Risk Management Tips For Property Managers

Risk Management Tips For Property Managers

In an industry where professional negligence claims are common, what can you do to help safeguard your business?

1. Be selective in the properties you choose to manage, not all business is good business.

2. Periodic Inspections
When conducting, recording and following up on Periodic Inspections imagine sitting in a courtroom witness box, being questioned about a periodic inspection that occurred three years prior with every detail under scrutiny.

• Conduct thorough and regular inspections.
• Ingoing report should be given great attention with all issues attended to with a sense of urgency.
• Include photographs, the more the better, particularly of potentially hazardous areas/ items. Images can be used to show landlords any defects but they can also be helpful in monitoring potential problems (such as whether mould is worsening over time).
• Do you have adequate system in place to follow up the return by the tenant of the ingoing report?
• Do you conduct a pre-vacation inspection? This gives you the chance to identify problems which can then be addressed and resolved before they leave.
• Are smoke alarms tested on each inspection (do you outsource maintenance of these?)

3. Repairs & Maintenance

• Act with a sense of urgency to all requests from tenants for repairs and maintenance.
• Work with tradespeople that “get it”, that understand the liability potential that can arise if things are not attended to promptly.
• Do you have an induction process for new tradespeople where you set your expectations?
• Only use licensed and insured tradespeople
• Do you hold copies of tradespersons licenses and insurance certificates of currency?
• Do you have a process to monitor the renewal of these licences and certificates?
• Do not issue any work orders where you do not hold evidence of the contractors insurance.
• Be wary of property owners who say they will fix the problem or get their mate to, depending on the nature of the maintenance required this could be fraught with danger.
• Once repairs are completed, do you check with the tenant that their concerns have been satisfactorily addressed?
• Are completed repairs inspected?
• What systems are in place to ensure all outstanding repairs are followed up?
• Do you continue managing the property if you have a difficult landlord who refuses to rectify issues where safety is a concern? Not all business is good business.

4. Insurance

• Ensure all property owners carry a minimum of $5,000,000 public liability insurance, however recommend they consider taking out a Landlord Insurance Policy which usually includes $20,000,000 of public liability cover along with rent default cover, malicious damage cover etc.

5. Keep File Notes Of Conversations

• This is critical. Confirm material conversations you have had with either a tenant or landlord in writing to them. Good record keeping can be the difference between winning and losing a case.
• Keep detailed and dated records. In the event of a dispute, accurate contemporaneous records are the most persuasive evidence.

6. Building Safety Health Checks
Examine your rent roll.

• How many properties do you have that have hazardous features such as decks, verandas, balconies, staircases etc?
• How old are those properties? Older than 20 years?
• Consider writing to the owners of all such properties recommending they have the property undergo a safety health check for hazard identification purposes so as to minimise their own exposure (and in turn yours!) to bodily injury claims.
• This is a proactive step to deal with potential issues prior to any injury (or worse still death) occurring.
• Do this annually, and if the owners refuse, you will at least be able to show that you have made appropriate recommendations.
• If you do have concerns over the safety of the property and the owner ignores those recommendations then its time to reassess the value of that client and the risk it poses to your agency.

7. Maintain a strict follow up system for everything

8. Follow your clients instructions

• Failure to act in accordance with direct instructions is a breach of your obligations under the Management Agency Agreement, a breach of your fiduciary duty and can expose you to a negligence claim.

9. Pool Safety

• Encourage landlords to carry out regular maintenance by a pool professional so as to ensure the pools of your managed properties meet safety standards. Watch out for the following common problems:
• Pool latches that do not latch properly;
• Gates that are not self-closing;
• Articles such as outdoor tables or chairs left near the pool fence enabling kids to climb over;
• Low-hanging tree branches that children could use to climb the fence;
• Poor or out of date signage; and
• Signage that is not visible from the pool area.

10. Clandestine Drug Manufacturing
Even the most solid tenant selection processes may not identify illegal drug manufacturers. Signs to watch for include:

• Reports of persons coming and going from premises at all hours;
• An unusually higher level of security surrounding premises eg cameras, dogs, fencing;
• Strange smells emitting from the building such as acetone, ammonia or methylated spirits;
• Windows covered or blackened out;
• Powerful lighting frequently on at all hours;
• Unusually higher usage of power and water or signs that electricity sources have been tampered with;
• Numerous discarded empty packets of cough and cold tablets and methylated spirit containers indicates premises could be used for Pseudoephedrine extraction (a process used in methyl amphetamine manufacturing).

For further advice or to get pricing on cover that you can rely on, contact us to speak with one of our property risk insurance specialists.

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