Banks coming in and taking back properties

I have a question for everyone. Has anyone been through a situation when the bank holding the mortgage decides to take back the property? What happens? Do they replace the employees? How do things change?

I would say if it is just a small company with few employees, yes it is possible. But if the company employs several hundred people it is highly unlikely that there will be any type of employee replacement. Remember, a bank does not have Property Managers and Service Team members on staff to cover these positions.

Just went through what I think you are talking about. The mortage was not being paid fully. Bank went to court and a "receiver" was appointed to run the property for the bank and the owner while the bank moved to foreclose and find another buyer. It depends on the "receiver" and the reasons why the property was not making money as to what happens next.
If they feel it is due to the failure of the manager, they will be fired. Or, if the manager's salary cannot be supported by the income of the property, they will fire them and find someone cheaper. Same thing with maintenance staff. If you have 3 on staff, they probably cut it down to one.
Receivership is hard to accept because you are no longer in charge of making any decisions about the property. They will probably reduce the prices of the vacants to the bone, not fix anything in them and expect you to rent them. They want everything occupied NOW!!!!! Some money is better than no money to them. They only think short-term.
They may not pay any of the previous invoices procurred by the owner prior to the day the property went into receivership, so you'll keep getting calls from creditors. They will tell you how to handle them.
It will be all about cutting, cutting, cutting costs and bringing in money!!!! If they keep you, and they'll tell you the day they take over, you'll have to go through their training for software, etc. Just like starting a new job. They'll bring in a team to inspect all apartments for capitol repairs needed.
You may not be able to use your vendors, either. I couldn't. They only wanted me to use the one's they had approved and set-up.
Good luck!!!!

It is always a scary thing when a property can no longer pay their bills! Banks don't want to run properties. It will usually go through court and a receiver will be appointed, just as Sandy stated. The Receiver may or not also be the Management company that ultimately runs the property until re-sell of the property. I was an RPM for 6 properties in Receivership. The company that I worked for was also appointed as the Management Company. We kept ALL of the site staff on a 90 day contingency basis. They became new employees of the management company. We did weed out some of the staff over the next year. The management company put a ton of money into the properties and vacant units. We used a lot of the same vendors, but could not pay any outstanding invoices from before the property went into receivership. I had an exceptional staff, folks that cared about their properties. It was so fun to work with them and turn the properties around from 50-60% occupied to 90-100% occupied!

A lot is going to depend on the size of the company that is appointed as Receiver. I can tell you that we had a ton of reports that had to go to the court and the bank!

If your property is going into receivership, relax, breathe and go with the changes. Flexibility is important in property management. It is a new opportunity!!

Thank you for your answers to my post. It clears up some of my questions and concerns.

Feel free to call me if you have other questions or concerns!

Actually we do many receivership for lenders and banks throughout the nation. The first thing is the ownership of the asset is notified of default status, and the procedures of foreclosure. The lender will go to the trustee or directly to the court and file a request for a receivership, in which a receiver will be appointed by the court. At that time the receiver would take possession of the asset and either self manage or hire a third party management company. At that point, it would be the decision of the management company to either keep the current staff or bring in a new crew. However, it is my experience that the management company would typically keep the current staff and give them a 30-90 day evaluation. So as long as you’re doing your job to the best of your abilities, I don’t see any reason to truly be concern.