PM forgot to include $150/month in utility charges in an executed lease. Would you fi

Phoenix, Arizona
General Real Estate Investing
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PM forgot to include $150/month in utility charges in an executed lease. Would you fi

Ying Tang
Member since 2025 · 324 posts · 121 votes

I recently discovered that my property management company forgot to include the $150/month water, sewer, and trash charge in a tenant’s lease.

The lease has already been fully executed, so my understanding is that I can’t simply require the tenant to pay an additional $150/month unless they voluntarily agree to amend the lease.

This mistake could cost me $1,800 per year.

I’m pretty frustrated because reviewing and preparing leases correctly is one of the basic responsibilities I’m paying a PM company to handle. It is not the first time they mess up things.

For those of you who have dealt with something similar:

1. Would you ask the PM company to compensate you for the lost utility income?
2. Would you consider this serious enough to terminate the management agreement?
3. Have you successfully held a PM company financially responsible for a lease drafting error?

I’m trying to decide whether to give them a chance to make it right or just move on to another PM company.

Or, Should I self-manage?
I have been handling all repair request using my contractors, since PMs always quote me twice the price I get.
I’m a realtor myself, but I’m not familiar with the documentations I need for lease. I’m sure I can pick it up quickly. I also travel a lot for my other business out of town and out of the States. So I cannot visit the properties myself very often.
Today, I just wrote a tool with AI for managing properties, where all lease info are read automatically into the system. I can keep track of rent, people, contact info, basic conditions of the property (ages of roof), payments, utilities, among a lot of other things I can think of.

Would appreciate hearing how other landlords have handled this.

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Addy Chupa
Developer · Member since 2024 · 52 posts · 16 votes
3d

You're right that you generally can't add a charge to a signed lease without the tenant agreeing, so I'd treat this as three separate problems: the tenant, the PM, and the process.

The tenant: I'd still ask, politely, and frame it as a correction rather than a demand. Some tenants assumed utilities were extra anyway and will sign an addendum, especially if you meet them partway (for example, starting the charge at renewal, or a smaller amount now). If they say no, I'd let it go until the lease ends and put it in the renewal. Pushing hard on a signed lease usually costs more in goodwill and turnover than the $150 a month. Before asking, check your state's rules on billing tenants for water, sewer and trash, so the addendum itself is done right.

The PM: I'd ask them to make it right, in writing, and see how they respond. Reasonable outcomes would be crediting part or all of the lost amount from their management fee, or waiving fees until the lease turns over. Check your management agreement first. Many have language limiting their liability to gross negligence, which can make a full recovery hard, but a good company will still offer something when the mistake is this clear. How they respond tells you more than the error does.

Terminate or not: one mistake I'd let them fix. "Not the first time" plus repair quotes at twice your own price is a pattern, though. If you're already sourcing your own contractors, the PM's main value to you is leasing, rent collection and being local. I'd shop one or two other managers and compare what they'd actually do for the fee.

Self-managing while you travel out of the country is doable but harder than it looks. Leasing, showings and emergencies are what break first when you aren't local. If you go that way, I'd at least get a local leasing agent or a reliable handyman who can let people in.

Whatever you decide, one process fix: have every new lease and renewal sent to you before signing, with rent, deposit, utilities, pet fees and term checked against a one-page summary. It takes ten minutes and would have caught this one.

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  • Addy Chupa
    Developer · Member since 2024 · 52 posts · 16 votes
    3d

    You're right that you generally can't add a charge to a signed lease without the tenant agreeing, so I'd treat this as three separate problems: the tenant, the PM, and the process.

    The tenant: I'd still ask, politely, and frame it as a correction rather than a demand. Some tenants assumed utilities were extra anyway and will sign an addendum, especially if you meet them partway (for example, starting the charge at renewal, or a smaller amount now). If they say no, I'd let it go until the lease ends and put it in the renewal. Pushing hard on a signed lease usually costs more in goodwill and turnover than the $150 a month. Before asking, check your state's rules on billing tenants for water, sewer and trash, so the addendum itself is done right.

