Suppose you own a 40-unit apartment complex. You notice that the units are not renting very fast, your vacancy rate is high and for some reason your collections are very low. As you're auditing your end-of-the-year books you discover that your on-site manager has been pocketing the laundry room machine income. As you dig further you find that rent money is missing. You decide to fire the manager.

You rummage through your files to find your manager agreement and find nothing. Now you are stumped. It's midnight and you worry about it all night. In the morning you call your attorney and ask "How do I fire this manager? Can I get my money back?"

The attorney will probably say "Sure you can fire managers; but will you let them stay on site?" You respond "Of course not I want them out."

Well, not so fast.

As an example, Oregon law provides for a 24-hour notice of eviction for on-site managers ( ORS 91.120). It says you can move them out using the rules you defined in your written employment contract.

Specifically, the Oregon law says that "a landlord may only evict an employee after 24 hours following written notice of the termination of the employment or as set forth in a written employment contract whichever is longer." If the on-site manager fights you, if you don't have an employment agreement, it may take days or weeks to go through the court system, depending on your local regulations and court system.

Bottom line: You need a written contract, an agreement which touches a variety of issues.

Define Your Priorities

The first step is to consider what you want the manager to accomplish.

1. Fill vacant units
2. Represent the property in its best light
3. Keep the grounds clean.
4. Be responsible for rent collections.
5. Be responsible for good tenant relations.
6. Maintain good communication with property manager /owner.
7. Check unit applications

Describe your compensation package

Will the rent be free as part of the compensation package. What will you pay in cash? What will you pay for the cleaning and painting of vacant units? What is included in the base pay as far as hours expected for showing the vacant units, cleaning, painting, landscaping and office hours? Discuss the status of unemployment taxes and workman's compensation. Explain when payday is. Describe the hire date.

General Details

1. Office hours
2. Pay
3. Fair housing guidelines
4. Repairs and cleaning responsibilities and commensurate pay
5. Security regarding keys and rental agreements

Rentals

1. Inspect vacant units upon move out
2. Show vacant units (and keep vacant units clean, smelling fresh and dusted)
3. Be available to show units take telephone calls set appointments with prospective tenants to show units.
4. Take applications, fill out rental agreements and renew leases, check applications

Maintenance

Inside the units

1. Splash pan replacement
2. Toilet seats
3. Lightbulbs
4. Smoke detector inspection and replacement
5. Change locks

1. Maintain exterior lightbulbs
2. Clean parking lot
3. Patrol grounds for litter
4. Clean laundry rooms
5. Vacuum and dust hallways
6. Supervise landscaping
7. Keep and inventory of all tools and supplies that belong to property

Once you have plotted out the nitty gritty of the job, you need to address the details. For instance what about vacations? When are they, how much time is allowed, who will watch the property while the manager is gone? What about sick leave? Bereavement? Etc.

Consistent with state law, drug testing is an important part of your policy. You may want to run a criminal check and credit check on your future manager as part of the hiring process, just like you would for any tenant in addition to the drug test. Again, work with your attorney to review state-specific rules.

Cancellation of the contract

How will you end your arrangement with the manager? What if you want to fire the individual?

For example: Managers can be dismissed for insubordination, fraud, conversion, lewd or violent behavior, drug use, and failure to report and follow instructions. State that you can dismiss the manager with 24 hours written notice.

You also need to address how the manager can resign and if their notice is for employment, residency, or both.

You need to address what happens to the manager if the property is sold or if there is a change in property management.

Finally you may want to define the walk-through of the property when the manager is leaving. You will want to collect keys, check the rent collections, collect petty cash, walk through vacant units and review status, review pending applications, perform and exterior walk through and check the toll and supply inventory.

Save yourself HEADACHES

Having a written contract with your resident manager will save you from the headaches of having a relationship with someone that you cannot control. Remember that the manager controls the rental income of your property, the tenant selection and the condition of the property. They need guidelines from you. They need to know what you expect and what will happen when the relationship no longer works for the both of you. Setting the rules will insure a smoother running property and a better return for your investment. For details which are consistent with industry practices and state regulations, be sure to have any agreement language written or reviewed by an experienced attorney.

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