Real estate investors often utilize property management companies to handle the day-to-day details of leasing investment properties. While property management can make sense for residential investment properties, it is more common with commercial real estate and all the additional details that go into those day-to-day operations.
Whether you are using a property management company to lease your property, or your company offers property management services for commercial real estate in Arizona, here are four important things to know about Arizona property management and commercial real estate (CRE) disputes.
What are Property Management Companies Typically Responsible For?
Most people understand that property management companies handle the regular interactions with tenants, but the specific details of what services are managed on a particular property are defined in the property management agreement.
- Property management companies will generally handle finding prospective tenants for the property and managing the contracting process with those tenants.
- Property managers will manage the collection of rents and the eviction process if the tenant does not pay their rent.
- Property management companies are also responsible for resolving any maintenance issues and scheduling the appropriate contractors to fix the matter.
- The property owner or the tenant, depending on the contract and the cause of the issue, will cover the costs of that maintenance or repair, but the property manager will handle the contact and scheduling of those services when necessary.
- Property management contracts will usually include the property landscaping and maintenance of the community areas.
- For a commercial building with a variety of tenants and a large communal property area, there are many more things that need to be detailed as much as possible in a contract for property management.
What is the Process When There is a Tenant Dispute?
Disagreements between commercial property owners and tenants are going to happen with almost any lease. Most of these issues can be resolved with some simple follow up and compromise. The first step of any commercial lease dispute in Arizona is reviewing the lease agreement. The details of the lease agreement should dictate the appropriate steps for resolution. This involves understanding what the property owner and tenant agreed to in the contract for payment dates, amounts, expenses, maintenance details and dispute resolution.
Arizona property owners and property management companies should understand the required process to provide a commercial lockout notice if a tenant fails to pay their rent and has not provided a suitable timeline for resolution. We have already posted an article that provides some guidance on Arizona’s commercial lockout notice and exactly what property owners and property management companies need to know if the need arises.
What are Common Property Management CRE Disputes in Arizona?
Property management companies will routinely resolve disputes with tenants as a normal part of their business. The two most common disputes involving property management will typically involve rent collection and maintenance issues.
If rent collection becomes a serious issue, then property management companies will have to assist in the eviction process, when they have the right to terminate the rental agreement on behalf of the landlord.
Evictions can become complicated and costly for a property owner and property manager if not handled correctly.
Tenant improvements or unexpected needs for a growing business could lead to disputes as well. If the contract does not detail which party covers the expense of any potential tenant improvements or alterations to the building, this will require a negotiation with the tenant and amendments to the contract.
What are Typical Disputes between Landlords and Property Management Companies?
While they are not as common as disputes with tenants, property owner and property management companies will have disputes at some point during a contract. Some of these might be simple misunderstandings or requests for different contract terms, but more serious disputes can happen as well.
The most common dispute typically revolves around a failure to perform the contracted responsibilities, like finding renters for vacant properties or not keeping up with communal area maintenance.
If parts of the contract between a property owner and property management company were vague, this can lead to disputes about what was discussed and what is detailed in the contract. This is one of the main reasons that any contract for property management should be as detailed as possible and reviewed by a real estate attorney.
Arizona Real Estate Law Firm for Property Management & CRE Disputes
Commercial property owners and property management companies should expect that disputes are a standard part of doing business. Most disputes will not rise to the level that requires litigation if you simply provide timely responses and attention to the matter.
However, all property owners and property management companies should understand that some disputes will not have easy or quick resolutions. Therefore, it is vital to have the representation of an experienced Arizona real estate law firm if you hope to have long term success as a commercial property owner or property management company.
M&G Law is the leading Arizona real estate law firm, and our attorneys are experienced with property management and CRE disputes in Arizona. Contact our firm today at 602-562-7218 or make an appointment online.