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Question: I own a 20-unit rental property and have a property management company. One of my renters is having difficulty paying rent on time and I have just noticed that the property manager is keeping the late fees as opposed to passing the fees on to me. Her response is that this is standard practice, but I am sure that my previous manager forwarded the fees to me. What is the proper procedure in these cases?

Property manager Griswold replies:

The retention of late fees by the property management company is a negotiable item, and there is no industry standard or common practice that I am aware of that I can cite for you. I can tell you that I know there are some companies that have a similar policy of taking the entire late charge as additional income in their pocket, but personally I can tell you that my property management company does not have such a policy. Any late charges or returned-check fees or other similar amounts are collected as additional gross income for our property-owner clients.

Of course, we do collect our percentage management fee on the late charge that we collect, as it is part of the gross collected income for the landlord, but this is a nominal amount. I do feel that a late payment creates a burden on the landlord, as those are funds that the landlord doesn’t have to make his or her loan payments or pay expenses.

The other side of the argument is that the property manager has to incur additional costs and labor in contacting the tenant and/or sending legal notices to nonpayers. I would agree that collecting late or delinquent rent is an extra cost to the property manager. But should the property manager be rewarded for accepting or retaining tenants that pay late? With the property manager not receiving the entire late fee he or she has an incentive to carefully screen incoming tenants to avoid late-paying ones. As a landlord, you shouldn’t be interested in maximizing your late-fee income, as the name of the game to be a successful rental property owner is to have tenants pay on time and treat the property and their neighbors with respect.

I would review your contract and verify that the late charges do accrue to the property manager and then contact the company to see whether it will drop those additional charges or renegotiate the contract to exclude them when the contract expires. If it will not cooperate, then you may want to look for another management firm rather than renew the management contract.

Question: I am a tenant in a house and the owner has put the property up for sale. I don’t mind the real estate agent coming by the house and I have even agreed to waive any advance written notice each time. But the real estate agent seems to be taking advantage of my good nature and I am wondering if it is harassment to enter your house twice a day on short notice. Do I have the right to refuse?

Property manager Griswold replies:

Based on the fact that you gave permission, I don’t know that it is harassment as much as they are taking advantage of you as you suggest. Personally, I would think it not harassment unless you can demonstrate some very specific behavior like showing the property late at night, opening all of your drawers, snooping around excessively, or bringing the same people back into your unit five times.

When a home is being marketed for sale there is always a need to show the home to potential buyers and even once the property is under contract for sale you then have additional interested parties in the form of lenders and appraisers and home inspectors. But that doesn’t mean that a sharp real estate agent cannot effectively show this home to prospective purchasers and minimize the impact on your daily life.

I would suggest you put your concerns in writing to the owner of the property and try to reach a mutually agreeable set of guidelines and conditions under which you are willing to allow access without advance notice. I think that is very reasonable and would be better than the landlord exercising his right of access excessively as long as he gives proper notice. So while you would be well within your rights to require proper advance notice every time the real estate agent wants to show the home, I think it is better to openly communicate your concerns and arrive at a reasonable consensus.

This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of "Property Management for Dummies" and co-author of "Real Estate Investing for Dummies."

E-mail your questions to Rental Q&A at rgriswold.inman@retodayradio.com.

Questions should be brief and cannot be answered individually.


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