Use Specific Reporting Guidelines for Defaulting Tenants

Depending on whether your property manager is a third party or works directly for you, it will probably check in differently. Because it’s providing financial information to you, a third-party property manager is obligated to report to you at least monthly regarding financial issues and any other predetermined topics. A property manager that works directly for you might have a tendency to check in more often. But both types of property managers should be instructed to check in with you more often about specific issues where time is of the essence. For example, the manager should communicate more frequently if there’s an impending default, and you should set specific guidelines for reporting in that situation in addition to customary reporting requirements.

The general rule is that a property manager should talk to the owner immediately upon any substantial change to the tenancy and then going forward as each step of the eviction process is contemplated or finished. Make it clear to a third-party property manager that it should and can act only on your instructions—not unilaterally—and that your written approval is necessary to authorize issuing a default notice, which would change the cash flow and tenancy of the property.

Remember when setting reporting guidelines for both types of property managers that you can choose the issues that you want information about and the intervals for updates, and require them to formally document all reports.