Property manager holding funds?

Chloe asks:
(updated on Friday, July 19th 2013)

I've had a problem with my property manager. A week before my contract with her was due to be terminated, she has put a hold on my rental money (two weeks rent) saying that it's company policy to hold the money for two weeks to make sure there are no outstanding fees to be paid from my account. However, it is not written on the contract and she did not notify me of this in writing or verbally. I only found out when I noticed my rent money wasn't in my account. Is this legal if it's not written on the contract?

Our Experts Answer:

Your contract with your property manager should provide for the payment of fees to your property manager. Such fees are normally deducted from rents and then the balance paid forward to a property owner. However, the property manager may well be tasked with paying for maintenance that has been arranged on your behalf, and your management agreement may specify that this is to be recovered from rent proceeds as well. If so, it is quite lawful and reasonable for the property manager to plan for the settling of such accounts on your behalf, out of rents that have been received. The alternative of paying all rent proceeds through to an owner and then having to ask the client for money to be reimbursed for arranged maintenance suggests a lack of planning on the property manager’s part.

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