Bank Forced Maintenance

A recent report in a multi family newsletter commented on lenders and insurance companies forcing maintenance on units that are slipping into disrepair.  Things like railings, roofing, and parking lot maintenance were specifically mentioned. These type of repairs have often been required when an owner refinances, but the recent foreclosure rates have focused much more attention on annual  lender inspections. The article also commented about lenders on refinance asking for the economic life of components of the buildings.  For example if the windows are old single pane windows, they may need to be upgraded before financing or refinancing can be complete.  I wonder how long it will be before these type of repairs are also forced on single family owners.  These types of issues often have a tendency to become industry standards.

This came from a Kidder Mathews multi-family report found on line.

Trust account management

 Are you an owner of rental properties in other areas of Washington State where the broker only collects the rent and passes it on to you?  Where you manage the repairs, tenant complaints, neighbor complaints, difficult tenant requests, periodic visits to the property, evictions, etc?

I found this interesting article regarding 'managers' who only provide minimal services to an owner.

The source is the Washington Realtors Assoc.  Attorney.



Question:
Broker provides property management services for clients. Broker receives rent checks from tenant, made payable to the landlord, and transfers the checks directly to the landlord.


Broker does not deposit the checks or handle the funds in any way except to act as the delivery system from tenant to landlord. Is this lawful?

Answer:
No. This handling of rental checks made payable directly to the landlord was acceptable prior to the Licensing Law and WAC revisions of July 2010. However, the revised Licensing Law provides “If any licensee exercises control over real estate transaction funds, those funds are considered trust funds.” RCW 18.85.285(2). Once a broker accepts a check from a tenant, even though the check is made payable to the landlord, the broker exercises control over the check.

The supporting WAC provision states that all funds received by broker on behalf of a client are deemed to be trust funds and must be handled in accordance with WAC 308-124E-105. The WAC requires that all funds or moneys received for any reason pertaining to the renting or leasing of real estate must be deposited in the firm's trust account. WAC 308-124E-105(6). If broker/property manager receives a rent check from the tenant, the funds must be deposited in the firm's trust account. If the firm does not have a trust account or if the parties do not wish for the funds to be deposited in the firm's trust account, then tenant will have to send the rent check directly to landlord.