Sometimes, there just doesn’t seem to be enough time in the day to complete all the jobs which need to be done.
But while shortcuts may be a short term fix, overlooking day-to-day tasks can result in a lawsuit or impact on the overall operations, performance and asset value of your property management department.
“The truth means nothing; evidence means everything”. Anyone who works or has worked in property management will likely attest to that statement.
So how do you ensure your property management business does not need to make a claim? Amy Sanderson, head of property management for LJ Hooker Global, spoke recently at the PPM Group national conference about getting the finer details right.
- Follow your client’s instructions:
“Act in their best interests at all times – if in doubt, I always go to the act, find the relevant clause and use that,” Amy said. Failure to act in your client’s best interest could exposure you to a claim of negligence. This also applies to a failure to follow maintenance instructions, Amy said. “Your client may have a particular tradesperson in mind they want to use. Our job in property management is to guide our clients with these specific requests to ensure they have proper processes in place.”
- Keep adequate records:1. Back it up in an email – and where possible, get it in writing. “While I love email, I often find they get in the way of getting the job done, so I get frustrated with it,” Amy said. “I’m pretty old-school and prefer to pick up the phone.”
2. Keep a record of your conversations so you can pull them out if needed. “Keeping a record of everything is crucial – when something goes wrong, it can go bad quickly,” she said. “I’ve had situations with staff members who have left the business and we’ve had to fill in the blanks. Piecing together missing information is never fun.”
3. When it comes to work orders, remember that these are proof of what work has been requested to be done. “If a tradesman comes in and does something different to the original request, then we have a recourse on that,” Amy said. “If we don’t have the work order to begin with, then we don’t have a hope of backing that up.”
4. Be prepared in advance with soft copy filing of all documents. Not every office will face a natural disaster, but you just never know what’s going to happen and when,” she said. “Our jobs depend heavily on the data we have.”
- Don’t perform work you’re not qualified to do:
If you’re not qualified to do it or talk about it, outsource it. “Get someone else to do it, you don’t want to get into strife because of this,” Amy said. Owners will regularly ask property managers to perform tasks outside of what they’re able to do, i.e. checking smoke alarms, advice on insurance. “I’ve had clients who haven’t wanted a professional to do a job because of the financial cost. In this instance, ask them to speak to their insurance company and find out what will happen if they don’t. It’s important to have these processes in place – you never know what will happen and on what property. Amy recommended asking any outsourced contractor for a copy of their relevant and current insurances, including: professional indemnity, public liability, worker’s compensation insurances and industry licence.
- Audit your accounts regularly: Auditing your accounts regularly is crucial. Fidelity claims are on the rise. Don’t leave the management of your trust accounts to just one person or leave the person unchecked. Business owners should audit their trust accounts on a regular basis, Amy said. “This could include: performing audits of accounts (trust and bond); having professionals (such as your accountant or auditor) review the books annually; undertake spot reviews and checks on employees work; have monitoring systems installed that can be cross-checked and, most importantly, be observant!”
5. Perform regular property inspections and reports:
a. All rental properties must be inspected – inside AND out. “We all work under different legislation across Australia (and in some cases, New Zealand) so it’s a good idea to know what’s going on. There are many legal cases of agents falling in this basic duty, resulting in risk exposure to the company and potential increases in premiums.” Amy said while the situation may be different each time, there is legislation locked into your agency agreements – the number of inspections in your contract is the number you need to achieve. “Inspections are often the first thing we put on hold when we’re busy. Once they’re completed, send a report. The owners needs to know and you need evidence that you attended and what you saw.”
Example: Excessive tenant damage to the property. The matter goes to court. If your agency agreement states X inspections, and you have not conducted these, you will most likely be found to be negligent, have to pay compensation and perhaps your fees.
- Be careful what you say:
- It’s important to check facts BEFORE making comments. Consider who you’re saying things to, Amy said. “Think about who owns the property, who is named on the lease and what privacy terms have been signed.” Consider using the phrase: “That’s a great question, I’ll call you back this afternoon with a response.”
- Advertising: Get it right, get it accurate. A property could be advertised with a garage and doesn’t have one. Check the style of laundry facility in apartments you’re managing. Some things are assumed – if the blinds are not part of the lease, say so.
- Check your documents: Make sure you have correct names, that everything is spelled correctly. “I had a scenario where we had a property and a staff member had written Street – that stuff is really important. It’s worth your time and effort to take that extra 10 minutes to check you have used the correct document, made any requested changes and written the correct name – this could impact whether you get paid or not!”
- Check your files: Do you have signed management authority, signed lease, premises condition report, bond, smoke alarm/s – tested, blinds / cords – compliant, pool certificate, safety switches compliant, creditors licensed and insured, adequate insurance – office, investor and tenant?