How Do I Fire My Property Manager? A Step by Step Guide
Firing your property manager is not an easy task. We commonly hear, “I feel guilty” or “They used to do such a good job.” There are numerous conflicting emotions involved in firing someone, but like any relationship, business or otherwise, it just doesn’t always work out. Unfortunately this forces you to make a difficult decision. When you've decided it's time to part ways with your current property management company, it's crucial to follow the proper steps to reduce future liability, protect your real estate investment and ensure a smooth transition. Because this is a common issue we at Realicore discuss with many of our new clients, we decided to create a detailed guide on how to fire a property manager effectively and professionally.
*Disclaimer: We are not attorneys, nor a law firm, and the following article is not advice that you should act on without first consulting an actual attorney. See full disclaimer at the end of the article.
Step 1: Review Your Property Management Agreement
Your first step should be to review the property management agreement with your current company. Look for specific clauses, including:
Termination dates – Note the date when your contract terminates. Some companies include clauses that automatically renew the contract each year.
Required notice – Most property management contracts require you to give a certain amount of notice when canceling. The most common is 30 days, but contracts vary.
Fees and penalties – Identify any costs for early cancellation. Some contracts have an early termination penalty that drops off or is reduced after a certain amount of time.
Early termination clauses – Some agreements may allow for termination without penalty under certain conditions, such as breaches of contract made by the property management company and their employees.
Addendums – Most property management agreements have an addendum where the property management company will throw in some clauses that you may not have previously been aware of. Check that addendum for any clauses regarding termination.
Understanding these terms will provide clarity on your obligations and ensure there are no surprises when you move forward. Understanding your contract may help you to avoid unexpected costs and conflicts. Not sure where to start? Contact us and we can take a look.
*Disclaimer: We are not attorneys, nor a law firm, and the following article is not advice that you should act on without first consulting an actual attorney. See full disclaimer at the end of the article.
Step 2: Evaluate the Reasons for Termination
Be clear on why you're firing your property manager. Common reasons include:
Poor communication or unresponsiveness.
Financial mismanagement or lack of transparency.
High tenant turnover rates or long vacancy periods.
Failure to address property maintenance issues.
Various conflicts of interest.
Having these reasons documented will help you communicate clearly with your current management team and assess whether your next manager will meet your needs better.
Step 3: Gather All Tenant Information and Paperwork
Before notifying the property management company of your decision, it’s essential to collect all tenant related documents:
Leases – Make sure you have access to current leases and any tenant records.
Notices and correspondence – Gather any notices or communication that the management company has sent to tenants.
Financial records – This includes rental payment history, maintenance records, and any other documentation related to tenant relations.
Keeping your intentions under wraps at this stage is strategic. While the management team may suspect your decision to terminate your contract with them, collecting this paperwork first safeguards your information in case there is resistance or delay from them.
Step 4: Find a New Property Manager
Before you begin the transition away from your current property manager, it's time to find a reliable property manager who aligns with your goals for your property. Here’s what to look for in your next property management company:
Transparent and proactive communication – Look for a company that prioritizes regular updates and accessible communication channels.
Proven track record and experience – The right company should have positive client reviews, demonstrate experience in your property type, and a reputation of maintaining excellent tenant relationships.
Fair pricing – It’s fair to say that everyone wants to get the most value out of anything they purchase. Make sure you are making a fair comparison between property management companies taking into consideration each company’s pricing and services that they offer. If something seems too good to be true, it usually is!
Use of technology, but not as a crutch – Innovative property management firms leverage technology for efficient processes, from tenant screening to maintenance tracking, but a great property management company also knows when to make a phone call or show up in person.
Step 5: Fire the Property Manager in Writing
When it's time to formally terminate the contract, remember that everything in real estate should be in writing. This step involves:
Drafting a clear and concise termination letter or email. Sometimes, less is more. If you don’t want to provide a reason for termination, that may be the better move depending on what your contract allows in regards to termination.
Paying close attention to the notification method specified in your contract. For example, some agreements may require you to mail a certified letter to confirm termination.
Make sure you are aware of current fair housing laws. You should never discriminate against anyone, especially a protected class. Any form of discrimination could be used against you.
Making sure your termination of the property management contract is documented in writing is important. If you ever have to go to court against your current property management company, you’ll be glad you have the termination in writing.
Step 6: Prepare for Tenant Communication
As soon as your property manager is notified of your intent to terminate your property management contract, you should communicate with your tenants. Let them know:
A change in management is taking place.
Any updates to payment methods, maintenance requests, or point of contact.
If you already have a new property management company in mind, make sure to ask them what their processes are for taking over from the previous company. Typically, your new property management company will have a letter or template to send to the tenant letting them know what to expect next.
Reassure your tenants that their leases and rights remain intact during this transition. This proactive approach maintains tenant trust and reduces confusion. If the property management company you fired wasn’t attentive to your tenant’s needs, they may actually be relieved to hear that you are taking a proactive approach.
Step 7: Make The Switch
At Realicore, we understand the value of exceptional property management. Our team is committed to maximizing your investment, ensuring clear communication, and utilizing technology to streamline every aspect of property management.
Ready to make the switch? Contact Realicore and we will review your current property management contract for free with no obligations. We can help you assess your options so you can make better, more informed decisions about the management of your property.
Frequently Asked Questions (FAQ)
Q: How much notice do I need to give to fire my property manager?
A: Always check your contract, but most agreements require 30 to 90 day’s notice.
Q: What happens if I fire my property manager mid-contract?
A: Depending on the terms, an early termination fee may be charged to you.
Q: What should a termination letter to a property manager include?
A: Address the property management company and, if possible, the specific manager to avoid confusion. Clearly state your intent to terminate, include the effective termination date, and remain professional while expressing gratitude to maintain a good relationship during the transition. Request confirmation that the notice was received and the termination date is agreed upon. Follow the delivery method specified in your agreement, such as certified mail or email, and always keep copies of the letter and delivery receipt. Always check your contract to see if there are any specific requirements that must be met to properly cancel the contract.
Q: What should I do if the property manager is withholding information or keys?
A: Document all your communications and, if necessary, consult legal counsel. At Realicore, all of your documents are available through our online portal, so you shouldn’t have to ask us for anything. We want you to have easy access to it. If the property manager has a managing broker, you may want to talk to them to help resolve the issues you are facing. You can also submit a report to the Department of Real Estate.
Q: How can I avoid these issues with a new property manager?
A: Communication is key. Look for property management companies like Realicore, who emphasize proactive communication and put their clients first!
Q: Will I incur any fees or fines if I fire my property management company?
A: Every contract is different so make sure you review your contract for any fines that you may have to pay to cancel.
Q: Is the lease with my tenant still valid?
A: The lease you have with your tenant is not affected by who your property manager is. If the lease is still active (Meaning the lease is executed properly, the tenant is not in breach of the contract and the lease has not terminated), then all the terms stated in the lease are still in effect even if you plan to switch property managers or sell the property. If the lease is month to month you may have more flexibility depending on local rent control laws.
