One year contract is over. My rights?

[Joz]

What is the name of your state? TN. We have multiple rental houses in TN and managed by a couple property managers. We had a one-year management agreement with one, we weren't happy with them, so moved our houses to another PM that was doing well for us. When the new manager took over, current rents still went to the previous property manager. Now, they don't respond to any requests for funds or accounting statements.
My question: Now that the contract is over, are the still considered our "agent" if legal action is required?
Here is a statement from the contract:
"OWNER shall pay all expenses incurred by AGENT such as attorney fees, AGENT time, cost, liabilities, or penalties in connection with any claim or suit or other related to SUBJECT PROPERTY or its management. This includes but is not limited to laws related to illegal discrimination of any kind Nothing in AGREEMENT shall obligate AGENT to employ legal representation or counsel for any reason. Owner agrees that Western district of TN as the court district for any suit arising from this agreement or the management of the subject property."
Also, Is the agent still obligated to send statements after the end of the contract? Another statement from the contract:
"OWNER STATEMENTS - Monthly the AGENT shall provide OWNER with a partner statement document for the previous month’s operations. The partner statement shall include income and expenses by SUBJECT PROPERTY. Monthly the AGENT shall provide OWNER with a disbursement of rent received minus expenses. If expenses exceed rent received AGENT will subtract the difference from the owner account. Owner agrees to refill the owner account to its minimum balance within 30 days."
We've received nothing in the past 2 1/2 months. So, is the agent still our agent and if we go to small claims court, we pay all his fees?
Thanks for any info.

 

[quincy]

What is the name of your state? TN. We have multiple rental houses in TN and managed by a couple property managers. We had a one-year management agreement with one, we weren't happy with them, so moved our houses to another PM that was doing well for us. When the new manager took over, current rents still went to the previous property manager. Now, they don't respond to any requests for funds or accounting statements.
My question: Now that the contract is over, are the still considered our "agent" if legal action is required?
Here is a statement from the contract:
"OWNER shall pay all expenses incurred by AGENT such as attorney fees, AGENT time, cost, liabilities, or penalties in connection with any claim or suit or other related to SUBJECT PROPERTY or its management. This includes but is not limited to laws related to illegal discrimination of any kind Nothing in AGREEMENT shall obligate AGENT to employ legal representation or counsel for any reason. Owner agrees that Western district of TN as the court district for any suit arising from this agreement or the management of the subject property."
Also, Is the agent still obligated to send statements after the end of the contract? Another statement from the contract:
"OWNER STATEMENTS - Monthly the AGENT shall provide OWNER with a partner statement document for the previous month’s operations. The partner statement shall include income and expenses by SUBJECT PROPERTY. Monthly the AGENT shall provide OWNER with a disbursement of rent received minus expenses. If expenses exceed rent received AGENT will subtract the difference from the owner account. Owner agrees to refill the owner account to its minimum balance within 30 days."
We've received nothing in the past 2 1/2 months. So, is the agent still our agent and if we go to small claims court, we pay all his fees?
Thanks for any info.

Sorry. Contract analysis falls outside the scope of this forum. It is considered the practice of law and for that you will need an attorney licensed to practice in your jurisdiction.

Good luck.

 

[LdiJ]

Sorry. Contract analysis falls outside the scope of this forum. It is considered the practice of law and for that you will need an attorney licensed to practice in your jurisdiction.

Good luck.

I agree, however, what manner did you use to notify your tenants that you had fired the previous management company and that they should remit their rents to either you or the new one?

 

[adjusterjack]

current rents still went to the previous property manager.

How much money are you talking about? Dollar amount please.

 

[quincy]

One important clause in the contract that was not quoted by Joz is the one addressing the termination of the relationship between the owner and property manager/management company. The Tennessee attorney who is contacted will want to review the contract in its entirety rather than a couple of clauses pulled from the agreement.

