To help reduce your risk, we’ve summarized all our property management posts on handling evictions, property maintenance, and short-term vacation rentals over the last two years. Use it as a risk management refresher for new hires or everyone on your team.
Handling Evictions
Landlords cannot just evict tenants for no reason if there is a formal lease agreement in place. There must be just cause. Typically, valid reasons include: damage to a property, nonpayment of rent, illegal activity in the property, or some other breach of the terms of the lease agreement. If a tenant is being evicted for some other reason, for example, the landlord wants to move into the property, the landlord will generally need to provide the tenant with a period of rent or a waiver of rent to allow the tenant to relocate.
See How to tackle evictions and avoid a lawsuit.
Know the Correct Process for Your Local Area
An eviction notice needs to be provided to the tenant outlining a deadline for rent to be paid or damages to the property to be fixed. If the tenant does not meet the deadline, the landlord is allowed to file a lawsuit against the tenant to evict them. The landlord may seek, not only an order to evict, but also damages to cover unpaid rent, property damage. and court costs.
Watch Out for Illegal Eviction Activity
Property Managers should watch out for any signs of illegal evictions by landlords. Things like changing the locks, removing a tenant’s belongings unlawfully and turning off electricity or water to try and force tenants out are all illegal actions.
Educate landlords as part of your onboarding process when you’re leasing a property. You want to be sure the landlord understands what constitutes a lawful eviction, and he/she is fully aware of the conditions of the lease agreement and how and when it can be terminated.
Need for Timely Maintenance and Repairs
Failure to do regular maintenance as instructed by the landlord or failure to act when emergency repairs are needed can result in lawsuits:
- It can lead to the untimely deterioration of the property and costly repairs for landlords.
- If it’s due to your failure to act properly as a Property Manager, you may be sued for negligence to recover damages.
- It can also result in damage to tenant property, break-ins, tenant or visitor injury, illness, or loss of life. Property Managers could be sued for negligence or face criminal charges.
Where there are property and maintenance issues that could result in injury, illness, or loss of life, you need to prioritize these first: major leaks that can cause mold, collapsing hazards, electrical issues that can result in electrical fires, tenant-reported problems with a smoke alarm, etc.
Some property owners prefer to handle repairs themselves, but a cheaper DIY fix may lead to a lawsuit against both you and the owner. Activities requiring permits, anything structural, or any repairs involving gas should still be handled by a licensed contractor.
- To help protect yourself, advise your property owner in writing about your recommendation to hire a licensed contractor.
- If your property owner suggests you use a handyman that isn’t licensed, be sure you put your recommendation for a licensed contractor in writing and get the landlord’s reply in writing.
- Always have the landlord choose the person to handle repairs and maintenance, not you, even if you’ve worked with repairman and maintenance workers before. You don’t want to be responsible for their work. Be sure to save these communications in your transaction file.
Ensure your property records are up to date and keep track of any contact you have with tenants, licensed contractors, and landlords. See: How Maintenance and Repairs Prevent Property Management Lawsuits.
Handling Vacation Rentals
The short-term vacation rental business may have local regulations in your area, and permits may be required. Regulations may dictate the maximum number of guests, quiet hours, number of vehicles on the property, etc.
To run a vacation rental business, the landlord and real estate licensee should implement:
- Required security deposits
- Insurance policy to protect against damage or loss
- Regular inspections and maintenance, with a handyman available whenever needed
- Noise rules for guests and posted reminders of quiet hours in the neighborhood
- Regularly changing guest codes to access the lockbox
- Clear check-in and check-out times, with penalties for overstaying
See Vacation Rental Issues for Real Estate Licensees
When You’re on Vacation
Arrange another contact at your office that landlords and tenants can speak to in your absence. This should be someone reliable and responsive that can act if there are any urgent inquiries.
Ensure all tenant, landlord and property information files are up to date and easily accessible to others in your office.
If there are any pending issues at any of the properties you manage, such as current maintenance work, ensure your vacation contact is up to speed on everything.
Ensure your vacation contact knows what procedures are in place for emergency repairs and maintenance. Some landlords allow maintenance and repairs to be arranged by the Property Manager without consultation if it’s under a certain dollar amount. Double-check your emergency trades/maintenance contractor contact list and ensure all contact details are up to date.
Advise your clients that you will be away and tell them what measures you’ve put in place to ensure their properties are still looked after and managed effectively.
Set up an out of office message on your emails and your cell phone. Provide an alternative email or phone number that people can call if the inquiry cannot wait.
If you’re managing holiday homes or properties that are currently vacant, arrange for someone to check them while you’re away. Vacant properties can be particularly prone to squatters if left unchecked for long periods. See our Property Manager’s Vacation Checklist to Prevent Lawsuits.
Get Your Name on the Owner’s Insurance Policy
If a real estate licensee is taking on a property management client, be sure your name appears as an additional insured on the owner’s policy.
Keep in mind that the coverages between your client’s homeowner’s policy and your own Errors and Omissions policy are completely different. If there’s a personal injury or if there’s any kind of bodily injury, many times those kinds of damages will be covered under an owner’s policy but won’t be covered under an E&O policy.
Make sure that as a licensee, you have in your property management agreement the obligation for the owner to name you as an additional insured.
- Get proof to make sure it actually happens with a new client, and review it every year with your existing clients.
- Have a tickler that reminds you on every house that you manage to contact the owner and ask, “You just renewed your homeowner’s insurance. Can you send me a copy of the policy page showing me as additional insured?”
Don’t Manage Properties without Property Manager’s E&O
If you’re involved in any type of rentals – whether as a property manager or as a real estate salesperson who is asked by a client to handle a rental – you need Errors and Omissions insurance for property managers to protect you from specific-to-property-management risks.
As part of one of the largest insurance brokers in the world, CRES has access to more property manager E&O options than just about anyone. Let us find the best coverage at the best price to fit your specific property management activities.
See all of our ClaimPrevent® Summaries:
- ClaimPrevent® Summary #8: Property Management Ads and Applicant Screening
- ClaimPrevent® Summary #7: Avoiding Legal Trouble with a Real Estate Contract
- ClaimPrevent® Summary #6: Challenges with Clients and Other Licensees
- ClaimPrevent® Summary #5: Completing the Residential Purchase Agreement to Avoid Problems
- ClaimPrevent® Summary #4: Handling Offers
- ClaimPrevent® Summary #3: Seller Disclosures and Working New Listings
- ClaimPrevent® Summary #2: Licensee Responsibilities When Creating New Listings
- ClaimPrevent® Summary #1: Attracting Clients and Showing Property
