Navigating Property Management Breakups
Today, let's dive into something that's rarely talked about but critically important: terminating relationships with property management companies. This topic came to the fore for me recently following a termination initiated by Emerson that was met with quite a bit of feedback from the owner.
Understanding Termination in Property Management
Firstly, it's crucial to grasp that you won't be with your property management company forever. Whether you're selling your property, moving back in, self-managing, or choosing another management company, the possibility of separation is always on the horizon. Management companies might also get acquired, leading to changes you didn’t anticipate. Having clear expectations of what termination looks like is vital.
Feedback and Lessons Learned
In our recent case, the most significant feedback came from the fact that we temporarily held distributions after initiation of the termination process. Our rationale is straightforward: to manage final maintenance works, utility bills, and other closing expenses efficiently. This process typically takes 30 to 60 days, and I believe it's fairly standard in the industry.
The owner, in this case, was understandably frustrated, especially since previous transitions from other management companies had been rocky. However, it’s essential for owners to be prepared for potential delays in distributions post-termination. We must ensure all accounts are closed properly and that no loose ends remain.
On Spending Money and Control
A recurring issue raised was control over spending. We maintain strict management protocols: a $400 reserve limit, unless immediate action is required to preserve the property or ensure tenant safety. We take these measures seriously, primarily guided by the property lease and Texas Property Code.
However, the owner felt uneasy about relinquishing control due to past experiences with unscrupulous management firms. It underscores a vital point for property owners: if allowing a management company to take financial control is uncomfortable, it might not be a suitable partnership.
Security Deposit Processing (SODA)
We also faced concerns about security deposit processing post-termination. Our policy is clear: within 60 days of termination, we don't handle security deposits. Owners must process them directly, as we no longer have legal authority over the property, which complicates matters like maintenance work assessments and documentation.
For new clients, we handle turnovers, ensuring deductions align with legal standards, which further underscores our commitment to transparency and compliance.
The Importance of Clear Agreements
Finally, I can't stress enough the importance of thoroughly understanding the termination clause in your management agreement. We operate on a month-to-month basis with no termination fees, making transitions smoother. Always know what severance costs might be involved with your management company to avoid 'golden handcuffs' that tie you into unfavorable agreements.
I hope these insights help you navigate your property management relationships more smoothly. Understanding your contracts, particularly in terms of termination, spending, and SODA processing, is crucial. If control over these aspects is critical to you, then a particular management company may not fit well.