Legal Question in Business Law in California

Dear Sir or Madam,
I signed a property management contract with a property management company to manage my 2 rental properties on Nov. 2011, I was not happy with the company because I had to keep asking them to pay me the collected rent, therefore, I would like to terminate the contract.
However, the contract said �Owner may not cancel within the first six months of the date this agreement begins unless for cause�. The cause I can think of is the contract stated �Bond by a fidelity bond in adequate amount any employee who handles or is responsible for Owner�s monies� but when I asked them to provide me a copy of the bond, they gave me a copy of their account receivable statement. Another cause I can think of was when we signed property management contract, they made me a copy of the contract that we both signed instead of sign 2 original copy of the contract and each party should keep an original copy of the signed contract.
I worry about my 2 tenants that live in my 2 properties(one of them is going to move in on March 1), they signed lease with the property management company and they never seen me(owner name was stated on the lease), how do I talk to them to pay me the rent instead of the property management. Also, I worry if I terminate the mgt co. they will talk to tenant not to pay me the rent and cause a lot of problem.
Below please find a copy of prop mgt contract for your reference, base on the contract, if I have your firm to send them a notice of cancellation, will the prop. mgt co. get anything if they threaten to sue me?
Thanks in advance for your help.
1. The Owner hereby retain and grants Agent the exclusive right to rent, lease, operate and manage the property(ies) listed on �Exhibit A� dated November 21, 2011; upon the terms hereinafter set forth, commencing, November 21, 2011 and continuing in effect for one(1) year with automatic annual renewal provided, that Owner may not cancel within the first six months of the date this agreement begins, unless for cause. After the first six months, either party hereto may terminate this contract giving to the other party not less than 60 days prior written notice on an intention to so terminate.
2. Agent shall:
A. Use due diligence in the performance of this contract.
B. Render monthly statement of receipts, expenses and charges and remit to Owner receipts less disbursements.
C. Accumulate as a reserve in the Owner�s account each month not more than $200.00 total. Y.C. 12/29/11 No Reserve $0.00 (modified on 12/29/11 signed by employee)
D. Bond by a fidelity bond in adequate amount any employee who handles or is responsible for Owner�s monies.
3. The Owner grants Agent the following authority and powers and Owner shall pay the expenses in connection herewith.
A. Upon Owner�s approval to advertise the availability for rental of the herein described premises or any part thereof, and to display �For Rent� signs thereof with Owner�s approval; to sign, renew or cancel leases for the premises or any part thereof; to collect rents or other charges and expenses due to or become due and give receipts therefore; to terminate tenancies and to sign and serve in the name of the Owner such notices as are appropriate; to institute and prosecute actions, to evict tenants and to recover possession of said premises in the name of the Owner and recover rents and other sums due. Any lease executed for the Owner by the Agent shall not exceed one year. Agent shall pay for Sunday advertising in the North County Times.
ADVERTISING INCLUDED IN FEE
B. To make or cause to be made and supervise repairs and alterations, and to do decorating on said premises; to purchase supplies and pay all bills therefore. The Agent agrees to secure the prior approval of the Owner on all expenditures in excess of $200.00 for any one item, except monthly or recurring operating charges and emergency repairs, in excess of the maximum, if in the opinion of the Agent, such repairs are necessary to protect from damage or prevent damage to life or to the property of others or to avoid suspension of necessary services or to avoid penalties or fines or to maintain services to the tenants as called for in their leases.
C. To hire, discharge and supervise all labor and employees required for the operation and maintenance of the premises. Agent may perform any of its duties through Owner�s attorneys, agents or employees and shall not be responsible for their acts, defaults or negligence if reasonable care has been exercised in their appointment and retention.
D. To make contracts for electricity, gas, fuel, water, telephone, windows cleaning, trash or rubbish hauling and other services as the Agent shall deem advisable; the Owner to assume the obligation of any contract so entered into at the termination of this agreement.
E. To pay loan indebtedness, property and employee special assessments and insurance as designated by Owner.
4. The Owner Shall:
