I am an authorized and declared property manager for a property with two single-family houses on it. I am having problems with the owner, my uncle. Can he just fire me verbally? I have two notarized letters from him making me property manager with all financial decisions. Is he wrong?
That depends on your contract. Any property management agreement should have a list of obligations and agreements from both parties, of course – determining the scope of the engagement and the compensation for the manager.But the contract should also include a section in the agreement covering contract termination procedures.
Unless there is an agreement in a contract to the contrary, the uncle in this case is within his rights to terminate the contract with his nephew – which appears to have been verbal to begin with.
However, best practices would call for the landlord to terminate the contract in writing, along with any final monies owed through that date. The letter is a convenient marker that both parties can use to determine the contract end date and calculate any payments due to one another.
These are very basic elements of almost any extended services contract – especially if the amount of money involved is anything more than negligible. And that’s never the case with property management.
I’m going to take a moment, at the expense of our correspondent, here, who seems to have gotten in over his head, to make a point: Simply hanging out a shingle does not make one a qualified property manager. If the two parties involved didn’t get around to constructing a contract with a workable section on contract termination, then what else was left undone?
Landlords, if a manager is willing to run your properties without having basic familiarity with the workings of a contract at the basic level,
- Are you confident the manager can manage a complex lease contract?
- Are you confident the manager understands the many laws concerning housing discrimination you are subject to?
- Can you be confident that the manager can navigate the eviction process?
- Can you be confident that the manager can remain in compliance with construction permits and employment laws?
- Can you be confident that the manager can operate in compliance with the Fair Credit Collections Act?
- Can you be confident your manager won’t you get sued or even criminally prosecuted because of his or her inexperience?
- Can you be confident your manager maintains the professional liability or errors and omissions insurance coverage to protect you?
This is clearly an example of not just bad processes in place, but no processes in place that can form the backbone of a property management practice.
It’s also a great lesson in why we generally require property managers to hold real estate brokers licenses – or to work under the supervision of someone who does hold a license. Property management is much more complex than fixing leaky faucets and picking up a rent check once per month. Landlords are responsible for compliance with thousands of local, state and federal laws, rules and regulations – and are responsible to ensure their property managers are capable of doing the same.
In this case, it appears from the letter that a license isn’t required. Most states exempt individuals who work for only one property owner as employees from the licensing requirement. But you can see why state regulators generally require anyone offering his or her services as a property manager would require a license of some sort. Property managers must be conversant with a wide variety of laws and regulations, and have a specialized and specific body of knowledge.
This is a big part of the property managers’ value proposition: This body of knowledge and expertise not only saves the landlords’ time, but also helps the landlord reduce liability and risk by preventing expensive lawsuits, and keeps the landlord from accidentally getting into trouble with law enforcement.
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.