Landlord Offboarding Checklist | Process Street Landlord Offboarding Checklist – Process Street

Introduction:

There are numerous reasons why a property management agreement is terminated.

Often, professional relationships between landlords and property managers break down because the landlord feels unsatisfied with the services they are receiving in exchange for what they feel is exceedingly high management fees, or have simply found what they feel is a better alternative. Perhaps they were never a good fit in the first place, and there is an opportunity for you to improve your landlord screening and onboarding process

Whatever the reason, ending the relationship in a painless and professional manner is critical to avoid unnecessary legal expenses and to maintaining a positive reputation amongst the landlord community as a successful and trusting property manager.

Run this checklist to ensure a smooth, legally sound offboarding process every time a landlord whose properties you manage decides to terminate the management agreement.

First steps:

The essential first steps to getting the landlord offboarding process underway are:

  • Receiving a written notice from the landlord
  • Reviewing the termination clause in the management contract
  • Verifying the cause of termination and confirming the effective date

Record landlord's contact details

Receive written notice from the landlord

The first thing the landlord needs to do if they wish to terminate the management contract is to send you a written notice.

Make sure the effective date of termination is included in the letter and provides at least 30 days notice. Depending on the contract the notice period may be up to 90 days. 

Review termination clause in the management contract

The termination clause will dictate under what circumstances you or the landlord can end the relationship prematurely and what penalties or costs will be incurred as a result. 

Carefully read through the termination clause in the contract to validate the landlord's request and clarify what the termination procedure will be. 

Verify the cause of termination

  • 1
    Breach of contract
  • 2
    Poor communication/reporting
  • 3
    Inadequate response time
  • 4
    Inadequate maintenance performance
  • 5
    Too expensive
  • 6
    Service demands are not being met
  • 7
    Excessive damage to a property
  • 8
    Other

Confirm effective date of termination

Transfer of documentation:

It's now time to begin proceedings to close the contract and part ways with the landlord.

The following tasks are critical to the success of the termination and should be completed within 3-5 days of the contract being terminated. 

Provide copies of all lease agreements

Send the landlord copies of all tenant lease agreements.

If the agreements are stored in a digital folder, enter the link below, grant the landlord access and direct them to the folder by sending them the email below. 

Provide a record of tenant security deposit obligations

Provide the landlord with a list of all the tenants you managed and their security deposit obligations. 

There may be some tenants that you were in the process of onboarding and that recently paid their deposit, while others may be in the process of moving out and need their deposits to be returned within a certain number of days. 

All of this information needs to be clearly stated in a document that will be sent to the landlord so they can assume the responsibility themselves or forward it to the new property management company that will begin representing them.

Financial obligations:

Transfer security deposits to the landlord or new manager

Once you've provided the landlord with copies of all lease agreements and security deposit records, transfer all security deposits to the landlord or to the new management company they are using. 

Provide closing financial report/owner's ledger

Send the landlord a closing financial report that includes:

  • 1
    Statement of all income and expenses
  • 2
    Funds needed to cover all outstanding expenses

Does your contract contain a clause giving you permission to withhold owner funds, either all or a portion like the reserve, for a certain period of time to make sure all expenses are paid? If so, this should be stated in the financial report to avoid any misunderstandings after the contract has been terminated.

Check out what information must be included in an owner's ledger

Collect fee for early termination

Depending on the termination clause in your contract, this fee will vary from a few hundred dollars to all fees the management company would have accumulated over the remaining length of the contract. 

State the total fee to be collected below and the date on which it was paid by the landlord. 

Collect outstanding management fees

Collect any outstanding management fees owed by the landlord. 

Pay money owed to the landlord

Depending on the termination clause in your contract, you will likely have 30-60 days to complete payment of all funds owed to the landlord. This is because you must make sure you have the necessary funds to pay all expenses you owe before determining how much the landlord is owed. 

Tenant communication:

Send all tenants a written notice

The final task to complete during landlord offboarding is to send each tenant a written notice in the mail explaining the change in management. 

The letter should include:

  • 1
    Statement that you are no longer managing the property
  • 2
    Contact information for the owner's new agent (name and address)
  • 3
    Where/by whom their security deposit is being held

Sources:

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