Property Management Contract

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Property Management Contract

I own a house in Portland, OR. On Febr.1st 2009 I signed a contract with a Property Management Company to rent that house and manage it for me.I paid $100 setup fee plus $400 for miscellaneous spending.On March 2nd I put the house on the market for sale. So, I canceled my contract with the PM Company.In my contract it is written that I have to pay a $400 cancelation fee if cancel the contract before the property is rented. They sent me a statement explaining that all my money was spent and I still own them the cancelation fee. Is it any legal way that I could avoid paying the $400 fee?

Asked on May 9, 2009 under Real Estate Law, California

Answers:

J.M.A., Member in Good Standing of the Connecticut Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

I am a lawyer in CT, not CA but deal with PM contracts for various clients i represent.  You need to see what the agreement says about the fees they receive and how they spend it.  There are usually provisions regarding accounting and providing an itemization of expenses paid.  The $400 miscl spending fee appears to be a separate charge from the cancellation fee.  If that is the case, then the $400 cancellation fee is due as it is a way to protect the PM company in the event that you terminate their services.  You can either tell them you refuse to pay and make them sue you for the money, or try to work a deal out.  The $400 is so nominal that i cannot imagine that they would hire a lawyer to sue you.  Maybe they will sue you in small claims court - but in that case, you can then negotiate a settlement to avoid going to court.  Without seeing the PM contract I cannto suggest anything further.

B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

I doubt that you can avoid paying the cancellation fee, if it is clearly stated in your contract.  That fee is intended, usually, to make up for the management company's lost opportunity to make money from renting the house.

What you might do, depending on the contract, is ask for proof of the "miscellaneous spending." Without reading through your whole contract, and seeing what the company comes up with as far as where the first $400 went, I don't know how far you could get with this.  It's possible that you could negotiate something less than the full cancellation fee.

People tend to be a little more "flexible" when you have a lawyer negotiating for you.  You can look for an attorney at our website, http://attorneypages.com


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