How to Switch PMCs as Seamlessly as Possible
If you’ve already come to the decision to end the relationship with your existing Property Management Company (PMC), chances are they’ve dropped the ball in several aspects of their job. They could be disorganized, bad at communicating, or failing to deliver the quality of service that was promised or expected. But often this gets even worse once you break the news to them that you won’t be continuing to use their services.
Some PMCs have been known to do a disappearing act once they’re terminated, like refusing to answer any communications or supply documents and vanishing, without giving you any notice period. When dealing with small, mom-and-pop operations, the likelihood of this being a problem can be even higher, particularly since there is no blanket industry standard for how to handle a transfer of management.
So, what should you do to make the transition as smooth and professional as possible to ensure your rental business maintains a level of consistency during the switch? Whether your current property management company is being cooperative or not, you need to make sure you get the essential information from them to allow the new PMC to start managing your portfolio.
A ”Wish List” of Documents from the Current PMC
For every property they manage, the terminated PMC should provide:
- A Copy of the Lease: If you can’t get anything else on this list, make sure you at least get a copy of the lease. Without it, you can’t prove rent amount, security deposit, lease end date, etc,. and there’s no legal means of holding tenant(s) accountable to fulfill their lease obligations.
- A Rent Ledger: Property managers should keep a financial record of all rent payment history, how the tenant paid, late fees and other charges, if any balance is due, etc. This information is essential for your new PMC to understand how a tenant pays and if any balance is owing.
- Tenant’s Ccontact Iinformation: How professional is it for a PMC taking over management of a lease to have to knock on the door of a home to make their initial introduction to a tenant and ask for their contact information? Many tenants may get suspicious and refuse to cooperate. So, try to get tenant contact information from your PMC before terminating them. Ideally, the new PC would also like their original rental application, so they have their social security number, driver’s license number, etc., which can be useful if they have to start eviction proceedings or collection efforts.
- Section 8 Docs: If a tenant has Section 8 paying all or a portion of their rent, the current PMC will need to complete a Transfer of Management form for the new PMC to send to the Section 8 office. This form lets the Section 8 office know where to send future payments. The transfer can be done without the form, but the old PMC will still receive Section 8 payments, which they may or may not forward, and it often takes a lot longer for the new PMC to start receiving the Section 8 payments.
- A “Goodbye” Letter: In a perfect management transfer scenario, the current PMC would send a letter to the tenant(s) informing them the management of their lease has been transferred, give them the new PMC’s name and contact information, and the effective date of the transfer. Otherwise, tenants may not know where to send their rent or which PMC to contact. It’s also helpful for the new PMC to have a copy of this letter to address tenant claims of never receiving it.
If you can’t get any of these, because your previous PMC pulled a disappearing act or refuses to cooperate, how do you know if the tenant owes anything? How do you know if they’ve been a problem tenant or have a perfect payment record? You could ask the tenant themselves, but it comes across as highly unprofessional to do this, and they could lie about their history without you being any the wiser!
The best thing you can do is try to make sure you have all of this information before your outgoing PMC leaves. It might even be stipulated in your PM contract that they have to provide this information at the end of your relationship, but the only way to actually enforce this is by taking them to court -– which not only costs legal fees, but could also lead to rental income losses if tenants are confused or refuse to cooperate and withhold their rent payments.
Hopefully, though, it won’t come to that. As long as your current PMC is willing to cooperate with you during the transition by handing over the necessary information, changing managers doesn’t need to be overly complicated. It may take a few months for the new PMC to onboard all of your properties and get to grips with handling your tenants, but with the documents listed above, there’s no reason why they shouldn’t have things running smoothly after that initial adjustment period.
Any personal experience with changing PMCs? Was it a smooth or rocky transition? Share your stories in the comments below.
Image Courtesy of Andrea Piacquadio