Navigating Property Management Breakups
Today, I want to dive into a crucial topic – what it looks like when a property management relationship comes to an end, and share some lessons from a recent owner termination we experienced at Emerson.
Understanding Property Management Termination
Recently, we had an Emerson-initiated termination. The owner wasn’t very happy, and while some of his feedback was more emotional than factual, he did provide some constructive criticism that I think is valuable to share. Whether you’re working with a current management company or thinking about hiring one, it’s essential to understand what termination might look like. You won't stay with the same property management company forever—you might sell, move back in, switch companies, or start self-managing.
In this specific case, our management company had been bought, which often happens in this business. It’s important to know upfront what separation might look like if the company you’re working with changes.
Prepare for Potential Hold on Distributions
The first thing to consider during a termination is the hold on your distributions. At Emerson, for example, we shut off all distributions for 30 to 60 days to finalize accounting – covering any outstanding maintenance or utility bills, ensuring we’re not calling you later for payments. This might be fairly normal in the industry, but it’s something to prepare for during a termination.
Control Over Spending and Maintenance
An essential piece of feedback we received was about control over maintenance spending. This owner hesitated to relinquish control, skeptical that we were spending money freely. It's crucial to trust your management company in handling immediate concerns, like fixing a heater or addressing utility issues that preserve the property and the safety of the tenant. At Emerson, we have strict controls: we won't spend over $400, unless it concerns the property's preservation or tenant’s health and safety.
Security Deposit Processing
Another critical area is how the security deposit is handled. For us, if we terminate 60 days before a lease ends, we don't handle the security deposit return because we no longer have authority to follow through with necessary processes. This responsibility goes back to the owner. It's important to know how your management company approaches this task.
Agreement Conditions Matter
Lastly, always read and understand the termination conditions in your contract. We at Emerson operate on a month-to-month agreement with no onboard or termination fees, which empowers our clients to move on when needed without feeling handcuffed.
Final Thoughts
If you're facing or considering a termination, ensure that you’re aware of all conditions, understand the implications for maintenance spending and security deposits, and feel comfortable with the level of control you’ll have over spending as an owner. Understanding these aspects will better prepare you for a smooth transition.
I hope these insights have been helpful. If you have any feedback, whether it's constructive criticism or positive comments, please share them. Thank you for your support, and I’ll see you next time!