 

[Joz]

Per the contract, we needed to give 60 day notice to terminate the contract, at the end of the 1 year term (or it would automaticly renew). We did this. At the same time, we contacted the new PM to let them know, we would be moving 3 houses over to them. The new managers reached out to the tenants to inform them of where their rent paymnets would go. Two of the houses were government subsidised so the new management put a block on the rent payments with the city. But, the last payments still got through to the previous PM. The previous PM confirmed to the new PM, that they did recieve the rents. I'm not sure of the exact amount because, the previous PM had changed their story about how rents were paid. It started out that they hold rents for 30 days then pay out the following month (like all are other PMs). Then, after nine or ten months, they say, the send out rents as soon as they get them. So, they either owe us for 3 houses for one month and two houses for the last month, or just two houses for the last month. Which would equal in the $4000 area or $1700 area. There accounting was so confusing with a 3 month delay in the begining and moving funds from one house to another to cover repairs with no explinations, accounting errors and haveing to ask for statements every month, (some of the resaons we're leaving them.) We've been repeatedly asking for a statement but no response.
So, it does look like we may need to get an attorney involved. If it goes to court, can we ask for legal fees? We're in CA and would have to travel to TN. Can we ask for expenses?
Thanks for all the responses.

 

[Just Blue]

Per the contract, we needed to give 60 day notice to terminate the contract, at the end of the 1 year term (or it would automaticly renew). We did this. At the same time, we contacted the new PM to let them know, we would be moving 3 houses over to them. The new managers reached out to the tenants to inform them of where their rent paymnets would go. Two of the houses were government subsidised so the new management put a block on the rent payments with the city. But, the last payments still got through to the previous PM. The previous PM confirmed to the new PM, that they did recieve the rents. I'm not sure of the exact amount because, the previous PM had changed their story about how rents were paid. It started out that they hold rents for 30 days then pay out the following month (like all are other PMs). Then, after nine or ten months, they say, the send out rents as soon as they get them. So, they either owe us for 3 houses for one month and two houses for the last month, or just two houses for the last month. Which would equal in the $4000 area or $1700 area. There accounting was so confusing with a 3 month delay in the begining and moving funds from one house to another to cover repairs with no explinations, accounting errors and haveing to ask for statements every month, (some of the resaons we're leaving them.) We've been repeatedly asking for a statement but no response.
So, it does look like we may need to get an attorney involved. If it goes to court, can we ask for legal fees? We're in CA and would have to travel to TN. Can we ask for expenses?
Thanks for all the responses.

Those are question you would ask the TN attorney you're going to hire. The one who can read the contract and advise you based on what the contract states.

 

[Zigner]

Why are you relying on the PM's accounting - you have your own accounting as well, don't you?

 

[adjusterjack]

it does look like we may need to get an attorney involved.

An attorney is likely to cost you more than the amount of money involved.

TN small claims limit is $25,000. Here's a guide to TN small claims court.

final_guidelines_and_helpful_info_for_people_in_gen_sess_court_-_may_2013.pdf (tncourts.gov)

The use of an attorney is optional. However, if you own the properties as an LLC or corporation you may be required to be represented by an attorney. You'll have to find that out.

If it goes to court, can we ask for legal fees?

Does your contract have an attorney fee provision? If yes, you may be entitled to attorney fees. If no, then you are on your own for attorney fees.

We're in CA and would have to travel to TN. Can we ask for expenses?

You can ask but you won't get. Nobody ever gets expenses to travel to court.

It's the risk you take when you own properties in another state. Something goes wrong and it costs you big bucks.

