Property Management agreed that I will pay utilities without asking

I have a couple units in the same market. The first unit I got signed with a PM and have been very happy with them. Standard stuff, tenant pays all utilities. Water and Sewer must be in my name, but the tenant is sent a bill each month. I have had zero issues with this unit or the PMs. I brought a second unit in with existing tenants (that I inherited from purchase) that needed to be re-leased. The tenant was behind in rent after just one month, but has actually caught up. (they had a temporary job loss due to covid). I noticed that I wasn't seeing the water/sewer payments. I just was given the explanation today that the tenant is not responsible for water and sewer. Apparently when they released, the PM negotiated with the tenant to not pay water/sewer.  This property is already 15%+ under market but I had decided that keeping (what I thought was a stable) tenant in the unit was worth slowly bringing them up to market rents. Now I am hemorraging 60% of my cashflow every month to their utility bills, and they are arguably 30%+ under market rent.  I am extremely pissed about the PM not asking if this was ok. 


Did the property manager do wrong here, was there something I should have done?

  Topic Real Estate Subtopic Property Management Tags real estate property management utilities rental property
29 Days 2 Answers 107 views

David Miller

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Answers ( 2 )

  1. Amal Yeargin 430 Community Answer

     I am a Real Estate Broker licensed in South Carolina. If you purchase a unit in my state that is leased, a copy of the lease is provided to you at closing. You must honor the terms of the existing lease.

    I understand from you that the Property manager negotiated the re-leasing of the unit AFTER you purchased it. Your property manager cannot SIGN the lease unless you gave her the Power of Attorney to sign on your behalf.

    A Commercial lease is an agreement between the Landlord and the Tenant not the property manager. 

    UTC 2021-04-19 02:17 PM 0 Comments
  2. The question boils down to expectations and communication, I think.  When the PM negotiatied with the tennant, were they in communication with you, or did this happen before you came into the picture?   I'm assuming the re-leasing happened after you purchased - if it happened before, then disregard the following. 

    My inclination is to say that both things are probably true: yes, the PM should have disclosed this to you, and yeah, you should have confirmed the terms before agreeing to them. I will say it does strike me as odd that they would negotiate something like that away without checking with you!

    At the end of the day, the responsibility for knowing the costs and cash flow is on you, right?  Lesson learned for next time, and its probably worth developing a checklist of things like this to keep handy moving forward.  

    UTC 2021-04-19 01:41 PM 1 Comment

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