[ktsuei]

I have an issue with the prior property management. However, their management contract was sold to the new one. The issues were mismanagement and not screening tenants so now I have damages to the property that occurred during the prior management and I have no way of getting reimbursed for it.

I was told that the new property management is the successor of interest and therefore, is liable. However, they argued the following under Section 7.1 as state below: I have also included Section 2.1 for your review.

So I’m not clear as to who is responsible. I can’t go back to prior company since it is no longer in existence. Would the current management be responsible or the prior management? Since it was sold by a partnership who owned the prior management company, would they be responsible instead?

Section 2.1 Agreement to Purchase
Upon Closing, Buyer shall assume all obligations and liabilities with respect to the Purchased Assets and shall upon and after closing, forever indemnify, protest and defend Seller from any further liability whatsoever arising therefrom. Provided, however, Buyer does not assume and shall not in any manner become responsible or liable for, and the Seller shall retain pay, discharge, and perform in full, all other debts, obligations or liabilities of the Seller of any nature whatsoever whether known or unknown, fixed contingent or otherwise, including, without limitation, any debts, obligations or other liabilities directly or indirectly arising out of, or resulting from, the Seller's ownership or use of the Purchased Assets prior to the Closing Date, except that the foregoing does not include any obligations agreed to by Seller but which do not arise or accrue until on or after the Closing Date.

Section 7.1 Obligation of the Sellers to Indemnify Buyer (e) states “The Seller hereby agrees, to indemnify and hold harmless the Buyer from and against . . . . any claims asserted by any person against the Buyer arising out of , or based, in whole or in part, on any negligent act or omission or intentional tortious conduct by the Seller or the Business or any of their respective employees or agents which occurred at any time, including, without limitation, all claims by any customer(s) of the Seller for any act or omission caused by the Seller at any time.”

[ScottGem]

Where did you get those clauses? It looks like they came from a contract for sale. But what does that have to do with property managers?

A property manager is a person or company responsible for the maintenance of a property. The extent and nature of that responsibility is spelled out in the contract. It could range from just collecting rents and being a contact point for tenants, to physical maintenance of the property or something in between.

If a PM mismanaged the property, the owner of that property has a cause of action against THAT PM. A successor PM would not have any responsibility unless that was written into the contract or they were taking over the business of the previous PM, not replacing them just for that property.

Now its also not clear what your stake in this is, are you the property owner or what? And, again, those clauses look like they come from an agreement between buyer and seller, not the PM.

[ktsuei]

Where did you get those clauses? It looks like they came from a contract for sale. But what does that have to do with property managers?

A property manager is a person or company responsible for the maintenance of a property. The extent and nature of that responsibility is spelled out in the contract. It could range from just collecting rents and being a contact point for tenants, to physical maintenance of the property or something in between.

If a PM mismanaged the property, the owner of that property has a cause of action against THAT PM. A successor PM would not have any responsibility unless that was written into the contract or they were taking over the business of the previous PM, not replacing them just for that property.

Now its also not clear what your stake in this is, are you the property owner or what? And, again, those clauses look like they come from an agreement between buyer and seller, not the PM.

The clauses came from the Asset Purchase Agreement. I had requested this since the current property management is referring me back to the old one who is no longer in existence. I had issues with the prior managemnt since they didn't screen the tenants, paid high bills without authorization, etc.

I am an owner of the unit and was trying to figure out who do I go after for mismanagement. That is why I quoted the contract sections. So do you read it as the current PM not being responsible?

[ScottGem]

I am an owner of the unit

"THE unit"??

This sounds like you may be the owner of a condo unit in a condominium complex. Is that the case? Please clarify.

But I can't see you having any claim against the current property managers. The only way you might is if, like I said, they were not hired by the property owner, but took over the business of the old company. EVen then, the takeover agreement might absolve them of responsibility.

[ktsuei]

Yes. I'm the owner of the condo unit. The new PM were not hired by me. They just took over since they bought the PM contracts from the old company.

I was told that the agreement is between the prior PM and current PM and not me. However, I couldn't tell if the current PM are responsible or not since they quoted me that section in the contract.

[ScottGem]

Generally the property manager is hired by the condo association, not by individual condo owners. The contract is between the PM and the association. It appears from what you are saying that the new PMs bought the business of the old PMs. In that case, section 7.1 does appear to remove them from liability.

What does the association have to say about this. Seems to me they might have the right terminate the oldPMs contract and hire someone new. Of course that doesn't help you at all.