Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime
General Landlording & Rental Properties
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 14 years ago on . Most recent reply

User Stats

1,573
Posts
928
Votes
David Beard
  • Investor
  • Cincinnati, OH
928
Votes |
1,573
Posts

Property Manager - question on funds handling process

David Beard
  • Investor
  • Cincinnati, OH
Posted

For you seasoned landlords and PMs, I was wondering your thoughts on this language in a PM contract, related to funds handling. Thanks!

"4. ______ ______ If this line is initialed, Owner agrees to open a checking account (with debit card) at either [bank 1], [bank 2], or [bank 3], to add [PM named by person] as an authorized signatory to the account, and to provide [him/her] with a debit card for the account. All rent payments will be received in Owner’s name and deposited into said account. Owner agrees to notify Manager at least twenty-four (24) hours prior to withdrawing any funds from said account. Financial reports will be provided to Owner for the previous month, following reconciliation. Owner agrees that all security deposits will be placed in said account.
--OR--
______ ______ If this line is initialed, Owner agrees to provide to Manager deposit information and a debit card (for materials purchases to be used on the Property) for a bank account at either [bank 1], [bank 2], or [bank 3]. Manager agrees to deposit all rent receipts into said account. Manager will submit to Owner invoices relating to the Property as they are received, and Owner agrees to pay invoices within five (5) days of receipt. Owner agrees that all security deposits will be placed in said account. "
____________

To their credit, this PM is very transparent and does no up-charging on outside service work that is needed, and has developed a very good reputation over a long period of time. That said, I'm leery about adding them as a signatory on my bank account.

Most Popular Reply

User Stats

13,452
Posts
8,352
Votes
Steve Babiak
  • Real Estate Investor
  • Audubon, PA
8,352
Votes |
13,452
Posts
Steve Babiak
  • Real Estate Investor
  • Audubon, PA
Replied

In my state, the security deposit money can/should not be placed into your operating account.

Is this PM "bonded"? By that, I mean that they post a bond that is intended to cover your funds should they misbehave.

It's almost similar to how I have bills paid at my house where I live; I let the creditor do ACH transactions to get paid directly from the account; of course, they are obligated to inform in advance of the date and amount of any withdrawal. The main difference is that this PM will be able to sign anything to pay anybody (including themselves), whether a legitimate expense or not.

So what would your recourse be in the event of misbehavior on the part of the PM?

Loading replies...