    The PM: I'd ask them to make it right, in writing, and see how they respond. Reasonable outcomes would be crediting part or all of the lost amount from their management fee, or waiving fees until the lease turns over. Check your management agreement first. Many have language limiting their liability to gross negligence, which can make a full recovery hard, but a good company will still offer something when the mistake is this clear. How they respond tells you more than the error does.

    Terminate or not: one mistake I'd let them fix. "Not the first time" plus repair quotes at twice your own price is a pattern, though. If you're already sourcing your own contractors, the PM's main value to you is leasing, rent collection and being local. I'd shop one or two other managers and compare what they'd actually do for the fee.

    Self-managing while you travel out of the country is doable but harder than it looks. Leasing, showings and emergencies are what break first when you aren't local. If you go that way, I'd at least get a local leasing agent or a reliable handyman who can let people in.

    Whatever you decide, one process fix: have every new lease and renewal sent to you before signing, with rent, deposit, utilities, pet fees and term checked against a one-page summary. It takes ten minutes and would have caught this one.

    1Reply
  • Clever Mukori
    Member since 2026 · 33 posts · 13 votes
    3d

    Before deciding on the PM, I'd pull your management agreement and check two things: whether preparing leases is listed as their job, and whether there's a clause limiting their liability for mistakes. If lease prep is clearly theirs, it's fair to ask them in writing to cover the missed utility charge for the rest of this lease term, and how they respond will tell you more than the mistake itself. Since this isn't the first slip, I'd also ask for a list of every active lease with rent, deposit and utility terms so you can confirm the others weren't set up the same way. If you do move on, give notice exactly as the agreement says and get copies of all leases, deposits and tenant ledgers before the handoff.

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  • Jimmy Samaha
    Staten Island, NY · Member since 2013 · 118 posts · 54 votes
    3d

    Frustrating, but I'd put the $1,800 a year in perspective before blowing things up. A signed lease is a signed lease, so I'd just ask the tenant for an addendum and offer to start it at renewal if they push back. Most people say yes when it's framed as fixing a paperwork mistake.

    On the PM, in my area I see owners lose more money from a vacant month than from a lease typo. One unit sitting empty while you switch managers can cost you 2 to 3k easy, so I'd ask them in writing to credit you for the missed charge and see what they do before you fire anyone. If they brush it off, that tells you what you need to know.

    If you self manage, being a realtor helps, but traveling is the hard part. I'd keep a local handyman and a leasing person on call so you aren't flying back for a lockout.

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  • Brandon Harwood
    Property Manager · Chandler, AZ · Member since 2026 · 9 posts · 0 votes
    2d

    Ying, I’m with Renters Choice Homes in Phoenix, the East Valley and Casa Grande.

    Importing a signed lease into your system won’t necessarily catch a charge that was omitted from the lease. I’d compare the approved leasing terms, signed lease and tenant ledger, then flag discrepancies for review rather than automatically adding charges. Was the $150 documented in the instructions the PM received?

    Before choosing self-management, map out who handles after-hours calls, on-site checks and vendor access while you’re traveling, including backups. Before deciding to stay, ask the PM to demonstrate the revised review process, not just promise improvement.

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  • Richard F.
    Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
    2d

    How were the terms of the erroneous agreement determined? Did you/they have a prior tenant agreement for the unit that was used as the base of terms, or was this a new property for you that was vacant when turned over to PM? Who was paying utils prior to the new agreement, you directly, or the PM?

    If PM made a mistake, they should not even hesitate to eat the loss and make the util payments. I assume the rental agreement is between the PM and the tenant, not you and the tenant, so you have no standing to deal direct with the tenant at this point. Your only recourse is through the PM.

    With regard to your comments about the PM repair costs being double what you can get, I have no doubt about that. I assume you use unlicensed, uninsured, vendors with little to no vetting. PM's must abide by "all" laws, including local requirements for proper licensing. You are certainly free to choose who you hire and pay, PM's are not. Three years from now when you find that "your guy" took shortcuts and his work is failing prematurely, he probably will not be around.

