Running the daily operations of rental property management from collecting rent to property upkeep and handling neighbor disputes is a time consuming and sometimes challenging job. Rental property management companies can get into legal trouble or be fired from their position if they do not conduct themselves in a professional and capable manner. While there are all sorts of potential issues associated with property management,
these are the most common rental property management mistakes to avoid:
The patched together lease agreement
Lease agreements create a legally binding connection between a tenant and the rental company. Creating a unique lease agreement can be complicated and expensive, so some rental property management companies end up downloading or copying an agreement off of the internet and using it as their own lease. Problems arise, however, when the copied lease agreement doesn’t comply with local laws or misses important legal steps. While it does cost more up front, using an attorney to draw up an official, unique lease agreement for the property is important. It can help avoid legal issues further on down the road.
The property management agreement
There needs to be a signed and written agreement between all parties involved with a property; the property owner(s), tenant(s) and service providers. A rental property management firm needs to have such an agreement as it clearly outlines each party’s responsibilities. A real estate management company should not begin work for a property, nor should a property bring in a firm without this important legal agreement in place.
Incorporate lease-purchase into a lease
A lease-to-purchase agreement should never be incorporated into a lease agreement as it becomes difficult for a judge to determine what kind of property it is. Each agreement must be clear, which is why the lease-to-purchase and lease agreements need to be signed separately.
The move in/move out forms
When a tenant moves in, they need to sign a move in form indicating any possible damage already present or fixes requested. Just as important, the tenant needs to do a walk through with the rental property management company for a move-out inspection. These walk-throughs and forms are meant to protect both the tenant and property manager. A rental property management firm must complete both forms with the tenant and a failure to do so could land the firm in small-claims court.
The security deposit trust account
When a tenant moves into a property they pay a security deposit and the rental property management company should deposit the funds into a trust account. Essentially, this shows the renter where the money is, that it is in place and the property owner is not using it for other spending. Rental property management companies who fail to keep deposits in a trust account risk not having access to the money in case of an unexpected move and could end up paying back interest on the funds.
These five common property management mistakes are made by many rental property management companies. While there are other mistakes a rental property management firm may make while maintaining the facility, cutting these top five issues out can go a long way to protecting the management company.
Son-Rise Property Management is a full service property management company located in Bellingham, WA. Contact us today to see how we can help you find the perfect home to rent or manage your property.