A property manager collects $10-20K monthly from preferred vendors for website listing fees, separate from work performed. Peter Lohmann argues this structure breaches fiduciary duty like a kickback. The manager says his attorney confirmed disclosure isn't required because it's a distinct transaction, not a percentage of vendor work.
This is what I did at my property management company is I reached out to all of my preferred vendors, the ones that I was giving, you know, a healthy amount of business to. And I said, hey, listen, here's the deal. I'm going to have a page on my website for preferred local vendors. I get X tens of thousands of traffic to my website every month, people looking at this. And in exchange for me listing you on our website as a preferred vendor in our community, you are going to pay me a marketing fee. And the marketing fee is going to be a separate transaction from the transactions that we do for the work that you're doing on the properties that I manage, but it can be reflective of that volume of work, right? And so I may pick a certain percentage or whatever the case may be, but what's going to happen is at the end of every month, I'm going to send you an invoice and you are going to send me a check. And that transaction is going to happen completely separate from the other transactions that happen when you service one of the properties that I manage. And, you know, You know, that can add up really quickly. I mean, at 750 units, you can easily be making an extra $10,000, $20,000 a month or more on a vendor marketing fee.
Wow. Okay. That's not what I thought you were going to say. I thought you were going to say that you talk to these vendors and you tell them that because you're giving them such a high volume of work, you're offsetting some of their marketing costs. And so they should cut you back a check for 5% of the volume of work they did for you that month as like a marketing thing, which to me is just a straight up kickback. Right. Which is not allowed in a fiduciary agreement because now you're influenced to select that vendor because you know you're going to get a kickback from them, even if it may not be the right and the best for the owner of the property. But what you're describing—
why I structured it the way I did. And so I talked to my attorney about it and I was like, hey, this is what I'm doing. And I know in our industry, right, it's always disclose, disclose, disclose. And she was like, you don't have to disclose that. Like, that is a separate relationship transaction that you're setting up with that person that is not a kickback. So, yeah, that's why I structured it that way.
