Can a Property Owner Sue a Property Management Company? Here’s Why

When you hire a property management company, you’re placing your trust in them to protect one of your most valuable assets—your rental property. But what happens when that trust is broken? Maybe the rent isn’t being collected, the property is falling into disrepair, or you’re suddenly facing legal issues due to their mismanagement.  So, if you’re wondering about “Can a landlord sue a property management company?”

The answer is Yes. You absolutely have the legal right to take action when a property manager fails in their duties.

As per the Industry reports, over 75% of landlords hire property managers to save time and avoid legal complications. Yet, conflicts still happen, and legal disputes are more common than many realize. Whether it’s due to negligence, breach of contract, or mismanagement of funds, you have legal rights as a landlord that can protect you from significant financial losses.

With over 15+ years of experience in property management, I’ve seen it all. In this article, I will guide you through the most common risks, your legal options, and the smart steps to take before considering a lawsuit.

Reasons to Sue a Property Management Company

The question is, on what grounds can you sue your property management company? Here are some of the key points you can consider before suing a management company:

1. Breach of Contract

If the property management company fails to fulfill the terms of the management agreement, you have reasons for a lawsuit. This could include not performing necessary maintenance, screening, or failing to communicate effectively.

For example, if the company promised and signed the contract to find tenants within a month, but took much longer.

2. Negligence

If the management company’s actions (or inactions) lead to property damage or personal injury, you may be able to sue your property management company for negligence.

For example, if they failed to address hazardous conditions that resulted in injuries.

3. Violation of Tenant Rights

If the property management company violates tenant rights, such as failing to provide a habitable living environment or improperly handling security deposits, you may seek legal action, as tenants are protected under fair housing laws.

4. Misrepresentation or Fraud

If the property management company misrepresents their services or fails to disclose important information, you could potentially take legal action against fraud.

For example, if the company collects rent but doesn’t pay it to you.

Steps to Take Before Suing Your Property Manager

If you believe that the reasons for suing the management company are valid, then here are the steps you need to take before suing:

1. Review the Contract:

You should first look at the contract you have signed with the rental management firm. This document outlines what the company is supposed to do. Understanding these terms can help you determine if there has been a breach.

2. Gather Evidence:

You should collect any evidence, such as the lease agreement, that supports your claim. Here’s more:

• Emails or messages showing communication with the company.
• Photos of damages or maintenance issues.
• Financial records showing mishandling of funds.

3. Try to Resolve the Issue:

Before going to court, it’s often best to try to resolve the issue directly with the property management company. You can:

• Discuss the problems with the company.
• Send a formal complaint.

4. Consult a Lawyer:

Wondering if it is necessary to consult a lawyer to sue a property management company? Yes, it is. If the issue isn’t resolved, it’s best to consult or talk to a lawyer who specializes in landlord-tenant law. They can provide legal advice on whether it’s worth suing and how to proceed. They can also help with the legal paperwork needed to file a lawsuit.

5. File a Lawsuit:

If you have already decided to go ahead, you will need to file a lawsuit in the appropriate court. For claims involving lower financial amounts, small claim courts may be the ideal venue, as they offer a quicker and less expensive process.This usually involves:

• Filling out legal forms.
• Paying a filing fee.
• Serving the property management company with the lawsuit documents.

6. Attend Court:

Finally, both you and your property management company will go to court. Both of you will present your own evidences, and a judge will make a decision. If the judge rules in favor of you, the company may have to pay damages or fulfill their contract obligations.

What are the Potential Outcomes and Damages?

When you decide to sue a property management company, you might receive several possible outcomes and types of damages if you win the case. Here’s a simple breakdown:

Possible Outcomes

1. Settlement: Often, the property management company may choose to settle the case before it goes to court. This means they agree to pay you a certain amount of money or fix the issues without admitting fault. Hence, settlements can save time and money for both parties.
2. Court Judgment: If the case goes to court, a judge will make a decision. There’s a equal chance for both parties, the favor either goes to you or the management company.  However, if the judge rules in favor of you, you may receive compensation.
3. Dismissal: If the evidence isn’t strong enough, the case might get dismissed. This means the court decides there’s not enough proof to move forward, and you may not receive any compensation.
4. Counterclaims: The property management company might respond with their own legal claims against you. This can complicate the process and lead to additional outcomes.

Types of Damages

As a landlord, if you wins the lawsuit, you may be awarded with different types of damages:

1. Compensatory Damages: These are meant to cover the actual losses you suffered. For example:
   • Repair Costs: If the company failed to fix a broken pipe, you might get money for the repair expenses.
   • Lost Rent: If your rental property became uninhabitable due to neglect and tenants had to break the lease early, you can claim compensation for the rent lost during that period.
2. Punitive Damages: In some cases, if the property management company acted very poorly or dishonestly, the court might award punitive damages. These are extra payments meant to punish the company and deter similar behavior in the future.
3. Legal Fees: Sometimes, the judge can order the property management company to pay you legal fees. This means the company would cover the costs you incurred while hiring a lawyer.
4. Specific Performance: Instead of money, a judge might order the property management company to fulfill their contract obligations. For example, they may be required to complete necessary repairs or find tenants as promised.

Want Legal Help

If you are considering for legal action against the property management company, here are some useful options:

1. Legal Services Corporation (LSC): LSC is a nonprofit organization that provides funding to legal aid organizations across the U.S. They can help connect you with local legal aid services that offer assistance.
2. LawHelp.Org: This website helps you find free legal help and information about your rights. It includes a Rent and Eviction Help Guide, which can direct you to legal resources specific to your state.
3. Local Legal Aid Services: Many states have their own legal aid organizations that provide free or low-cost legal assistance. For example, Oklahoma Legal Services offers help with various civil legal matters, including landlord-tenant issues. You can apply online or call their intake line at 1-888-534-5243.
4. State Bar Association: Most states have a bar association that can provide referrals to attorneys who specialize in landlord-tenant law. They often have resources for finding legal help in your area. For Oklahoma Bar Association, you can call their intake line at 405-416-7000 for any legal matters.

Conclusion on legal action against property management company

Whether you’re a residential landlord managing single-family homes or a commercial landlord overseeing retail spaces, you have the right to sue property management companies for various reasons, including breach of contract, negligence, and misrepresentation.

Before taking legal action, it’s crucial to review the contract, gather evidence, and attempt to resolve the issue directly. If these steps do not lead to a satisfactory resolution, consulting a lawyer can help evaluate the case and guide you through the legal process. Understanding the potential outcomes and types of damages can empower you to make informed decisions about how to proceed.

FAQs on Suing a Property Management Company