The Property Management Shop
by Marc Wilson
Q. My husband is a technology nut. He brags about the fact that he is literally managing our apartment building from his home-office computer. I’m concerned about the lack of documentation relative to all of his tenant communications. For example: are his emailed 24-hour notices to enter an apartment legal and proper? What about tenants making direct deposits and/or my husband making automatic withdrawals for rent payments? What do you think about property management in the digital age?
A. I have a dream. My dream goes something like this: I’m sailing in the Caribbean and managing San Francisco apartment buildings simultaneously. I’m sitting in the sun drinking a rum and coke. My tenants email me repair requests and I email my contractors and vendors their work orders. I pay all of the bills online. Once a glorious month, I sit in a deck chair, punch a couple of keys on my computer and watch my bank account grow with automatic withdrawals from all of my tenants’ accounts. Melanoma and cirrhosis are my only concerns. What a life! If only it could be.
The management of San Francisco residential housing simply does not lend itself to the utilization of the latest and greatest technologies. San Francisco tenants are generally well behaved but can be extremely dangerous—kind of like dealing with snakes. It is not wise to deviate from generally accepted safe handling procedures when dealing with a snake or when dealing with a San Francisco tenant, and emailing 24-hour notices to your tenants is not a safe handling procedure. Why? Because it is not proper or legal. Entering an occupied apartment, like virtually everything a property owner does, is a highly regulated undertaking. A notice to enter needs to be properly served and an email is not proper service. Notices to enter need to be personally served, posted and mailed, or just mailed with a six-day notice. Nowhere in the statutory code relative to proper service does it even mention the word “email.” Sure, using email for such purposes is easy and efficient and, in all likelihood, preferred by your tenant, but it is simply not legal.
I don’t allow email communication with my tenants; it even says so in my rental agreement. If I get an email from a tenant, I have a standard response that reiterates this policy and requests that the tenant immediately deliver or mail me his message. I take all tenant communications very seriously. It is impossible to have serious communication via email because nothing done on email is enforceable or legal when it comes to property management. One cannot terminate a tenancy via email. One cannot serve a three-day notice via email. One cannot enter an apartment pursuant to an email. One cannot warn a tenant via email. Are you getting the picture?
The day might come when emails carry the same weight as notices and letters that are properly served, but that day has not yet arrived. One day there will be a line item on the standard “Proof of Service” document that will define proper service relative to emails, and when that day comes I will get on board. Until then, do not take the easy way out: do not have email communication, and I mean any email communication, with your tenants. Stipulate in your rental agreement that emails do not constitute acceptable communication and that all communication must be in writing and posted at or mailed to the management office. Your tenants need to understand that you don’t read emails concerning property management.
I was at a property managers’ meeting last month. I met several sales people for companies that are in the business of processing rent payments via automatic withdrawals or transfers from the tenant’s account. These companies sell this service to property owners and managers. Why go through the hassle of opening the mail, collating the rent payments, stamping and posting the rent payments, and depositing the rent payments, when these companies will do it for practically nothing? Why do I need to hire a bookkeeper? It sounds too good to be true and it is when it comes to San Francisco and all other rent-controlled communities.
How can you effectively manage revolving tenancies if you are accepting withdrawals from a bank account into which anyone can deposit money, including an unauthorized subtenant? What if you are in the process of evicting a tenant and he makes a transfer to your account? What if the tenant transfers the wrong amount of rent? What if he doesn’t make a transfer? What if he doesn’t adjust his transfer to reflect the most recent rent increase? What if you serve a Three-Day Notice to Pay Rent or Quit and the tenant pays but you don’t realize it until such time as you have sued the tenant? What if your seriously below-market-rent tenant is lying dead in his bathtub and he continues to make automatic rent payments for the next two years? There are way too many “what ifs.”
Besides, these kinds of systems have no value unless all your tenants agree to join the system, and the probability of that happening is zero. The fact is that it is not prudent to engage in automatic transfers with tenants in a rent-controlled environment. Automatic transfers are for your routine dealings with known vendors, for relatively small amounts of money and with contracts that can be terminated at will with or without cause. I won’t accept automatic rent payments, withdrawals or transfers from any entity whose association I cannot terminate at my leisure. As long as there is rent control, I will not and cannot accept automatic payments or transfers from tenants and I suggest that you adopt the same policy.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or SF Apartment Magazine. Marc Wilson has specialized in the brokerage of San Francisco apartment buildings for 20 years. He can be reached at 415-229-1275. Copyright © 2007 by SF Apartment Magazine. All rights reserved.