great question! Our first question is this: You do have a contract, correct? It’s difficult for me to imagine a landlord and property manager engaging on any long-term arrangement like property management without a written contract to refer to, but stranger things have happened.
Assuming you have a contract, then it’s time to make some assessments. Fortunately, there are a number of options short of the nuclear option of terminating the contract early and filing a lawsuit for damages – which should be the last thing you want to do.
First, have you suffered damages as yet because of the landlord’s actions or inactions?
If no, the situation is much easier because you can focus on correcting the issue without having to worry about collecting damages or recompense of any kind.
Second, what is the reason the property manager is not adhering to the agreement?
Most of the time, it’s either a matter of poor communication between the landlord and the management representative, or poor communication between the property management company and the poor employee trying to hold things together.
90 percent of the time, a good meeting with the contract in front of both of you can resolve the issue. It might be of use to work on your relationship with your property manager; learn more in another Ask a Pro question: Q: How can I strengthen my relationship with my property manager?
Is the contract realistic?
In some cases, you may need to reassess the contract itself, and make some changes to how things are done. You may be asking for metrics or reporting that are inappropriate, or impossible to get. Or you may be under-resourcing the manager for repairs, maintenance and other services that you expect but aren’t paying enough for.
Are you paying for the services you are asking for?
Yes, you could be a hard-*** about insisting that the services be provided according to the agreement. But that could lead to the manager just half-stepping the engagement until the end of the term, at which time you could be fired. Yes, property management firms occasionally fire cheap or problem clients, just as surely as landlords fire cheap or problem landlords.
The best thing to do is to ensure the management agreement is profitable both for the landlord and the property management firm. Don’t bargain down to the last penny. Leave some money on the table for the manager to succeed with. In the long run, chances are your own experience will be better that way.
If you cannot resolve your differences with your property manager with a meeting, you may want to involve a third party – a mediator or arbitrator. Generally, arbitrator decisions are binding, while mediators simply try to facilitate reaching an agreement. Many property management engagement contracts require the use of an arbitrator, rather than the courts, to settle differences. This can save both parties a lot of time and money, and arbitrators are frequently outstanding.
In South Carolina, you may want to explore ADR, or Alternative Dispute Resolution, detailed here. You can find arbitration and mediation professionals via the South Carolina Academy of Mediators and Arbitrators. Non-South Carolina readers should visit the website for the National Academy of Distinguished Neutrals.
If you are experiencing an issue where your manager is not taking care of the property, take a look at this Ask A Pro question: Q: What can I do if my property manager fails to care for my property? Though the question focuses on arbitration in New Jersey, it provides a good starting point if your situation is similar.
Do You Want Out of the Contract?
If the property manager is operating in breach of contract, that may release you from the obligation to continue the arrangement for the duration of the contract term. However, the breach should be a material breach of some consequence – not a trivial breach of contract that does no damage to any party and can be attributed to an employee mistake, for example, and is easily corrected.
Your contract should provide for what happens if either party wants to terminate the contract early. If you cannot resolve your differences and you have lost faith in the manager’s ability or willingness to effectively honor their agreement with you, then by all means, execute the early termination procedures outlined therein. Remember that that may require some cash outlay from you.
If you have suffered damages, you must go to arbitration if that is a requirement of the contract. Otherwise you have the option of either hiring an arbitrator mutually agreeable to both parties, or pursuing the claim in South Carolina courts. If the damages are less than $7,500, you can go to small claims court, linked above. If you do not prevail, however, you may be on the hook for your managers’ court costs and attorneys’ fees. For more specific information, contact your county courthouse or a licensed attorney in your state.
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.