Property Manager is shady

[rgnchris]

Have a home in NC that we listed with a realtor to sell, as we were moving out of state.(She worked for a national realty company.) When it didn't sell after several months, our realtor asked if we would rent it, as she had someone interested. We said yes, and they signed a 2 year lease. This was 2 months ago, and we still do not have a signed lease agreement showing what the tenants are actually paying a month, what date it is due, what deposit was given, etc. We signed a property management agreeement with her, assuming that she would mangage the property as an agent for the realty company. Now, we find that she is managing our porperty herself, out of her home. She keeps saying she has to get new software before she can get us a copy of the rental agreement. I feel we were misled in that we assumed she was renting our house as an agent of the realty company, and we should have the signed rental agreement in hand before the tenants even moved in! Do we not have to have this agreement in order to write off the losses we take each month on this rental? She tells us that we don't need it, that she will report such info to the IRS. Are we being taken advantage of since we are out of state?

 

[JETX]

Though you are probably not 'being taken advantage of', but you are certainly not being treated professionally.

I would suggest that you do the following:
1) Call the agent and DEMAND that you receive a copy of the lease application, the signed lease and a full accounting of the property records within a specific time (3 days?). Be sure to tell her that if you do not receive the information, you will be filing a formal complaint with her broker (bet her broker doesn't know about the side business) and with the state realtor board. Follow this up with a written demand (send by FAX with proof of transmission) and by mail, US Certified RRR.

2) Contact a friend or former neighbor and ask them to do a 'drive-by' on the property. If you can't come up with a friend or neighbor, call a different realtor in the neighborhood and ask them to take a look at the house (I am sure that they would be glad to, especially with the possibility of listing or management with them).

3) If all else fails, you may need to make a trip to the old house to clear up these problems. Be sure to point out to the 'property agent' that you will consider litigation against her and the broker to recover any and all expenses needed for this trip.

4) And finally, while at the old residence, you might consider going by the courthouse and getting information on possible filing for the future.

Best of luck to you....

 

[HomeGuru]

Yes you are being taken advantage of. Immediately send a certified letter to her listing by itemized number, exactly what you want her to do and also state your position. Be sure that you state that the property management agreement is hereby terminated. Send a copy to her principal broker of her former real estate firm, the local Board of Realtors office, the State Real Estate Commission and the BBB.

1) First of all she was supposed to manage the property as an agent of the large RE company.

2) Next as soon as the property management agreement was signed, she was supposed to give you a copy of same AND get your approval and authorization with respect to the conditions of the lease ie. if you accept pets, who pays for utlities, repair and maintenance etc. how much rent the property would rent for and the term of the lease and request your tax ID number for IRS reporting purposes. I would presume an astute agent knowing that you wanted to sell the property would not rent on a 2 year lease basis. Note: the property management agreement is vital so you can deduct management fees as an expense for tax purposes (Schedule E). If you get audited and have no proof of a management relationship, the IRS can disallow said deduction.

3) Next, as soon as the property was rented (say within 7-15 days) this agent was to provide you with a status report to include the cover letter and enclosures such as a copy of the lease agreement, tenant registration and application form, accounting statement indicating amounts the tenant paid in rent, security deposits etc., amount of expenses paid by or owed to manager such as advertising, rental management fee etc., owners check for the rent the tenant paid, owners check for the security deposit the tenant paid or a receipt showing that the agent will safekeep the deposit in a company trust account. Without these documents you have no idea how much rent and deposit the agent collected, if any, how much is due to you, where is the security deposit, when the property was rented etc.

Note: if she is not a real estate broker, then she can not handle the rental but must be working under a real estate broker. If she is a real estate broker, she has violated her fiduciary duties to you, violated her code of ethics and is practicing unfair and deceptive trade practices. In other words, she could lose her real estate license or get sanctioned by the Real Estate Commission. If she is a licensed real estate broker, her former broker would have needed to sign off an agency document in which her real estate principal broker released her from being licensed with the real estate company. Furthermore, all monies collected by this agent regardless of whether it is rent or security deposit, is required to be placed in a separate business account and can not be deposited into her personal acount. I she used her personal account, then she is guilty of commingling of funds, which is another violation. Also if she holds the tenants security deposit said deposit must be placed into a separate business client trust account.

You should check with your State regulatory real estate licensing agency for more information. You can also lookk at the Realtor Code of Ethics at the National Association of Realtors website. http://www.realtor.com

She is taking advantage of you because you did not know the above information. As you can see, she has been giving you aa bunch of BS all along. Hopefully she did not spend YOUR money for her Christmas shopping.
Lastly, you must make sure that the listing agreement to sell the home is terminated. She may have transferred this agreement or it may still be an active listing with her old company. In any case, you do not want to be dealing with her on anything else.

Please keep me posted.

 

[rgnchris]

Thank you both ever so much for your information and suggestions. We knew something was very fishy with this whole thing. At least we did get the rent money (albeit late) on a personal check of hers. So, she is really messing up. She still works for the real estate company, and she told us that they were aware of this situation. I'm betting they don't - and will notify the owner of the firm. I have my work cut out for me.

Thanks, rgnchris

 

[HomeGuru]

Thank you both ever so much for your information and suggestions. We knew something was very fishy with this whole thing. At least we did get the rent money (albeit late) on a personal check of hers. So, she is really messing up. She still works for the real estate company, and she told us that they were aware of this situation. I'm betting they don't - and will notify the owner of the firm. I have my work cut out for me.

Thanks, rgnchris

HomeGuru response: Please note that her principal broker of her national RE company is liable for all her illegal actions pursuant to the State RE licensing laws