It’s That Time of Year

If you live in a college town like we do, you know that May-August is prime time for moving in and moving out of rental properties. Over the next few weeks we’ll be doing a series of posts on the rights and responsibilities of landlords and tenants, so stay tuned!

Some of our topics will include:

  • landlord responsibilities and remedies
  • drafting (and signing!) a good lease
  • tenant move-ins
  • security deposits

and other topics our clients suggest we post about.

 

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Property Managment Companies- The Good, The Not So Good and The Just Plain Ole’ Bad

By Alexx, staff attorney and Barry, owner/partner

Chances are good that if you’ve lived in a rental property or have rented out a property, you’ve had some interaction with a property management company. Maybe you’ve just seen their ads promising hassle free management for homeowners and easy living for tenants. Most of them advertise they increase harmony and peace of mind for everyone involved by putting good tenants in good homes owned by good homeowners. Every company is different but there are some basic features common to most of them, and not all of them are pretty. In essence, property management companies are the middlemen between tenants renting the home and the owners of the home and that has both pros and cons.

Property management companies, like most other private businesses, have to make a profit in order stay in business. They tend to make their profit by taking a percentage of the rental income paid by the tenants to the owners. Many also charge a monthly fee to the owners and bill the owners for any major repairs that the property needs either before or during a tenancy. In exchange, the company acts as a landlord to the tenants. Tenants pay their rent and submit work requests to the company. The company either has its own maintenance staff or contracts with crews to respond to tenant requests and maintain the property in good order.

The Pros for Homeowners

When the company is actually good at management, it can be a match made in heaven. Sometimes homeowners have no experience in the business of being a landlord. Maybe they live out-of-town or out-of-state.  In today’s market, many homeowners are renting out their own home or another property hoping to make some income and hold on to the property until they’re able to sell it when the housing market improves. Whatever the reason, many homeowners appreciate that the company takes all the dirty work out of renting out the property. They rather enjoy that it’s the company and not the owner who’s getting the middle of the night broken air conditioning or burst pipes calls, especially if the homeowner has several investment properties.

The company takes care of the advertising and screens tenants according to the owners’ specifications. For instance, while city codes or other ordinances might permit pit bulls as pets, the homeowner might not and so the property management company will tell the prospective tenants, “Sorry, not pit bulls allowed.”

The Pros for Renters

There’s nothing more frustrating than having a serious maintenance concern, like say, a water pipe bursts in your backyard and water is gushing everywhere, and not being able to get in touch with someone who can help you. Property management companies are supposed to give you a local, experienced contact in the community where you live so that when these problems arise, you can get a fast response. It keeps your frustration down and keeps the property in good shape. In theory.

The Cons for Homeowners

  • Fees: Fees can be unclear and increase without much notice, depending on the agreement the homeowner signs.
  • Gatekeeping: The company may do too good a job gatekeeping and keep the owner in the dark about important issues.
  • Price Gouging: The company may overinflate the price of services and labor used to maintain the property with little in the way of oversight.
  • Lax Standards: The company may not really check references or run credit checks and not follow the owner guidelines for renting to tenants.
  • Bad Workers: The company may hire shoddy or problematic workers, leaving the homeowner vulnerable to legal problems.
  • Commissions: The company may also seek kickbacks or fees if the homeowner tries to sell the property without involving the company.

The Cons for Tenants

The same cons that apply for homeowners also have a flip side for tenants, though most tenant complaints usually relate to the feeling of having to go through a tedious bureaucracy to accomplish anything.

  • Fees: Tenants may be asked to pay additional fees on top of fees the owners pay with neither being the wiser.
  • Too busy: The company usually oversees dozens if not hundreds of properties and may not be able or willing to dedicate attention to any one property.
  • Gatekeeping: Most of the time, the property company keeps the owners’ information confidential so the tenants can’t contact the owners directly when they have concerns.
  • Problematic standards: The company may engage in problematic screening practices just shy of illicit and blame it on the owners’ preferences, regardless of the truth.
  • Bad practices: The company may improperly start eviction proceedings or violate the state’s Landlord/Tenant act and subject the tenant to added expenses and legal trouble.
  • Commissions: The company may stand in the way of the tenant and owner striking a deal to purchase the property.

How to Handle Property Management Companies

If you’re a homeowner:

  • Be sure to do your homework before contracting with a company.
  • Check their references.
  • Ask other homeowners for information.
  • Read your agreement thoroughly, really really read it.
  • Don’t be bullied into signing something you don’t understand just to get started more quickly. Protect yourself from legal liability from the very beginning. If you hire a shady company that you knew or should have known was up to no good, you can open yourself up to all kinds of legal problems down the road.
  • Consider having your lawyer look over the proposed agreement to see if the company is trying to skirt the rules.

If you’re a renter:

  • Do your homework before moving into a home with a property management company.
  • See if you can talk to other tenants to find out what they think about the company.
  • Think of the company as your landlord and remember they have to abide by the landlord/tenant laws in your state.
  • Read the lease. No, really, read it. In the event of future problems, your rights are affected primarily by what the lease says. If there is something that does not sound right or that you don’t understand, ask for an explanation before signing. Even the best rentals can be nightmares if you get into a disagreement with the management company. Protect yourself at the beginning and avoid unpleasant surprises down the road.
  • Don’t be afraid to try to contact the owners if a problem arises that the company won’t fix.
  • And keep track of all of your interactions with the company in case trouble pops up later.

