Yes, you can almost always get out. Nearly every management agreement includes an exit clause, and the decision to sell a rental property often triggers it on its own.
According to Yahoo Finance, investors own about 20% of the 86 million single-family homes. When it comes to hiring a property manager, only a few read beyond the fee schedule in the agreement.
Unfortunately, most owners only go looking for the exit clause after a buyer is already waiting. By then, the notice window is running against you. Knowing what your agreement allows will keep a manager from taking a cut of your sale.
Here in Memphis, that is exactly the seller we work with at WeBuyHouses.com. We’ll make one visit and put a cash number in writing within 24 hours.
How Do You Know You Signed a Bad Management Contract?
Most owners never read past the fee schedule. The trouble hides in the clauses that an unprofessional property manager never explains at signing. Here are some red flags to look out for:
- An evergreen clause that renews the deal automatically every year
- A 90-day notice window instead of the usual 30
- A sales commission owed to your manager if you ever sell
- A protected buyer list that outlives the contract
- Termination only for cause, with cause defined by them
You’ll find these issues in predatory landlord contracts. Unfortunately, most of them are perfectly legal in Tennessee. The good news is that legal doesn’t mean unbreakable.
What Does Your Property Management Termination Clause Say?
Pull the agreement out and find the section marked Term or Termination. According to AirDNA, management fees run 8% to 12% of monthly rent, so your property management termination clause governs a smaller number. Here is what each shape means for you:
- Notice only: Send written notice, wait out the window, walk away clean.
- Flat fee: Pay a set amount, often a few hundred dollars, and you’re done.
- Remaining fees: Pay out the rest of the term, which stings most if you quit early.
- For cause only: The hardest version, and the one worth a lawyer’s hour.
Read your property management termination before you call anyone, including your manager. The clause you have decides whether this is a phone call or a negotiation. If you guess at this, you’ll likely pay more.
Can Your Property Manager Really Sue You for Selling?
Your property manager can sue you for selling. However, most never do because the numbers don’t make sense.
A contract claim pays actual damages. Your manager’s actual damages are the fee stream they lost. Say you pay 10% on $1,400 rent with eight months left on the term. These calculations give them about $1,120 in dispute.
It isn’t rational to hire a lawyer over $1,120. A filing in Shelby County costs money, takes months, and invites a claim right back. Most real estate legal disputes this size end with one phone call and a fee.
What Does It Cost to Walk Away from Property Management in Memphis?
An exit has a price, and it’s rarely the number your manager quotes first. Here is where the money actually goes:
The Early Termination Fee
Most contracts name either a flat fee or the fees left on the term. Check which one yours uses, because the gap between them is wide. Here is the range you’re likely looking at:
- A flat fee, often a few hundred dollars
- The rest of the term, which grows the earlier you quit
- Nothing at all, if you give proper notice
The flat fee is the cheap version, and most managers will take it. Offer the flat number in writing, and many will take it rather than chase you.
The Notice Window
Nearly every agreement wants written notice before the clock starts. Thirty days is standard, and ninety is a warning sign. Here is what that window costs you:
- Another month or three of management fees
- A closing date you no longer control
- A manager still collecting rent on your property
Send notice the day you decide, not the day you find a buyer. The window runs quietly in the background while you line up the sale. This one habit can save you a full quarter of fees.
The Hidden Sales Commission
The hidden sales commission clause hurts. Some agreements hand your manager a cut of any sale, sometimes even a sale to your own tenant.
Direct asset liquidation is the cleanest way around this, but only if your clause allows it. Check the wording before you accept any offer. If it’s all good, get in touch with cash home buyers Memphis as soon as possible.
Frequently Asked Questions
Who Keeps the Security Deposits When the Contract Ends?
You do, and Tennessee law is specific about it. Under the Uniform Residential Landlord and Tenant Act, which covers Shelby County, deposits belong in a separate account and stay attached to the tenant, not the manager.
Ask for a written list of every deposit before you sign the exit. Get the ledger, the account details, and the transfer in one email thread.
Can You Complain About a Manager Instead of Suing?
Yes, and it costs nothing. Most third-party property managers in Tennessee must hold a real estate license, which puts them under the Tennessee Real Estate Commission. A complaint is free, and it lands on the manager’s license rather than in a courtroom.
What Happens to Your Tenant’s Lease When You Sell?
The lease follows the house, not the owner. Your buyer takes the property subject to whatever lease already sits on it, and your tenant keeps both their term and rate.
Sell a Rental Property Without the Fine Print
A bad management agreement will give you trouble. You can sell a rental property out from under a contract you regret, as long as you read the clause before you sign the offer. The exit is almost always cheaper than the case that follows.
WeBuyHouses.com Memphis has been buying, renovating, and renting single-family homes in this city for 50 years. Peyton Clark is your local buyer, and he makes one visit, and you get a fair as-is cash offer within 24 hours, with no repairs, no commissions, no closing costs, and no fees taken off the top.
Contact us and get your cash offer today.
