How to Minimize Property Liability

How to Minimize Property Liability

Property managers stand in the unique position of having to protect several stakeholders from a myriad of risk events: owners, renters and property managers themselves. Property managers and owners can be held liable for incidents that occur on their properties if the injured individual can prove that the owner or manager was negligent, and they sustained some sort of loss due to the negligent behavior. Negligence typically is determined by comparing the behavior at issue with the behavior of a “reasonable, prudent person” in a similar situation. If a reasonably prudent person would have discovered the unsafe condition at a property and taken steps to correct the condition, a property manager or owner who does not do the same can be held liable for the resulting injuries.

In property management, a major area of risk involves proper maintenance of the property. To lessen the probability of a risk event associated with maintenance negligence, property managers and owners should conduct proactive or preventative maintenance and establish a timely response process to renter-initiated requests. The foundation of proactive or preventative maintenance is a written, comprehensive Property Maintenance Plan. Such a customized plan details each element at the property that must be maintained, who will be responsible for maintaining it, how often it will be maintained, and the specific maintenance protocols for each item. A properly created and administered Property Maintenance Plan ensures that regularly scheduled cleaning and repair of a property’s facilities, equipment, and amenities will occur before a problem exists.

When customizing a Property Maintenance Plan for a specific property, the property manager should consider the following:

1. What systems are in place to practice proactive or preventative maintenance?
2. How are after hours maintenance requests and emergencies handled?
3. How are maintenance and/or repair requests tracked?
4. How are completed work orders tracked and documented?
5. What repairs or recurring maintenance tasks can be performed by tenants, if any?
6. Are tenants permitted to hire their own handyman and/or contractors?
7. What work is outsourced to contractors versus in-house personnel?
8. Are rules in place regarding contractors entering occupied properties?
9. What processes are involved in preparing a property to be re-rented after a renter vacates?
10. How long should it take to “turn” a vacated property?

A reasonable and prudent property manager will have a proactive approach to maintenance. Those managers and owners that follow such an approach, including keeping a well thought out written, property-specific plan for inspecting and maintaining every aspect of the property and for quickly responding and tracking incoming renter requests are the ones that are least likely to be found liable in a negligence action.