Owner Disbursement

What is an owner disbursement?

An owner disbursement is the payment a property manager sends a property owner from collected rents after expenses, fees, and reserves are deducted. The money being disbursed is the owner's, held in trust until paid out. Getting the amount and the timing right is a trust compliance matter, not just a bookkeeping one, because the funds never belonged to the management company.

Calculating what is actually distributable

Start with collected income, not billed rent, because uncollected rent is not available to distribute. Subtract paid operating expenses, management and leasing fees, and the reserve the management agreement requires you to maintain. Hold back for known upcoming obligations such as a scheduled repair or a property tax installment. Distributing cash that a pending bill will need is the most common way managers end up funding owner expenses themselves.

Timing and trust discipline

Most agreements set a disbursement date, commonly between the 10th and the 20th, after rents have cleared and bills are in. Never disburse against uncleared deposits; a returned rent check after the owner has been paid creates a shortage in the trust account covered by other owners' funds. Reconcile before every disbursement run, and keep each owner's balance visible so you never disburse more than that owner holds.