A property owner contacted me recently looking into our services. He’s currently using another property management company here in Philadelphia — a pretty well-known, very large one. And to be clear, there are good property management companies in Philadelphia besides my own, but the one he’s using isn’t one of them. He wants out.
His question was simple: how does this actually get handled? Does he have to coordinate the switch since he’s not local? Or does the new property management company handle it?
The short answer: the new property management company handles almost all of it for you.
What the New Property Manager Actually Does
When you hire a new company, they’re going to reach out to the old one to collect everything they need to take over the property. That includes:
- The tenant leases
- The tenant security deposits (very important)
- The keys
- Any other relevant documentation
I can only speak for my own company, but I’d assume most property management companies do this for you. It’s the standard way takeovers work.
Why Some Companies Make It Difficult
Here’s where it gets interesting. Property management companies are licensed and regulated by the state. Even so, some of them will be incredibly difficult during a transition.
Through the years, we’ve had a lot of trouble getting tenant security deposits back from outgoing companies. That seems crazy to me because it’s super illegal. That’s not your money. That’s not my money. That’s the tenant’s money. When the old company transfers it to us, it’s still the tenant’s money — we’re just holding it on their behalf.
We’ve actually had a very well-known, well-positioned property management company in a prominent part of Philadelphia refuse to hand over security deposits. In some cases, I don’t think they even had the money anymore — which to me is beyond illegal. That’s go-to-jail illegal.
But again, this isn’t your problem as the owner. It’s my problem as the new property manager.
Our Escalation Process
We have a mechanism in place for this exact situation, because it happens enough that we’ve made it routine. Here’s how it works:
1. The Friendly First Request
We email the outgoing property manager and ask for the leases, keys, and security deposits. Most of the time, they cooperate.
2. The Gentle Reminder
If we don’t hear back, we send a polite follow-up. Still friendly. Still no attacking.
3. Loop In the Broker of Record
If they’re still dragging their feet, we send another super friendly email — but this time we CC the broker of record at the brokerage. Nine times out of ten, the broker takes it seriously. They understand the liability of mishandling tenant funds, and they want it resolved.
4. Loop In the Real Estate Commission
In rare cases, the broker actually thrives on conflict. When that happens, we send another super friendly email — only this time we add the contact at the Pennsylvania Real Estate Commission to the CC line.
That’s no joke. The Real Estate Commission governs brokers, and once a broker sees that name attached to the email, they get very concerned very quickly. We’ve never actually had to have the Commission step in. Just having the contact visible on the email has always been enough.
What This Means for You as the Owner
None of this affects you. That’s the point. Whether the outgoing company hands everything over on day one or whether we have to escalate up to the Real Estate Commission, it’s mechanical work on our end. You don’t have to chase keys. You don’t have to argue about security deposits. You don’t have to mediate between two brokerages.
You give notice to the old company per your management agreement, you sign with the new one, and the new company does the rest. That’s how it should work, and that’s how we run it.
If you’re thinking about switching, the takeover process shouldn’t be the thing that holds you back. The bigger question is whether you’re with the right company in the first place. If you want to know what to look for, take a look at how to choose a property management company in Philadelphia and what a property management company actually does day to day.
The Bottom Line
Switching property management companies is rarely as hard as owners think it’s going to be. There can be a few extra steps depending on the company you’re leaving, but the company you’re hiring should handle the heavy lifting. If they’re not willing to, that’s a sign you’re hiring the wrong company.
As always, I’m just trying to do my best to answer your real estate investing and rental property investing questions. Happy rental property investing.
