Author Topic: Legal Question: Ending Management Agreement with PM  (Read 1547 times)

Ensign1999

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Legal Question: Ending Management Agreement with PM
« on: October 17, 2016, 04:06:16 PM »
I'll try to keep this quick with just the details

-Moved away from a property and hired a PM 6 years ago.
-We moved back into the area and would like to manage the property ourselves now.
-1st PM has retired and a new PM (2nd PM) is servicing the property.
-2nd PM want us to give him 60 days notification before he will let us go from the agreement ($360 cost to us in management fees).
-Management agreement on the first page defines "agent" as the 1st PM's name, not the company.
-2nd PM says the contract is with the company and not the agent.

The question I have is, is the 2nd PM correct and that even though "agent" on the 1st page was listed only as the 1st PM's name, that the contract is really with the company?  I guess I'm annoyed at the thought of paying him more money to do nothing.  I even offered that if we are forced to move again that we would return to his services (as they had been fine...) but I guess he would rather try to get $360 and burn a bridge than earn future business.  If he is correct, then we are locked in, but I'm thinking he might not be.

Any help is appreciated.

srob

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Re: Legal Question: Ending Management Agreement with PM
« Reply #1 on: October 17, 2016, 05:10:05 PM »
You might be right, but it might not be worth the fight? A smooth transition might be worth the 360...

Enigma

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Re: Legal Question: Ending Management Agreement with PM
« Reply #2 on: October 18, 2016, 11:34:19 AM »
You have been using a PM for 6 years...  I wouldn't mind a couple of months of transitioning and paying the $360.

However, with that being said you can always cancel and let the tenants know you will be taking over as the owner.  Then have the PM sue you if they think their contract will hold up.  Could just be a headache and a judge will either rule in your favor or their favor.  I do not see a judge ruling in favor of the agent if there is nothing mentioned about the company in the contract.

Ensign1999

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Re: Legal Question: Ending Management Agreement with PM
« Reply #3 on: October 19, 2016, 08:02:37 AM »
Thank you for the feed back.  I agree, it seems like a small price to pay.  My distaste in paying it stems from the New Agent's attitude when I called to speak to him about ending him as a PM.  Instead of trying to instill good will and secure potential future business, he was more interested in trying to point out how he could try to hold us to the contract for another ten months, but he would let us out after a sixty day notice.  Based on that conversation I would rather not pay him another dime, but I still need a good transition.  Since he is keen on pointing to the management contract, I figured I would go through it with a fine tooth comb.

I have a lawyer friend looking it over and will give me her opinion.  In the end it might not be worth the effort, but it is a bitter pill to swallow when someone acts as he did.

Jack

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Re: Legal Question: Ending Management Agreement with PM
« Reply #4 on: October 19, 2016, 12:01:38 PM »
You might be right, but it might not be worth the fight?

"Is it worth the fight" works both ways. More to the point, it favors whoever is currently in possession of the money under dispute (which is the OP in this case, since he hasn't paid yet).

zephyr911

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Re: Legal Question: Ending Management Agreement with PM
« Reply #5 on: October 19, 2016, 02:33:10 PM »
In real estate, the contract is always supposed to be with the broker/company, not the individual agent servicing you. However, if my personal experience is any indicator, a lot of the contract writing is pretty lax, and details like that are often ignored. So, PM#2 may be telling you the contract SHOULD be with the company... but they've sort of highlighted a possible out via a failure to property execute the contract.

Wait to see what your lawyer friend says. Make sure they analyze that key point.

chesebert

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Re: Legal Question: Ending Management Agreement with PM
« Reply #6 on: October 19, 2016, 02:56:32 PM »
Not worth analyzing for $360 IMO. At the minimum, the contract appears to have been modified to have PM#2 act as the replacement agent by your course of dealing. Alternatively PM#1 may have simply delegated his obligations to PM#2 and you were okay with it. Or PM#2 may be right that the contract is supposed to be with the company and not individual employee and it's a scrivener's error.

I have apparently typed way too many words for a $360 problem...

Ensign1999

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Re: Legal Question: Ending Management Agreement with PM
« Reply #7 on: October 26, 2016, 12:40:46 PM »
Here is the final outcome.

My lawyer friend felt I had a solid argument with the way "agent" was defined as the old PM and not the Broker.  The contract had no provisions for passing management on to a new PM.  The weak spots they pointed out were that the contract did have the Brokerage letter head on it, but they felt that did not take precedence over the definitions, and that the PM had the broker listed as her employer on the back page, but felt that listing your employer doesn't make the contract between you and them.

Because there was some room for argument and looking for a smooth transition I proposed to the PM that we agree to a 30 day notice vice having it become a pain for both of us.  The agreed to this and the contract will terminate on Nov 30th.

In the end, I ended up saving $180 (minus the beer I owe my lawyer friend) and will get a smooth transition.  For the amount of time that was expended in emails and phone calls, it ended up being well worth it....I figure (including my friends time) this paid about $60 an hour minimum and likely much more.

Thank you again for the feedback and advise.