A. Indemnify and save the Agent harmless from any and all costs, expenses, attorney�s fees, suits, liabilities, damages or claim for damages, including but not limited to those arising out of any injury or death to any person or persons or damage to any property of any kind whatsoever and to whomsoever belonging, including Owner, in any way relating to the management of the premises by the Agent or the performance or exercise of any of the duties, obligations, powers or authorities herein or hereafter granted to the Agent; to carry at Owner�s sole cost and expense, such public liability, property damage and Worker�s Compensation Insurance as shall be adequate to protect the interest of the Agent and Owner, the policies for which shall name the Agent as well as the Owner as the party insured. This indemnification is contingent upon the Agent acting in good faith. Manager shall indemnify Owner from and against any and all claims, losses, damages, expenses, causes of action and liabilities arising out of or related to (a) the acts or omissions of Manager, or (b) any action brought by a tenant, or prospective tenant or third party based upon the acts or representations of Manager.
B. Pay the Agent:
1.
a. For management: 10% per month of rent collected. On Month seven of Rent collection, fee reduced to 8% - (modified by prop employee & signed)
b. Maintenance Processing Fee: 5% of invoice amount up to $250.00. 2.5% of invoice amount over $250.00
c. Rent Collection after grace period: Late fees retained by Agent.
d. Prospective tenants will be charged a $25.00 Application Fee, which will be retained by Agent.
2. In the event that the Owner(s) shall request the Agent to undertake work exceeding that usual to normal management, then a fee shall be agreed upon for such services before the work begins. Normal management does not include modernization, refinancing, fire restoration, major rehabilitation�s, obtaining income tax advice, presenting petitions to planning or zoning committees, advising on proposed new construction or other counseling.
(3. For Assignment: The Owner hereby agrees that Agent may be compensated by the party or parties requesting an assi8gnment of lease for services rendered in negotiating the consent of assignment. � cross out this paragraph, initial by Tom)
5. In consideration of this Agreement, Agent agrees to utilize its best efforts and due diligence to achieve the purpo9se of this Agreement.
6. In the performance of this Agreement, Agent warrants that he shall comply with all applicable Federal, State and local laws, ordinances and regulations, including those, which pertain to Fair Housing and minimum wages.
7. In Connection with the execution of this Agreement, Agent shall not discriminate against any employee or applicant for employment because of race, age, religion, color, sex or national origin. Agent shall tqake affirmative action to ensure that applicants are employed and that employees are treated during their employment without regard to their race, age, religion, color, sex or national origin. Such actions shall include but not be limited to the following: employment, upgrading, demotion or transfer, recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and selection for training including apprenticeship.
8. Nothing contained herein shall be construed as creating the relationship of employer and employee between the Owner and Agent or its agents and employees. The Agent shall perform its services as an independent contractor in accordance with its own methods, this contract, applicable laws and regulations. The Agent shall have exclusive and complete control over its employees.
9. Agent agrees to hold harmless, defend, and indemnify Owner for and from all losses, damages and claims arising as result of actions by Agent and his agents during performance pursuant to this agreement.
10. If it shall become necessary for Agent or Owner to give notice of any kind, the same shall be written and served by sending such notice by certified mail to the address shown below:
11. Owner�s money will be held in a sub trust account that is a part of the management trust account. There may be times when the total of the sub accounts may be less due to the payments of mortgages. If Owner so desires, a copy of the Bank trust statement will be provided.
12. This Agreement shall be binding upon the successors of the Agent and heirs, administrators, executors, successors and assigns of the Owner.
Parties acknowledge having read the foregoing prior to execution and receipt of a duplicate original dated this November 21, 2011.
By:_
Owner Telephone(W)
By:__

Asked on 2/12/12, 10:43 am

2 Answers from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

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Wouldn't failure promptly to remit net rental income also be a cause permitting termination of the agreement? I didn't see anything specific about remitting rent received, but it's usually understood that a rental agent must turn over the owner's share immediately upon the agent receiving cleared funds from the tenants. Also, have you been able to verify that the tenants are making their rent payments on time?

Answered on 2/12/12, 11:15 am

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