Property management company underbilled tenant.

[Susan King]

My husband and I own multiple rental properties. We've been using the same property management company for 10 years, so I guess we trusted them too much to go over our monthly statements closely. I just discovered that they've been under-billing one tenant nearly $350 a month for like 10 months. My guess is that it's one billing person's mistake and we caught it too late. And the tenant was just silently happy to pay less. Who is responsible for this and is our loss recoverable? 

[Nathan Gesner]

The property manager is somehow tracking charges and payments. If they charged $1,350 but the tenant only paid $1,000 each month, the property manager would see the outstanding balance and go after the tenant. I suspect they have been charging $350 less than what they should have and the tenant is paying what they are charged, not what they were supposed to be charged.

If the written lease agreement says rent is $1,350 but the PM is only charging $1,000 then it should be easy for them to go back and tell the tenant they were under-charged and demand they catch up. If the lease says rent is $1,000 and that's the tenant is paying, there's nothing the PM can do about collecting it. They could appeal to the Tenant's good nature, but you know that won't happen.

If the PM was instructed to rent it at a specific price and they messed up, they should compensate you for that mistake. However, you have a responsibility to look at your statements and catch things like this. As a Property Manager, I would negotiate a settlement with the Owner. As an investor, I would try to negotiate a settlement with the PM and I would accept a measure of responsibility for not catching the missing $3,500 for ten months.