For everyone:

  • Most importantly, get everything in writing. Oral agreements are easily forgotten. If the company tells you they will have something fixed or will make some change to your agreement, ask them to send you a confirming e-mail. Same with any rent concessions or any sort of  reimbursements.
  • Many disputes start with “They told me this and didn’t follow through.”

 

Most property management companies have legal counsel or advisors to help them deal with problems as they come up.

If you run into trouble that you can’t resolve on your own, contact a lawyer for help. Many lawyers offer free consultations and evaluations.

At our office, consultations are always free and we can tell you whether or not you need to hire an attorney or if there are steps you can take to resolve the problem on your own.

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Introduction

By Alexx, staff attorney.

We at the office have been meaning to start a blog for several months and the timing couldn’t be more perfect. Thanks to some fabulous donors who contribute to the National Consumer Law Center, I was able to attend a two day conference in Boston, MA called: Handling Mortgage Cases from A to Z. There were lawyers and legal advocates from every state sharing knowledge and strategies for helping homeowners in trouble.

I attended their annual Consumer Rights Litigation conference last November in Boston and hope to go to Chicago for this fall’s meeting. These conferences are wonderful and I have left both times feeling excited all over again to be working in the area of consumer law helping folks in Arizona.

Foreclosures are the top of everyone’s list of epic problems with mortgages and home loans these days so the conference dealt with those issues often and in depth. The presenters and trainers in the conference are doing amazing work.

They are lawyers working in legal aid, for other non-profits or for private firms. In addition to their attorney duties, many of them are also professors, scholars, and political advocates. They teach and train law students and other lawyers. They help influence reforms to existing laws. They help write new, more consumer-friendly laws. Some of them are also folks who were involved in a more hands-on way with the better aspects of Dodd-Frank.

In several sessions, the presenters gave examples of thorny issues and horrible practices they’ve seen in the cases they’ve worked on. They’ve seen it all– from incompetent procedures for dealing with loan modification requests to asinine excuses for “losing” documents (such as there’s only one fax machine in the entire loss mitigation department of the bank and it must have jammed) to lenders and other financial institutions flat out lying to consumers.

At lunch and during breaks the participants often swap stories of what consumer rights litigation is looking like in their hometowns and communities. Now while I want to spend some time talking about some of the topics we covered at the conference and the tips and tricks I picked up, I’d like to spend just little bit talking about that story-telling aspect of the conference.

A presenter was talking some about some of the horror stories of the run-around many consumers get when they call up the bank or loan servicer and try to get information on how to save their home from foreclosure.

In one example, The homeowner is told that he can’t qualify for a loan modification because he hasn’t fallen behind on his loan. A couple of months later he calls back and is told that he owes too much money in late fees and back payments and so the lender or investor isn’t interested in giving a loan modification but that he should apply anyway. He’s told five or six times to fax and mail the same information about his income and hardship. Meanwhile his marriage is suffering. He and his wife are stressed out and fighting and living in fear that their house will be taken away.

I looked around the room and dozens of attorneys were nodding their heads because they’ve seen it before.

I’ve seen it before (In fact, we’re litigating a case with just those facts right now).

I start talking to a few folks during a break and confirm that even though we’re from five different states, we’re all seeing the same run-around experiences from our clients. I start to feel glad that other attorneys are facing the same sorts of problems. It’s comforting to know our office isn’t alone in the fight we’re fighting for our clients.

But at the same time, I’m overwhelmed by the fact that we’re all seeing this kind of bad behavior from the lenders and servicers of home loans all across the country. And it’s only getting worse.

But again, it goes back to the fact that our office isn’t alone. We’re all in the conference together over these couple of days precisely because we are not unique. We are getting together, telling our stories, sharing information about strategies that have and have not worked, and working to make sure we get the best possible outcome for our clients but also to help shape the law so these kinds of abuses can be better dealt with.

That storytelling is important for consumers as well and carries many of the same benefits. Consumers, you are not alone in your fight for your rights to protect yourselves, your families, and your homes. And while the idea that the kind of situation you are facing is also happening to thousands and thousands of other consumers across the country is an awful thing to think about, sharing your stories can help everyone fight for their rights under existing laws and help influence the creation of new, better laws and policies.

And consumers are speaking up about the hell they’ve been put through.

They’re writing to their newspapers, to their state Attorney General’s Office, to their Congressional Offices. The Washington Post is just one publication that has been collecting stories over the last couple of years of the impacts of the foreclosure crises on homeowners and their families.

Facing foreclosure is a daunting, terrifying and incredibly difficult process.  Through this blog, we hope to be able to provide consumers and advocates with useful information and resources for dealing with foreclosure and other consumer rights issues.

If nothing else, we want to let you know that you are not alone in this. We’re constantly working to find new and better ways to deal with these issues and we are thankful to our clients and to our colleagues for sharing their stories with us and partnering with us to make a difference.

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