One of the questions that I occasionally get from one of my Oklahoma City metro area clients is how you go about terminating a property manager. The process to terminate property management agreement is very tough if not done in the right way so this blog post will guide you on how to do just that in a super-easy way.
Perhaps you’re frustrated with the service that you’re getting from the property manager, and you want to move to another property management company. There are certain procedures that you must follow.
In this article, I’m going to go through the steps that necessary whenever you terminate a property manager. You want to do that in a way that protects your interests, is legal. These are good guidelines for what to do in my market of Oklahoma City but should be applicable to other states as well. This is not legal advice and I am not an attorney.
The process to termination of the property management agreement is very tough if not done in the right way so this blog post will guide you on how to do just that in a super-easy way.
Process of Termination of Property Management Agreement
Check Your Management Agreement
There is likely the possibility that the condition for the termination of the management agreement is mentioned in the agreement paper.
If you are working with a legit property management company, then you must have signed a contract prior to going into business with them. In that contract paper, you can find a clause on how to properly terminate the agreement. Make sure that you abide by what it says and follow the exact steps needed to do so.
That means if any of the party i.e the landlord and the property management company who has been managing the property violates the terms of the contract, the other party can take legal actions, holding the violator accountable.
That being said, if the landlord intends to cancel the services of the property management company, the first thing the landlord must take into consideration is checking the agreement. Most contracts will contain a cancelation policy mentioned in them.
It is always important to review the terms of the cancelation and follow them accordingly to carry out the termination process. You can find out if there are any fees involved. Check for language relating to how and when you will get your asset balance (if any)
Recommendation: How to Switch Property Management Companies
Send a Cancelation Notice
Terminating a property management contract requires written notice before certain days of quitting. The termination clause of your management contract should specify before how many days should the notice be given to the property management company. Most contracts require a time period of between 30-90 days to terminate the contract. If you are not able to give the notice within this time period, your termination request will not be honored or your request for termination could be considered as a breach of contract. In this situation, you may find yourself in a lawsuit situation.
The landlord should provide notice to terminate property management agreement in a written form to the property management company.The landlord should not make the mistake of sending the notice through an online medium such as email.
Verbal notice to the property management company is not enough to terminate property management agreement.The landlord must provide the notification to terminate the management contract in writing and then send it to the property management company via certified mail with a request for a return receipt. This way, you can ensure that the company has received your notice.
When writing a notice to terminate property management agreement, make sure to include the effective date of the contract termination and stick to something formal fonts such as Arial or Times New Roman.
Even if the property management company is willing to let the landlord go, they might have some cancellation fee.
There is no fixed charge for this. The charge may vary from contract to contract. Some companies charge only a few dollars whereas some might charge for anything from a month or management fee or be the rest of their management fees for the duration of the contract. There might be other costs such as work orders or bills that have not been accounted for yet. Be prepared to roll in after the contract is terminated.
Make Sure That the Property Management Company Notifies the Tenant
As the property managers are involved in managing the rental units, they are likely in communicating with the tenants. So as a landlord, you should make sure that the property manager has notified the tenant about the change in the property management company.
Make sure that the property management company notifies the tenant in a written form, not in a verbal form. The letter sent to the tenants should also include who will manage them, to whom to pay their next rent payment, and when the new management will take place. They should also be informed of the transfer of their security deposit. Also, be sure to ask for a copy of the text.
Recommended: Terminate Property Management Agreement Template
Allow Time For The Transfer Of Funds
It will take some time to move all the funds from one trust account to another. Depending on the present state of your accounts, expect all landlord funds owing to you to take one to two months to collect. This is to ensure that all previous invoices have been charged by the current entity before moving the balance. However, tenant rental deposits should be set up in order to be deposited on the transition date into the new management account.
Ensure You Receive a Copy of the Important Paperworks
Always ensure that copies of the current contract, condition/inspection reports, rental bond deposits, and a statement of all profits and expenditures from your former agency for the current financial year are obtained by you or your new agent. These documents should be submitted directly to you or your new agent after taking over the management of the property and maintaining your records.
If you have questions about property management Services, call OKC Home Realty Services Today.
FAQs on Notice To Terminate Property Management Agreement
How long are property management contracts?
Most of the property management contract has a time period of 1-2 years whereas few are offering month-to-month contracts. Remember that the agreement will be lawfully restricting upon its execution (signing), despite the fact that the beginning date or “effective period” may start later.
Can a property owner sue a property management company?
The property owner can sue a property management company as any other business owner for negligence over the property.
Why do property management companies fail?
The property management companies fail due to several reasons such as adding too many units to their portfolio quickly, lack of knowledge of the exact market, and many more