Q: Must property managers check in before approving a repair bill?

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Q: Must property managers check in before approving a repair bill?

Q: Must property managers check in before approving a repair bill?

Do property managers have to check in with me before approving a repair bill? When would it be ok not to do so? 

answer-icon-masterRepair BillsGenerally, each property management contract has some specific built-in thresholds for repairs and notifications. So this is a matter of some flexibility between you and the property manager. 

Naturally, you’re going to want to be notified of any significant new, unplanned expenditures related to your property. You don’t want anyone running around with a blank check.

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But at the same time, you don’t want to have a property manager’s hands tied while they watch a burst pipe destroy the first floor of your valuable apartment building – and disrupt a bunch of lives at the same time – because you insisted that they get written advance approval from you before they contracted with a plumber to fix it.

So it’s up to you and the property manager to negotiate a happy medium. 

Here are the basic repair expense categories you’ll need to consider: 

Routine Maintenance.  No notification necessary. This category is mostly for routine maintenance, gardening, and routine handyman services planned for in advance, and accounted for every month or nearly every month. These are generally included in your property manager’s monthly retainer or fee structure anyway. 

Emergency Repairs. Generally, you’re going to hand over a certain amount of money for your property manager to keep on deposit or in escrow against emergency repairs. These are relatively small and manageable items like repairing a leaky or burst pipe with moderate damage, a baseball through a window, and the other occasional annoyances that you normally expect once in a while. 

These are items that you can easily afford to absorb, but which will force the property manager to tap the repair reserve. You’ll want to replenish the reserve, but you don’t necessarily need a call at home to replace a window that obviously needs immediate replacing, anyway. 

This is part of what you pay a property manager for: To handle minor annoyances like this so you don’t have to. 

You will probably want to grant your manager the authority to act decisively to prevent further, more expensive damage to your apartment. The more money you have on deposit with the manager, the more flexibility the manager has to prevent a minor damage event from becoming a major one. 

Repairs requiring your authorization. Generally, though not always, these are repairs that take more money than you have sitting with the property management company on reserve. In these situations, you’ll want a phone call from the property manager for your approval.

You’ll probably give it, of course, but in some cases, you might want to get a chance to review competing bids or explore alternatives. In any event, the property manager will need you to transfer cash into the property account or arrange to have you pay whatever vendors and contractors involved for supplies and material. 

Capital improvements. These are long-term improvements or upgrades to the property designed to increase its market value. The property manager can and should make recommendations, and can even arrange all the bidding for your approval.

But capital improvements, as opposed to repairs, are something you’re going to want to keep control of yourself, because decisions concerning capital improvement and capital expenditure should be made taking into account your overall risk tolerance, required rate of return on capital, tax strategy, exit strategy, etc. 

To make these projects happen, you’ll probably release the funds to the property manager, or to the contractor(s), in stages, based on successful completion of milestones. Again, you don’t want to be releasing additional funds to a contractor who’s just not doing the job. You can delegate the release authority to a property manager, if you like, or reserve the right to inspect the job site yourself. If you live nearby, that’s not a problem. Otherwise, make the best arrangement you can that suits your individual circumstances. 

Cost overruns. Occasionally, the contractor is going to run into legitimately unforeseen circumstances. For example, he could tear up some drywall to correct what everyone thought was a local leak, only to find extensive wet rot and other problems necessitating a much bigger repair job than anyone anticipated.

You’ll want to try to take care of this right away (so you don’t wind up paying someone to tear up the drywall twice!), but since there’s no reasonable way for anyone involved to have identified the damage before the drywall was taken off, this risk is going to be on you. If your property manager is handling it, they should inform you immediately, though, if the amount of money involved is greater than your agreed-upon threshold, and give you the chance to make a decision. 

Remember: You and your property manager are a team. They are your agent on the property. They are your cavalry. They are your eyes and ears on the property. You should have an open line of communication with your property manager at all times. The last thing you want to have happen is have your manager calling you needing you to make a decision in a tight spot – and to keep getting your voicemail. 

Landlording is one of those things that you can never entirely take a vacation from. But with some common sense and some trust on both sides, you can make it work for everyone. 

Author Bio
Writing about personal finance and investments since 1999, started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.
Author Bio for Jason Van Steenwyk

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