 

[quincy]

Per the contract, we needed to give 60 day notice to terminate the contract, at the end of the 1 year term (or it would automaticly renew). We did this. At the same time, we contacted the new PM to let them know, we would be moving 3 houses over to them. The new managers reached out to the tenants to inform them of where their rent paymnets would go. Two of the houses were government subsidised so the new management put a block on the rent payments with the city. But, the last payments still got through to the previous PM. The previous PM confirmed to the new PM, that they did recieve the rents. I'm not sure of the exact amount because, the previous PM had changed their story about how rents were paid. It started out that they hold rents for 30 days then pay out the following month (like all are other PMs). Then, after nine or ten months, they say, the send out rents as soon as they get them. So, they either owe us for 3 houses for one month and two houses for the last month, or just two houses for the last month. Which would equal in the $4000 area or $1700 area. There accounting was so confusing with a 3 month delay in the begining and moving funds from one house to another to cover repairs with no explinations, accounting errors and haveing to ask for statements every month, (some of the resaons we're leaving them.) We've been repeatedly asking for a statement but no response.
So, it does look like we may need to get an attorney involved. If it goes to court, can we ask for legal fees? We're in CA and would have to travel to TN. Can we ask for expenses?
Thanks for all the responses.

Yes. You may need to get an attorney involved. You should have your agreements and all facts personally reviewed by an attorney in your area. Whether you can get attorney fees could depend on these agreements - same with whether you have to travel to Tennessee to enforce your agreements.

 

[Joz]

OK, after 3 weeks and no response from the previous property maneger, I got an email from him yesterday. He claims, he forwarded the rents to the new PM, and will ACH the reserves to us. This timeline contradicts their story that they send out rents as soon as they get them in. Anyway, I'm trying now to verify with the new PM if this is true. So, it looks like no trip to TN is nessesary.
Speaking of legal fees. The only thing in the contract related to legal fees is this:
"AGREEMENT supersedes and replaces any previous management agreements entered into or negotiated betwixt OWNER and AGENT relating to the management of SUBJECT PROPERTY. This AGREEMENT is binding to both parties as well as their representatives, heirs, successors, assignees, administrators, or other. OWNER shall pay all expenses incurred by AGENT such as attorney fees, AGENT time, cost, liabilities, or penalties in connection with any claim or suit or other related to SUBJECT PROPERTY or its management. This includes but is not limited to laws related to illegal discrimination of any kind Nothing in AGREEMENT shall obligate AGENT to employ legal representation or counsel for any reason."
But, one of my questions (that probably dosn't matter now) was, if the contract is ended, are they still my "agent"? And in turn, bound by the contract?
He also said in the email, that the accounting statement I requested would be the "same as the last one he sent". But that one was in the last month of management and didn't include the final rents. But, it's something to work with.
Thanks for all the responses and valuable info. Very much appriciated.

 

[quincy]

OK, after 3 weeks and no response from the previous property maneger, I got an email from him yesterday. He claims, he forwarded the rents to the new PM, and will ACH the reserves to us. This timeline contradicts their story that they send out rents as soon as they get them in. Anyway, I'm trying now to verify with the new PM if this is true. So, it looks like no trip to TN is nessesary.
Speaking of legal fees. The only thing in the contract related to legal fees is this:
"AGREEMENT supersedes and replaces any previous management agreements entered into or negotiated betwixt OWNER and AGENT relating to the management of SUBJECT PROPERTY. This AGREEMENT is binding to both parties as well as their representatives, heirs, successors, assignees, administrators, or other. OWNER shall pay all expenses incurred by AGENT such as attorney fees, AGENT time, cost, liabilities, or penalties in connection with any claim or suit or other related to SUBJECT PROPERTY or its management. This includes but is not limited to laws related to illegal discrimination of any kind Nothing in AGREEMENT shall obligate AGENT to employ legal representation or counsel for any reason."
But, one of my questions (that probably dosn't matter now) was, if the contract is ended, are they still my "agent"? And in turn, bound by the contract?
He also said in the email, that the accounting statement I requested would be the "same as the last one he sent". But that one was in the last month of management and didn't include the final rents. But, it's something to work with.
Thanks for all the responses and valuable info. Very much appriciated.

It sounds like you are now getting the answers you were seeking and should soon learn the whereabouts of the past rental payments. Good.

As to the attorney fees, a court potentially could award the agent his attorney fees in a suit because of that clause in your contract.