As a property owner or manager, dealing with unexpected expenses can be a headache. One of the ways to alleviate this burden is by implementing tenant chargebacks, which are expenses that tenants are responsible for covering. However, chargebacks can be complicated and time-consuming to manage, especially if you’re relying on manual processes or spreadsheets. In this blog, we’ll explore tenant chargebacks and how to make them easy with property inspection software.
Firstly, let’s define what a tenant chargeback is. Essentially, a chargeback occurs when you spend money on a property that is the responsibility of the tenant. This could be for things like broken window repair, locksmith services, emergency plumbing, bulky trash pickup, or door and railing repair. In commercial properties, chargebacks can be used instead of or in addition to charging estimates for expenses and doing reconciliations at the end of the year.
So, when should you create a chargeback? You should do this whenever you spend your own or, your owner’s money on something that is the tenant’s responsibility. It’s crucial to be upfront with tenants about chargebacks and expectations from the beginning. Ideally, potential charges should be spelled out in every lease to avoid any surprise bills down the line. By covering yourself in the lease, you’re more likely to avoid legal conflicts.
Now, let’s talk about how to manage a chargeback. If you’re using manual processes or spreadsheets to manage your properties, chargebacks can be tricky. You may need to show evidence of pre-inspection and post-inspection to ensure it’s clear who is responsible for the damage. However, if you’re using property inspection software, it’s much easier. For example, with SnapInspect software, you can run side-by-side reports for move-in and move-out inspections to ensure the right person is paying for the damage.
You can distribute the expense among the tenants of a property, or you can select one or more individuals. Tenants can see the inception comparisons and make their own assessments of the damage.