This topic lists general steps that you should consider if you need to close a property because it is sold or if you no longer plan to work with the rental owner.
- Come to an agreement about what's expected. This includes the date that your contract will expire, when the money will be available, who the new property manager might be, and anything else that comes to mind.
- Provide final reports to the rental owner.
- Rental owner statement and/or income statement to show the year's activity and that you've paid out everything to your client.
- Balance sheet - to show that you've paid out everything to your client.
- Rent roll - to show liabilities to tenants and outstanding balances.
- A list of unpaid bills, if applicable.
- Any other reports that your client and your client's accountant would like to receive.
Get any final information for tax time. For example, if you intend to file a 1099 for this rental owner, you'll need their tax ID number or social security number. You'll also want to tell them to watch out for the 1099 towards the start of the next year.
Pay out anything that needs to be paid, including a final owner draw and any held tenant deposits.
Some property managers are only concerned with the bank account balance. So long as it is $0, then all of the money has been successfully transferred, even if the deposits held on a rent roll shows deposits on the leases. If you share this opinion, simply record a check to the rental owner for the final amount of money in the bank.
Some property managers prefer that the deposits held on all lease ledgers be at $0 when a property is closed down. If you share this opinion:
Issue a refund to the tenant for the amount of the deposit. Add a memo "transfer to rental owner/new PM." This is an adjusting entry and will not have a real world equivalent.
This is to reduce the lease deposit to $0.
In banking, add the money back into the bank account from which the refund was taken. Add a memo "transfer to rental owner/new PM." This is an adjusting entry and will not have a real world equivalent.
This is to fix the bank account balance.
Record a check to the rental owner or property manager to pay out the deposit. This transaction has a real world equivalent.
This is to actually pay out the deposits.
- Once you're done working with the property, inactivate it.