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    • Ying Tang
      OP
      Member since 2025 · 324 posts · 121 votes
      2d

      Thanks for the reply! It was a vacant property and we communicated about utilities charges. The utilities charges were clearly listed on the listings they made, but omitted in the final lease. It is a duplex and they did charge one side for the utility and forget to charge the other side. As for contractors, my contractors are licensed too and have been working together with me for a couple years already. I think PM mark up the material too. For example, they want to charge me $500 labor to replace a door, and $400 for the door. The door is $180 at Home Depot, and my contractor charges $200 for labor. But really, $500 for a regular wood door change?

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    • Richard F.
      Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
      2d

      Well, now is your chance to see if they step up. Based on your statements here, they should not hesitate to eat the utils they failed to include. Their E&O insurance might even cover if for them. If they hesitate, refuse, or want to negotiate, the answer is NO. Fire them in that case. I've never marked up materials or labor provided by contractors. When I was with companies that had in house maintenance staff, our hourly rates were published for each employee classification, and calculated to be about 15% above their full actual cost with insurance etc., minus general company overhead costs. They ended up well below contractor rates. Whether in house or contracted labor, the company income was always from the base management fees for several hundred units or more, which ranged from 7 - 10 percent of collected income.

      1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    2d

    How your PMC handles this error will tell you a LOT about their integrity - or lack thereof.

    Regarding the door - ask them how many labor hours they estimate it will take.

    • Maybe you and the PMC have different scopes of work?

    • How much does the local Home Depot charge to install? That can be a guide...

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  • Simon W.Business Member
    Real Estate Consultant · Lehigh Valley PA & New York City · Member since 2013 · 1k+ posts · 684 votes
    2d

    Everyone's covered the PM and tenant side, so I'll add how it looks on the books. If the PM credits you, I'd have it show up as a reduction of the management fee, not as rent or utility income, so the per-property numbers stay honest. Keep the lost utility visible as its own line, $150 a month billed versus $0 collected, so you can show the PM exactly what it cost.

    On a duplex I'd set up each side separately. If one side was charged and the other wasn't, a side-by-side ledger makes that obvious in about five minutes, and it's also how you'd spot whether other leases have the same gap, like Clever suggested.

    If the tenant signs an addendum, it generally only covers going forward, so the months already missed are what you'd ask the PM to credit. Addy's point about a written ask is the right first step.

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  • Leo SteinBusiness Member
    Property Manager · Orange County, CA · Member since 2025 · 199 posts · 41 votes
    1d

    Ying, a missed utility line in a signed lease is a real error, but I'd separate it from the bigger question of whether this PM is right for you. First, put numbers on it: what the lease should have said, how many months have run, and what the management agreement says about the PM's duty to prepare leases. Then ask them in writing how they will fix it. A fair ask is a signed addendum going forward plus a credit for the months already missed, since that's the part you can't recover from the tenant. Second, you said it isn't the first time. Make a short list of every miss with dates. One slip is a conversation; a pattern is a reason to leave, and the list makes the decision easier. Third, check the termination clause and any fee for leaving before you give notice, so you aren't surprised. On self-managing: quoting twice what your contractors charge is common, and a lot of owners handle vendors themselves. The part that bites is leases, notices, deposits and move-in paperwork, so only go that route if you want that workload. Not legal advice. Happy to compare notes by message.

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  • Patrick O'SullivanBusiness Member
    Property Manager · Phoenix, AZ · Member since 2024 · 551 posts · 210 votes
    17h

    @Ying Tang since the charge was in the listing, I’d pull a screenshot of it along with the application and any move-in cost sheet or holding agreement the tenant signed. If any of those show the utility charge, it supports framing the addendum as fixing a drafting error rather than adding a new cost. Most leases say the lease is the entire agreement, so I wouldn’t count on those documents being enforceable on their own, but it’s worth asking a local attorney whether they change anything.

    It also helps that the other side of the duplex is already paying it. That shows the charge was part of how the property was rented from the start, which tends to make the conversation with the tenant a lot easier.

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