Is That Property Management Account a Lemon?

Do you have a new and/or old property management account that is simply a lemon? Specifically, does this property owner cause you too much grief or too much work? It happens and when it does, you have to make a difficult decision on whether it is time to discontinue this management agreement or resolve the issues.

The first thing to do is identify the reasons this account may not be worth the time. I am sure you can think of more than the following list.

• The client wants to approve every single repair no matter how small.
• The owner is never happy with the maintenance performed on his or her property.
• The client is rude and abusive to your staff and/or your vendors.
• The client is rude and abusive to YOU.
• The client refuses to rent to an applicant even though they meet all qualifying requirements.
• The client shows up unexpectedly in your office and wants to see the property immediately.
• The client shows up at the property without notifying you to check out the tenant or maintenance.
• The client asks you to discriminate in any way.
• When you hear the client is on the line, you immediately want to avoid the call or leave the country.
• When you know you must interact with the client tomorrow, you have a physical reaction, such as a stomachache.
• The client wants to manage you and does not allow you to manage the property.

Next, you have to decide if you can turn this lemon account into lemonade. There are times when you can take some action that will put this account on the right track. Think carefully about how you may have been handling the situation. There are people who will treat you as a doormat “if they can.” They also may react differently if they know that you will not tolerate their behavior. Here is a true story of turning around a difficult situation.

My company rented a duplex unit to a well-qualified tenant with great credit, income, and outstanding rental references. John, the owner, did do the maintenance but this was not a problem. He had built the property, was an excellent contractor, and did quality work. John was an amiable person overall. However, after the tenant moved in, John appeared in my office and informed me that “in the future” I was not to rent to the same “type of tenant.” He was referring to the fact that the new tenant, Matthew, was black. I listened carefully without much comment and he left. I did not say much while he was there because I knew I would “lose it” and really let loose with a blistering diatribe because discrimination is one of my “hot buttons.”

After John left the office, I carefully composed a professional letter outlining that I would not discriminate because 1) I personally did not do this and 2) it was completely illegal and I could lose my license. In this lengthy letter, I gave John and his wife, the co-owner, a thirty-day notice to terminate management and I sent it by certified mail, all within the terms of our management agreement.

John appeared in my office the next day “begging” me to keep management of the property. Apparently, John’s wife had opened the letter and was furious with John’s behavior. After some frank discussion with John promising model behavior, I agreed to keep the account. John was a good man but felt he could treat me as a doormat. After standing up to John, I managed his properties for over ten years without incident.

There are many times when the account is simply a no-win situation. There are property owners who do not trust property managers, who are unreasonable about property maintenance, who discriminate, who aggravate the tenants, and who will continue to want to manage you and not allow you to manage the properties. These are TRUE lemons. If this is the case and you have determined they are a true “lemon,” it is time to take action and terminate management as quickly as possible.

I developed a three-stomach ache rule – after three stressful interactions with a client that caused a severe stomach ache, I terminated the account. Abuse of my staff or discrimination initiated immediate termination. My point is that you have to figure out your tolerance level and what areas you will not tolerate from a property owner.

You may think that you cannot afford financially to lose this account. However, the opposite is true – you cannot afford to keep this account. Over the years, I learned that keeping an account at all costs simply kept me from bringing in accounts that are more worthwhile. Lemon accounts take up a huge amount of time, increase your legal liability, and drain you and your staff emotionally. It is simply is not worth it. If you cannot make good lemonade, get rid of that lemon. 

Jean Storms, MPM® is the founder/author of LandlordSource and has been a NARPM® member since January 1993.

Disclaimer: LandlordSource does not represent the article content in this website as legal advice. It is shared information only and up to the reader to use this information responsibly, seeking legal advice as necessary to their business.