Switching Property Managers on an Apartment Building: The Books Handover Checklist and Catching Up Missed Months

What is a books handover when an apartment building changes property managers?

A books handover is the set of records and money an apartment owner collects from the outgoing property manager, so the building's books continue without a gap when the new manager starts.

There is one cutoff day. The old manager's records end on it and the new manager's begin on it. The money handed over on that day has to equal the lists handed over: deposit money equals the deposit ledger, operating money equals the final statement's ending balance. The final statement is read the same way as every monthly one, covered in how to check your property manager's owner statement.

What should an apartment owner get from the outgoing property manager?

8 things: the deposit ledger and deposit money, the final owner statement, bank statements and reconciliations, the rent roll, unpaid and prepaid rent by unit, open bills, software exports, and bank access.

Each item comes with a check, so you can confirm the handover instead of only receiving it. The first item is the one to do before any other.

Why does the security deposit tie-out come first for an apartment building?

Because deposits are owed to tenants, not to the owner or to either manager. The ledger total must equal the money transferred. In the example, 47 deposits at $750 is $35,250.

At Birch Way the ledger from Sample Property Management lists 47 deposits at $750, $35,250. On the first pass the deposit money transferred is $33,750. The difference, $1,500, is 2 deposits that had been paid into the operating account. They are moved across before the handover is accepted. It is a filing item, found and fixed on the day.

The deposit tie-out at Birch Way, invented data

After the move the deposit account holds $35,250, the same as the ledger. The bank total does not change. Only the split does.

What the management agreement requires at its end, and any state rule on moving tenant deposits, are legal questions, so ask your attorney. How the ledger is kept, unit by unit, is in security deposit accounting for apartment buildings.

What should the final owner statement for an apartment building show?

Every dollar collected and paid through the last day, the fee for the final period, and an ending balance. That balance must equal the operating money transferred.

• Every dollar collected through the last day: rent, fees and other income, by unit.
• Every dollar paid through the last day: bills, repairs and the fee, by vendor.
• The fee for the final period, worked out the way the agreement says.
• The ending balance. It equals the operating money transferred to you or to the new manager.

If the ending balance and the transfer differ, the difference is listed line by line until it is explained, as with any monthly statement.

Which apartment building records should be exported from the old manager's software?

The general ledger, every tenant ledger and the vendor payment history, for the whole period managed, in a spreadsheet format. Ask for them before access to the old software ends.

• The general ledger: every transaction for the whole period managed, with its date, account and amount.
• Every tenant ledger: each unit, every charge and payment, and the balance on the handover day.
• The vendor payment history: who was paid, when and how much, so no bill is paid twice.

Ask for the 3 exports before the handover day, while the old software is still open to you. Once access ends, the records are harder to get.

What should the new manager's opening balances for an apartment building match?

The numbers the old manager ended on: cash by account, deposits by unit, unpaid rent by unit and open bills by vendor. Any difference is resolved before the first month is closed.

Old ending, new opening, Birch Way, invented data

The 2 columns match line for line. The cash line is proved against the bank statement for each account on the handover day. How each account is proved is in bank reconciliation for an apartment building.

How do you catch up apartment building books for months that fell through?

List the missed months. Get the bank statements and rent roll for each. Close the oldest month first, then carry its ending balances into the next, until the last one ties to the handover.

At Birch Way the 3 months before the handover have no closed books. They are caught up oldest first, each one closed before the next.

1. 1List the months with no closed books. At Birch Way, the 3 months before the handover.
2. 2Get the bank statements for every account and the rent roll for each of those months.
3. 3Close the oldest month first: record every transaction, match the rent roll to the bank, and reconcile each account. How rent due is matched to rent banked is in rent roll vs bank statement. Each missed month goes through the month-end close for an apartment building.
4. 4Carry its ending balances into the next month and close that one the same way.
5. 5Stop when the last missed month ties to the handover balances.

When the last of the 3 months ends on the handover balances, the books are whole from the first month managed to the first month under the new manager.