The assigned manager agreement renewed on the seller's anniversary, missed by nine days

I'd have assumed the management contract died with the sale, the way a listing agreement does when the seller is gone. So when you took it by assignment, did the manager have to agree, or does it just ride along with the property? And what stops you from firing them and refusing to pay? I know the answer is probably "they sue you" but I want to hear it said out loud.

First rental closing in about seven weeks and my draft agreement says it "automatically renews for successive one year terms unless either party provides 60 days written notice." It never says notice before what. That's now my first redline, thanks. Mine also has an RBP at $35 a month and I hadn't once wondered who keeps it. I'd been spending all my attention on the screening criteria section.

This is exactly the thing that keeps me stalled. I want income without a second job, and reading agreements at fathom's level is a second job.

The mechanism worth separating out is that a management agreement is a contract between the owner and the manager, so it does not automatically bind a buyer. It moves on assignment, and most agreements require the manager's written consent to assign, which is the moment the buyer has the most leverage and usually spends none of it. If the buyer instead lets the seller terminate and signs fresh, the buyer sets the term start, the notice window, and the ancillary schedule.

On the damages clause, a per-door termination fee or an estimate of remaining fees is treated as either liquidated damages or an unenforceable penalty depending on the state and on whether the amount approximates actual loss, so that is an attorney question in the state where the property sits rather than something to reason out from the text.

Where fathom's number depends on an assumption: the $20,400 is measured against terms available from a replacement manager at 34 doors. That comparison holds only if those terms were on the table at the original signing date. Ancillary lines have become core revenue for managers rather than a garnish, with resident benefit packages, coordination fees, and platform fees increasingly filling the gap left by base fees stuck around 8 to 12 percent while insurance premiums have jumped on the order of 26 percent in a year. A manager who gives up the whole ancillary stack usually reprices the base. So the useful comparison is total cost per door per year under each structure, and the number to ask for is the manager's own average, not the schedule maximums.

@rena-expert the total cost per door per year framing is what I needed, thank you.

@fathom would you write out the clause list you'd now read first? I'm still a purchase away from needing it but I'd rather have the list before I'm under contract and tired. So far I have: term and anniversary date, notice length and how notice must be delivered, termination for convenience versus for cause, ancillary revenue ownership, maintenance approval cap, and the post-termination listing right.

The acquisition side of this is where I keep getting stuck. The clean answer is you require the seller to terminate their management agreement before closing at the seller's cost. The seller has zero incentive to do that, because if your financing dies they're sitting there unmanaged with 34 doors, and their termination fee is real money to them. So in practice you're negotiating who eats the exit cost of a contract you didn't sign, on a portfolio where the manager also controls the rent roll and the tenant files you need for diligence. @fathom did you try to push it onto the seller, or was the manager's consent leverage too strong to bother?

I read this differently. The missed calendar date cost nothing by itself, it just extended an agreement that was already badly priced. The 10% coordination markup is the actual injury and it was fully visible on page one. Any structure where the manager's revenue rises with your repair invoices will find repair invoices. I pay a flat 10% of collected rent on my long holds with no markup, no coordination fee, and no benefit package, and that manager makes fine money because he keeps units full for six and seven year tenancies. The fee number matters less than the direction the incentives point.

@orchard that incentive point is the same problem I keep hitting on the passive side. In two syndications I looked at this year the manager was an affiliate of the sponsor, so the sponsor is on both sides of the maintenance markup and the RBP. The PPM discloses it, in a list of affiliate arrangements six pages long. @fathom, when you say ancillary revenue got a named owner per line, is that a schedule you can actually get a manager to sign, or does it only work when they want the doors badly enough?

What did the notice clause say about delivery? Mine requires certified mail to the address in the agreement and specifically says email doesn't count, which seems designed to make the window harder to hit than it looks. Did you send yours by email first and then discover that?

Pulling on the $9,700. That's 10% of $97,000 of maintenance across 34 doors in 13 months, so about $2,850 per door annualized in repairs and turns. That's high enough that I'd want to know whether the markup caused the spend or the buildings did. If a chunk of it is deferred capital you inherited, the coordination fee was expensive but the underwriting was the bigger line. Do you have the split between turn cost and reactive repairs? Turnover alone runs somewhere around $1,750 a unit before anyone marks anything up.

My near miss was tiny by comparison. Three doors, inherited manager, and I only escaped because their agreement happened to be month to month. When I asked why, they said the owner before me refused to sign an annual term. That refusal saved me a year and I'd never have thought to ask for it.

Two reminders, one at 150 days before the anniversary and one at 130, and the anniversary comes off the executed document rather than off the closing statement. That's the whole fix and it's free.

After something similar on 12 doors I added a manager certificate to my diligence list, signed by the manager before closing. Effective date and anniversary date of the current agreement, current term expiration, notice deadline, list of all fees charged to owner and to tenant with amounts collected in the last 12 months, security deposit balances held and where, and any post-termination rights they claim to have. It's the same instinct as a tenant estoppel and managers grumble but sign it, because they want to keep the doors under the new owner.

@fathom the exclusive listing right is the one I'd flag hardest for anyone reading later. A termination fee is a number you can price. A one year encumbrance on your exit is not, and whether it survives at all depends on state brokerage rules, so that's a licensed opinion in the state, not a forum one.