New Property Management Crafty Book Keeping Is This Normal?

[Lear R.]

Hi, I currently have a relationship with a property management company that has implemented a new accounting practice, that basically puts previous tenants accounts recievables to the property management company directly on the books of the property owners in the form of an expense. To clarify I'll provide a real world example.

1. Tenant A moves out with over $1K in tenant specific expenses.

2. The property management company incurrs the costs associated with the tenant leaving and acts to make property available for rent to new tenant

3. This creates an account recievable due to the property management company from tenant.

4. The property management company takes that account recievable and places it as an expense against owners earnings until the previous tenant pays or the property management company addresses the account recievable with the tenants deposit.

5. If the previous tenants costs exceed the deposit, the account recievable stays as an expense against the property owners rent revenue until the tenant settles up.

To me this is very odd, and I never experienced it until this month, does anyones property management company do their book keeping this way?