Owning property is a serious commitment that comes with many responsibilities and challenges. Trusted property management is an essential component to the success of your investment and can help you avoid costly pitfalls.
One of the most important benefits is that trusted property management companies adhere to all laws, especially those related to trust accounting. Trust accounts are a special type of bank account that allows a business to hold money that does not belong to them (in this case, rental deposits). The rules for these types of accounts can vary from state to state but they usually dictate that there must be no comingling of company funds with tenant security deposit funds. In addition, there may be requirements for how quickly the funds must be deposited and that they must be reported regularly. These requirements can be difficult to meet without the help of technology, like software that simplifies accounting and payment processing.
The good news is that a reputable property management company will be set up with one or more bank accounts specifically for these types of deposits. These accounts will be separate from the company’s regular business checking account. The accounts will also be insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000.
Aside from the legal aspects of managing a trust account, there are other practical considerations. For example, if there are any problems with maintenance or with a tenant, it’s important to have a clear and transparent financial trail to provide a strong defense against allegations of fraud. If the property manager handles the issue in accordance with their fiduciary duty, they can show that they were not trying to rip off their clients. trusted property management