Flagged is not billable: what your contract allows

A flag is a question for the contract

The analysis is the easy part. An agent or a good spreadsheet reads a year of time records and flags every line that looks like extra work: conciliation hearings, damage claims, renovations, lettings, enquiries for the owner. The result is a total, almost always larger than anything that ever appeared on an invoice.

From a project conversation we know the question that follows: which of these hours the owner actually owes. The time records cannot answer it. A property manager may only bill what the contract lists as an additional service and what it had the authority or an instruction for. Until that has been checked, every flag remains an open question.

Base service or additional service: the contract draws the line

A property management contract splits the work into two baskets. The base fee, in property management often calculated as a share of rental income, covers the base services. Additional services are charged separately, usually by time spent and often only once the owner has given an instruction. An article by TREUHAND|SUISSE on a survey of pricing models (in German) names exactly this as a problem with flat fees: defining the services clearly.

A widely used template shows what this looks like: the general terms for property management contracts that a regional section of SVIT, the Swiss real estate association, publishes together with the homeowners' association and an association of real estate firms (2019 edition, PDF in German). An extract from both lists, in our translation:

Conciliation appears on both sides: representation towards the conciliation authority on the left, representation before conciliation authorities on the right. Where one ends and the other begins, the text does not say. As we read it, a letter to the conciliation authority and half a day at the hearing could each be read either way. Every contract has passages like this, and that is exactly where flagged hours end up.

Five places where flags and contract part ways

Authority and power of attorney

The contract names an authority limit up to which the property manager may commission repairs without asking. Above it, the owner decides; the template above makes an exception for urgent cases and for limiting damage. A power of attorney sets out what the property manager may do in the owner's name. Whether that work may be billed separately is a matter for another clause.

Cost cap

A cost cap sets an upper limit for an engagement or a year. What happens to the hours above it is often not stated: whether they lapse, trigger a question to the owner or are billed later. A flagged hour above the cap stays a borderline case until someone closes the gap.

Flat fees open to interpretation

A letting fee can cover advert, viewings, application review, lease and handover, or only part of that. If the contract only uses the word, everyone on the team reads it differently. In the template above, letting sits inside the fee, while re-letting after tenants have been given notice for a renovation triggers a first-letting fee that the parties negotiate.

Extras without an instruction

Many contracts only bill additional services once an instruction has been given. The flagged line then needs the instruction as well: an email from the owner, minutes, a file note. Without it, the hour is recorded but not evidenced.

Companies missing from the contract

If an owner holds properties through several companies, the contract often names only one of them. Hours for the others appear in the export under the same mandate and have no basis in this contract. Someone has to decide who pays for them before the invoice is created.

None of these five can be answered from the time records alone. All five can be written down before anyone opens the first export.

The grid: three columns per service

This logic belongs before any analysis. You read the contract with its annex once, in full, and write each service on its own line. Next to it goes whether it is included in the fee, as yes, no or unclear, and the clause in the contract, meaning section and wording. Only then do you open the export.

The rows above are examples, not a client's contract. The second column deliberately has three values. Anyone who only allows yes and no decides the borderline cases while filling in the grid, without noticing. In the free Contract Grid the three values are called flat fee, extra and borderline, with a worksheet for the lines from the export.

Then every flagged line gets the value of its service and the clause. Lines marked no, with a documented instruction, can be billed. Anything marked unclear goes to a person.

A named person decides each item

1. 01Read the contractParties, authority limit, cost cap, base and additional services, annex and addenda.
2. 02Fill in the gridEvery service with yes, no or unclear and the clause. Once per contract.
3. 03Assign the linesEvery flagged hour gets a service, a value and, for extras, the instruction that goes with it.
4. 04DecideA named person decides every open item: bill it, change the contract or leave it on purpose.
5. 05RecordDecision, reason and clause go into the log. At the next closing, the same line applies.

• Bill it when the contract lists the service as an extra and the instruction or authority is documented. The invoice cites the clause.
• Change the contract when the service comes up regularly and the contract does not cover it, or covers it unclearly. The talk with the owner settles the line for the next period.
• Leave it on purpose when the relationship with the owner, the amount or your own uncertainty speaks against billing. That is legitimate, as long as it is recorded with a name and a reason.

Leaving it on purpose is a decision. Leaving it unnoticed is not. The difference shows a year later, when the same question returns and someone can read how it was answered. If in doubt, settle whether an item is legally owed with your legal adviser.

An example from practice, anonymised

The smallest figure teaches the most. No time record can say whether the 6.8 hours could have been billed. The answer is in the contract, in the clause that covers conciliation. If no clause covers it, a named person decides. The figures alone do not show how much of the work outside the flat fee would have been billable. That takes the grid and one decision per item.

What an agent does, and what it does not

An agent reads the whole contract rather than a sample, assigns every flagged line to a service in the grid and writes the clause next to it. Whatever it cannot assign clearly, it flags as a borderline case. That is how the review lane for fiduciary and property management firms works, with one list per mandate and every item tied to its clause.

• What gets billed is not its decision. That stays with the named person.
• It writes no invoice and sends nothing to owners that nobody has approved.
• Unclear wording is never silently read in the property manager's favour.
• When an owner disputes an item, the agent does not replace legal advice.

The first step: one contract, one year of time records

Take one property management contract with its annex and addenda, and the time records for the same mandate for one year. Fill in the grid first, then assign only the lines that look like extra work. The items marked unclear go to the person who decides. The result is a short list that carries more weight than any total of flagged hours.

Whether hours disappear into the flat fee at all is the question before this one, covered in Flat fee or extra work. How to count the work in the tenant inbox in one day is shown in Count the tenant inbox. How Grow Amplified works from the first assessment to handover is described under Approach.

Frequently asked questions

Timon Wick

Founder, CEO · Grow Amplified GmbH

15 years in banking and consulting, in transformation and finance operations. Today he builds review lanes with Grow Amplified: agents read and reconcile, a person approves, and a replay log records who decided what.

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