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Residential Property Management/diclosure error in lease prepared by property manager

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QUESTION: I pay a property manager to manage a triplex. There is a coin washer and dryer shared by the three units. The electric for this room and the two machines is  included on unit threes electric bill. I( The owner) pay the total water bill and the total gas bill to heat the water for the washer and all water for unit three. The dryer is gas and is also paid for by me. I reduced the rent from 945.00 a month to 925.00 a month to off set the amount of electricity used by the light, dryer drum and wash machine agitator. My property manager failed to put this in the lease. It was explained to the tenant at signing but I have no proof. We have a pretrial conference in three weeks. Tenant is asking for 1500.00 plus court costs for failure to inform. Is my property manager responsible for this error? I did not ask for a copy of the lease to proof, I depended on the property managers expertise. Help please.

ANSWER: Alice,

Thank you for the question. Please note I am NOT an attorney and offer no legal advise.

Very interesting situation but I am confused. If you reduced the rent, and pay for the utilities, what damages have the tenant suffered? If you already have a trial date set, I urge you to engage counsel to represent you in the matter against your tenant. In the end, the lease terms will likely govern any decision.

As for your property manager, you should be able to rely on his expertise and care to draft the lease properly. His services are governed by both the management agreement and a general standard of care. IREM has a great "best practices" guide, found here:

http://www.irem.org/Bookstore/eBooks/id-21784/Best_Practices_Real_Estate_Managem

In the end, you need to hold him accountable. Is he licenses and accredited? If resistant, you may file a claim that his E&O insurance will likely cover. If you believe the manager was particularly negligent, you may also consider filing a complaint against with the state licensing agency and, if accredited, with the accrediting body.

Please feel free to provide an update on both the tenant action and how you fared with your property manager.

Best of luck,

Dvaid

---------- FOLLOW-UP ----------

QUESTION: The washer and dryer are coin operated. The tenant is suing as he says he was charged twice, by coin and paying for the electric that we failed to disclose. I was mailed a pretrial summons (no Proof of Delivery Attached) to appear. I have set up a low cost conference with an attorney, and scheduled a meeting with my property manager. I agree that the property manager should held accountable. It is hard to fight when your funds are limited. Thanks

Answer
Alice,

Thank you for the follow-up. Please be reminded I am NOT an attorney and do NOT offer legal advise.

Do not allow a simple legal action to get in the way of your business as a housing provider. I suggest you merely settle out of court and move on. It will likely be less costly than a full trial (I assume this is small claims due to the small sum involved). Much of my expertise comes from twenty-five years of learning from errors (like poorly drafted leases) and moving on.

I further suggest the property manager cover all or some of the cost as it was his error by not drafting the lease correctly (hence his learning moment). Settle that issue with him, too.

David

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K. David Meit, CPM

Expertise

Real estate investment, operations, renovation, marketing, and administration. Specializing in urban multifamily, DC rent control, property repositioning, change management and building high performance operating teams. For more information, please visit www.oculusrealty.com

Experience

I have over twenty-five years experience managing all classes of multifamily property in New York City, Washington, DC and the Maryland and Virginia suburbs. I am President & CEO of Oculus Realty, LLC, a licensed real estate broker in Virginia, Maryland and the District of Columbia. Oculus is an Accredited Management Organization (AMO) through the Institute of Real Estate Management (IREM). I have earned the CPM and ARM accreditation through IREM and GRI designation though National Association of Realtors (NAR). My career includes successful management and executive positions at Bozzuto Management, Forest City Residential, DARO Realty and Vornado Realty Trust.

Organizations
Institute of Real Estate Management Ethics and Discipline hearing Committee, Chair Region 3 Education Committee, Chair West Central Maryland Chapter 92, President (2012) Apartment and Office Building Association Advisory Board Member National Apartment Association Property Management Associations President, 2004 National Association of REALTORS

Publications
http://www.bizjournals.com/washington/stories/2010/09/13/story24.html

Education/Credentials
Boston University, BA New York University, Schack Institute of Real Estate, Property Operations Institute of Real Estate Management, CPM designation

Awards and Honors
Institute of Real Estate Management AMO of the Year Award 2015 CPM of the Year Award 2012 Past President's Award 2012 Property Management Association PMA Presidentís Award, 2003, 2005 PMA Vision Award, 2004 Property Manager of the Year, 1998 Apartment & Office Building Association Outstanding Leadership Award, 2006, 2008, 2011 AACE Award Washington, DC Service Team, Sedgwick Gardens, 2004 AACE Award, Virginia Garden New Upscale, Regentís Park, 1998

Past/Present Clients
My clients include high net worth individuals and family offices looking for long term income and appreciation from investment real estate.

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