Banks may call for the broker/agent to manage the property. And “property management” can mean something very different to a bank than to a broker/agent.
In some instances, all a broker/agent is asked to do is determine if the property is occupied. That’s it. Sounds simple enough, right? Wrong.
In rent-controlled cities (Oakland in particular), brokers are being sued – by the City – not the bank, not the occupant, not the buyer, not the borrower/seller, but the City itself – for violation of the City’s rent control ordinances. It seems the City believes that almost any notice to a tenant by a bank to move out is a violation of its rent control ordinances. So, the City is filing suit against all the banks. All of them. And the broker/agents too. On what theory? Aiding and abetting the banks in wrongful evictions. Settlements are in the tens of thousands of dollars, with requirements that the agent disclose each and every bank owned property it has listed (or worked on in any way, including just giving a BPO) over the last five years, and that the agent stipulate in advance to a minimum fine of $5,000 for every violation the City finds in all those previous listings or BPO assignments.
Did we mention that many E&O policies exclude violations of City ordinances from coverage? But wait, as they say, there’s more.
Collecting rent from an occupant pending the occupant vacating the property? Doing it just as a ‘courtesy’ for the bank client? Hopefully your trust account procedures are up to snuff. Oh, and by the way, did you know that if the owner (bank) is an out-of-state person or entity, the broker/agent/property manager is required to withhold seven percent (7%) of the gross rental proceeds and turn it over to the State Franchise Tax Board?
We’re not done yet…
What if the property is vacant, but the occupant left stuff behind? You guessed it. Call your favorite attorney – better yet, let the bank call its favorite attorney, and give the required Notice of Belief of Abandonment, etc., etc.
What if a trespasser has gained entry in an otherwise vacant and abandoned house? Can you just cut off the utilities? Nope. Do you call the cops? They’ll tell you it’s a ‘civil matter’ and direct you to contact, you guessed it, your favorite attorney. (Call the cops anyway. It creates a record of your belief the occupants are trespassers.)
What if the trespasser goes swimming in that “green pool” and is bitten to death by mosquitoes? Or just contracts malaria or the West Nile Virus? Call an attorney.
What about ‘cash for keys?’ Done correctly, it’s a win-win for everyone. Done incorrectly, it’s just another kind of unlawful eviction.