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How to Cancel Your Property Management Contract

There may come a time when you want to leave your property management company. These are some necessary steps to take during that process.

There may come a time when you’re working with a property management company that isn’t doing a great job. Or maybe you’ve decided to manage your rental property on your own. Either way, you’ll have to get out of your management contract.

Some property management contracts are strict and will charge a hefty fee for early cancellation. Some allow you to leave whenever you feel like and will let you go much easier. Today we’re going over the steps to take when you want to leave your property management company.

Check for a Cancellation Policy

There is a likely a specific cancellation policy in your management agreement. Review what this is and proceed accordingly. This section will likely outline any fees associated with cancelling and how/when you will be paid out for the remainder of the funds.

This section might also specify if there is a waiting period once you inform them of termination, i.e. a 30 or 60-day notice. It’s best to respect this window so the transition from their management is smoother.

Send the Cancellation Notice in Writing

It’s always best to send your notice of cancellation in writing. Even if you begin the process via phone call, mail them a written letter stating your intent to cancel. This protects both parties from incorrect accusations or confusion about the closeout process.

If you are switching to a new management company, you can provide their contact information to your current property manager. This can help with the transfer of information and funds.

Prepare for Possible Costs

Even if a property management company is willing to let you go, they might have a cancellation fee. This fee can be anything from a month of management fee or be the rest of their management fees for the duration of the contract.

There might be other costs, such as work orders or bills that have not been accounted for yet. Be prepared for these to roll in after the contract is terminated.

Make Sure The Management Company Notifies The Tenant

Because your property manager is likely the one communicating with tenants, be sure they inform them of the management change. Whether you are taking over or another property management company, the tenant should be informed in writing. If you’re thinking of leaving your current property manager and are looking for a new one, check out our guide to hiring a property manager.

The letter sent to the tenants should also include who will be managing them, who to pay their next rent payment to, and when the new management will take place. They should also be notified that their security deposit has been transferred over. Be sure to request a copy of the letter, too.

Collect Necessary Documents and Materials

There are a few documents and items you’ll want to make sure you have prior to cutting ties with your property management company.

Keys
Property condition report
Lease agreement as well as any renewals or addenda
Property condition photos
Tenant ledger
Tenant applications
Tenant contact information and renters insurance (if applicable)
Any HOA forms

Many of these are often forgotten during the process of cancelling the company. You may be so overwhelmed with the transfer that you forget to ask for specific forms or photos of the property.

Tell Them Why You're Cancelling

Whether the management company has failed to deliver on promises or you simply want to manage the home yourself, you should let the company know your reason for leaving. You’ll feel better letting them know what issues you had, if any, and they’ll appreciate your feedback.

Not sure if it’s time to leave your property manager? Check out our list of signs it might be time to find a new management company.

If you’re looking for a new property management company to manage your San Diego home, check out these 4 easy steps to make the hiring process easier!

Olivia

Content Marketing Manager at Good Life Property Management

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Hey guys, Adam Manley here from Good Life Property Management, bringing you guys another video. Today we’re going to be talking about how to cancel your property management agreement with your current manager. This would be a scenario if you are going to start managing the property yourself or maybe you’re transitioning to another property management company for a specific reason. That’s what we’re going to be going over in today’s video. Just a reminder, if you like this type of content, give this video a thumbs up. And we’d love to bring you guys more stuff like this. So let’s jump right into it. Now, the first thing to consider when canceling your property management contract is the actual cancellation policy. Now, different companies will have different cancellation policies. It’s not kind of like an industry standard thing. It all kind of varies between companies. So some companies will tie their property management agreement to the lease that is with the property. So they’re congruent. Some don’t. Some property management agreements are on an annual basis and they renew each year, some are on a month to month. So really the first step before you actually do anything is to really get an understanding of how the cancellation policy works, what type of notice you need to give. If there’s any fees associated with it, so that’s really the first step of the process. So once you understand what the cancellation policy is, the next thing is to actually send your cancellation notice to your current property manager. The best way to do that is always in writing. And sometimes it does help to include why. Every property manager wants to get better and to deliver the highest possible service. So some feedback as to maybe why you’re canceling. They didn’t live up to your expectations. Things have changed in your financial situation. Whatever it may be, the feedback is always helpful and appreciated. The third step is preparing for costs. So after you’ve given notice, a lot of times there can be costs associated with canceling your management contract. Sometimes the current manager will have some type of fee for canceling the current management agreement. So it’s best to prepare for some type of costs. And that could even be also in the transition process to your new manager. So just some things to keep in mind. And you’d have a better idea of this after reviewing the actual cancellation policy. The fourth step is to have both of the management companies, the company you’re canceling. And if you’re bringing on a new manager, both of them need to notify the tenants in writing about the transition. This just helps ensure a really smooth process from one manager to another or from one manager to you. This way the tenants aren’t going to be scrambling at the last minute. They’ll know who to call if something goes wrong, whether it’s a new manager or you as the landlord. And the last step of canceling your management agreement is actually collecting all of the necessary documents that you’ll need to either manage the property yourself or transition the property over to another property manager. These items could include things like the lease, the tenant contact information, any move in condition reports or photos, tenant rental applications. All of this information is going to be really helpful for either you when you’re handling the security deposit or moving your tenant out or for your incoming property manager just so they’re aware of what terms they need to enforce, who the tenants are, etc. So those are really the main five steps and recap them again here quickly for you guys. It’s understanding the cancellation policy, sending notice and writing to your property manager, preparing for costs, notifying the tenants and collecting all of the necessary documents. So that’s a quick rundown on how to cancel your property management agreement. If you have any questions, please let us know and thanks for tuning in.