Real estate firm closes, leaving many in lurch

A complaint has been filed with the state against Re/Max Kai Lani, a real estate and property management firm that abruptly shut down its Kailua office last week while owing money to some property owners and tenants.

The complaint was filed with the Department of Commerce and Consumer Affairs Regulated Complaints Office.

Re/Max Kai Lani, owned by Sandra and Jerry Bangerter, managed about 125 single-family homes and condo units, including some in the Harbor Court condominium downtown.

Property management firms collect rent on behalf of property owners, pay bills — such as association and maintenance fees and home repairs — and then pay the owner what’s remaining from the rent.

In an Aug. 30 letter to property owners, Sandra Bangerter wrote, “Re/Max Kai Lani is closed. Any rent that we have received is being returned to the tenants.”

But not everyone has received money owed.

Paul Mayer, managing partner of Elite Pacific Properties, which took over about 50 of the 125 units previously managed by Re/Max last week, said, “The only thing we know for sure is that we received an insufficient (bounced) check drawn on Re/Max Kai Lani for (about $6,000) in association fees dated Aug. 19.”

“The principals of Re/Max Kai Lani are the only ones, really, that know what’s going on,” Mayer added.

Sandra and Jerry Bangerter did not return calls for comment. The company’s website has been shut down, and calls to the office also weren’t returned.

A former Re/Max Kai Lani employee said she transferred her clients to Elite Pacific after she discovered the firm ran out of cash to pay rent, association fees and security deposits. The former employee asked not to be further identified.

“She (the employee) knew something was wrong,” Mayer said. “Some owners weren’t paid their income in August because the firm didn’t have sufficient funds to pay those owners.”

Mark Stewart, president and principal broker of Stewart and Associates and a member of the Honolulu Board of Realtors, said these types of cases are “extremely rare.”

“This is the first I heard (where a firm has) completely and unexpectedly shut down,” he said. “This is extremely unusual. It’s disappointing that there’s just been no communication from Re/Max Kai Lani that would really help both owners and tenants sort out where they are.”

Property management firms are required to manage client trust accounts, where rents, security deposits and owner reserves are held to pay bills and in the case a manager needs to pay for emergency repairs.

“It’s required by law to have a client trust account separate from your own funds,” Stewart said. “You’re not allowed to commingle funds. All property management funds must be kept in a trust account. There’s a great amount of trust that’s involved in that. That’s the reason a lot of owners go with (real estate agents). We understand the laws, we’re licensed and there’s a trust. When that’s broken it’s tough.”