Important Documents Property Management Companies Should Keep on File

Proper record keeping is something that all businesses dread, but is also something they understand the importance of. After all, correctly managing both property owner and tenant files can protect you from potential legal trouble in the future. Audits, legal disputes, discrimination complaints, and lease provision disagreements are just some of the hassles property management companies find themselves responsible for handling on a regular basis.

However, with all the advice swirling the internet about which documents businesses should keep on file and for how long, how are property management companies supposed to know what applies to them?

While each state has its own guidelines regarding specific documents that should be kept on file, we have put together a general list for property management companies that can help build a solid record-keeping foundation and help clear up any confusion.

Documents Worth Keeping

1. Signed Lease and Addendums

Every property management company should have both the property owner and tenant sign a legally binding lease agreement outlining all the details of the lease term and keep it in a specific file designated for that property. In addition, any added provisions should be filed with the signed lease agreement for at least one year past the end of the tenant's lease term. This may include things such as a pet addendum, landscape agreement, or provision to allow for modifications to the property.

With the lease agreement, you should also have any pre-move in documents that relate to the tenant taking up residence. This includes their tenant application, screening records, security deposit receipts, and any correspondence between you and the tenant prior to move in.

2. Property Owner Documents

When you agree to work with a property owner and manage their rental property, it is important you keep a detailed file designated just for them. Important property owner documents may include:

• Owner-Manager Agreement
• Property details
• Property tax information, deeds, mortgage information
• Insurance policies
• Photos and records of any prior property damage
• Property maintenance requests
• Management fees including agreement and payments
• Correspondence with property owner

3. Payment Records

As the official rent collector for your client, property managers should keep all tenant rent payments on file. This includes how much rent was collected, when it was collected, and in what form it was delivered to the property manager. This way, should you run into any disputes with either party, you have documented proof of what exactly was collected and when. You can keep a traditional paper and pen record of such payments, or enlist the help of an advanced payment software. In the end, no matter how you choose to document the rent payments that are collected, the crucial takeaway here is that you stay on top of it each month.

4. Vendor Information

Property managers often enlist the help of vendors to help maintain properties or make repairs. Hiring licensed and insured contractors is one of the most important considerations when it comes to hiring third-party services to do work on the properties you manage. Just as important is working with a company that provides detailed records of any work that was completed, including scope of work, issues that they ran into, and of course quoted versus actual price points. This is not only going to protect your management company, but will help come tax time as well.

Here are some of the key vendor documents to keep on hand at all times while managing a rental:

• Vendor contracts
• Any bids, work orders, addendums, and details
• Contact information – company name, email, address, phone number
• Business license information
• Invoices and receipts
• Payment records
• Tax documents

5. Inspection Records

As an experienced property management company, surely you know the effectiveness of routine rental property inspections. For example, before a tenant moves into a rental property you manage, you should conduct a full walkthrough with both the tenant and acting property manager in which you document in written form and with corresponding photographs the initial condition of the property. Additionally, have both parties sign the walkthrough documents to ensure that everyone agrees on the initial state of the property prior to move-in.

When the tenant moves out of the property at the end of the lease term, you can then reference the walkthrough documents you have on file to help determine what damage, if any, was done to the property during the tenancy. Again, in both written and photographic form, document the condition of the property and use this information when it comes to handling the security deposit.

6. Property Management Business Documents

Since you are part of a legal business and deal with legally binding contracts, customers, and expensive properties, it is important you keep on file all of your business documents as well. This will ensure your legal compliance, protect you in the case of an audit, help convince customers to employ you, and more.

Look at some of the most important things all property management companies should have on file at all times:

• Business licenses and any related permits
• Property Management or Broker’s licenses
• Employee records
• Audit records
• Insurance documents
• Tax returns and supporting documents
• Financial ledgers for the business and properties you manage

These are some of the most important documents all property management companies should have on file. In order to protect yourself and your property owners from any legal trouble, organized and thorough bookkeeping is necessary. Make sure that you keep all documents on file in a safe and secure place as many of them contain personal and sensitive information. Lastly, always check with your jurisdiction to make sure you know exactly what you are legally required to keep on file and for how long.