A common frustration among property managers all over the country is the difficulty posed when owner/clients start communicating directly with their tenants. From the owner’s perspective, it’s difficult for them to understand why this would be a problem. After all, it’s their rental property! The tenants are their tenants, right?
“Just because I have retained a professional property manager, shouldn’t mean I can’t interact with my own tenants.” This is what our owners often believe, and it’s one of the most damaging beliefs they can hold.
With the advent of social media, combined with the accessibility of information from county assessor’s websites, it’s not too difficult for tenants and owners to find each another. Privacy is pretty much a thing of the past, and our owner/clients can easily be identified. In fact, several states require the owner (and his contact information) be provided to the tenants in the rental agreement!
So, what’s the problem?
From the property manager’s perspective, owner/tenant interaction on a managed property is, at minimum, a great big hassle. At its worst, it’s a nightmare.
Not only is the property manager potentially at risk for the statements made by the owner/client to the tenant (vicarious liability), the property manager is often not privy to certain maintenance issues, or “side agreements” made between the parties. Lease administration and enforcement efforts become challenging, and the property manager’s authority to carry out his duties is weakened by the well-intentioned ‘sidebar’ conversations between owners and tenants.
Does owner/tenant contact harm the owner in any way?
A fellow NARPM member recently shared a first-hand story that, should you choose to share it with your own owner/clients, might help answer this question. I’ll paraphrase:
The owner/client with a big family moves into a larger home in the same town, freeing up their existing home as a rental property. They then contract with a professional to manage that rental property. The property manager locates a qualified tenant, also with a family, to occupy the rental home. The owner is thrilled to have another family occupying their rental home; a home they have such fond memories of. As a gesture of kindness, the owner has her children bake cookies for the new tenants, and takes those cookies over to the property. The owner and tenant meet, and share a pleasant conversation. All good, right?
About a month down the road, the tenant calls the owner directly with a maintenance issue. Perhaps, the property manager was out of the office, when the tenant tried to contact the manager first. Perhaps, the tenant bypassed the property manager altogether. It doesn’t really matter. What matters is that the phone calls from the tenant to the owner increase in frequency, over a short period of time.
Realizing the mistake the owner made by initiating contact with the tenant (after all, she’s paying a professional property manager to handle landlord/tenant matters), the owner stops answering the tenant’s calls. Pretty soon, the tenant starts paying the rent late. Then, they quit paying, entirely. The property manager takes action on the past due rent, the matter goes to court, and the tenant’s defense is that the owner refused to make repairs to the property. Naturally, the tenant had a log of all his phone calls to the owner that went unanswered.
Not only is that scenario pretty common when owners and tenants communicate directly, there are other risks to the owner, as well. Namely, the risk that the owner/tenant conversations will become material to any legal dispute between the parties, either during or after tenancy. This means, the owner will be much more likely to have to personally appear in a court of law, should such a dispute occur, than he/she would have been, had the owner left all landlord/tenant matters in the hands of his agent, a professional property manager.
What can we do about this, as property managers?
Our property management company recently added language to our property management agreement that expressly prohibits direct communication between the owner and tenant. This language does a few things:
- It prohibits the owner from having direct conversations with the tenant, during the term of the property management agreement,
- It warns the owner of the risks inherent in those communications,
- It gives the Agent (us) the ability to terminate the agreement “for cause,” should such communications take place.
I recommend you consult with your own legal counsel for appropriate wording, should you decide to add a similar clause to your property management agreement.
Have you experienced difficulties as a property manager, with owners and tenants communicating directly? Please share your thoughts and experiences, by leaving a comment on this post.