Property_Management_DummiesIn Von Nothdurft v. Steck, (2014) 227 Cal.App.4th 524, the manager challenged the written management agreement with the landlord as being “unconscionable” or “an adhesion contract” so void.  The Court of Appeal said the agreement was fine and confirmed it was freely entered into.  The Court told the manager/tenant she could not have it both ways. Further, managers cannot claim to be “on call”, they are only paid for the time actually working, even if the manager is waiting for a tenant or worker to come to the property.  

Steck hired Von Nothdurft to be the residential property manager for his apartment building in October 2009.  The two signed an agreement that provided Von Nothdurft would be compensated by allowing her to remain in her three bedroom apartment rent free.  The value of the apartment was just under $1000 per month.  In April 2010, Von Nothdurft filed a complaint with the Labor Department alleging she was not adequately paid.  The Labor Commissioner found for the resident manager but allowed Steck a credit of $451.89 per month for the free rental unit.  Steck and the property manager settled all claims except for the credit ruling.  The resident manager appealed the decision on the credit to the Fresno Superior Court, which upheld the decision of the labor Commissioner.  Von Nothdurft appealed to the 5th District Court of Appeal.      

The Decision: The Industrial Welfare Commission (IWC) issued wage order No. 5-2001 (Cal. Code Regs., tit. 8, § 11050), commonly known as Wage Order 5. Wage Order 5 contains rules governing how resident managers of apartment houses must be paid, including the circumstances under which an employer may credit lodging toward a resident manager’s pay.  The Wage Order also specifies that resident managers only need to be compensated for time spent performing assigned duties.  Here the ruling of the Labor Commissioner was consistent with Work Order 5 and therefore Steck was allowed the credit.  As long as the agreement is voluntarily entered into between the parties and it is clear that the resident manager is being compensated in the form of free rent, then the agreement is enforceable even if it does not specifically identify the amount of credit allowed by Wage Order 5 or the applicable minimum wage.          

The Implication:  Residential property management agreements need to be in writing. If so, the resident manager cannot have it both ways – the manager cannot both be compensate for services rendered and accept free of rent and deny the property owner of the ability to credit a portion of the free rent toward the owner’s payment obligations.