Managing rental properties has been automated to some extent as technology has advanced, but the property management business is still driven by and requires people to make decisions in real life terms and situations. There must be a philosophy underlying how decisions are made in a professional property management company. The risks are too great not to.
As the property management company grows and more rental units are onboarded and under management, the greater the need to create a decision-making philosophy for your management staff. The staff decisions must be based on sound, guiding principles. Lead rental management must train their management staff in real world scenarios so they can learn how to apply the principles to the situation.
The following are helpful guides to making sound decisions in the property management business.
PRINCIPLE 1 – COMPLY WITH AND ENFORCE LEGAL AND CONTRACTUAL OBLIGATIONS
Landlord obligations derive from F.S. 83 pt. 2, the property management agreement and lease agreement.
Tenant obligations derive from F.S. 83, pt. 2, the lease agreement, and other contracts (e.g. application, addenda, etc.).
The real estate broker and property manager’s obligations derive from all of these contracts and law, as well as F.S. ch. 475.
Your operations calendar schedule, periodic tasks, maintenance responses, priorities, responses to claims or requests must have a solid foundation in the law and contractual provisions that apply.
PRINCIPLE 2 – PREVENT, AVOID AND MITIGATE LOSSES, DAMAGES OR INJURIES
When a decision, condition, action (or omission) can result or cause loss, damage or injury, you must take proper steps to analyze the issue and prevent, avoid or mitigate the potential loss while producing the best outcome possible.
The more serious the loss, damage or injury, the greater and more precise your diligence must be. Due diligence includes, but is not limited to, the following approaches:
- Timeliness. The timing and timeliness of response must correspondence to the gravity of the situation. The heavier the gravity, the more timely your response must be.
- Information Gathering. The greater the impact of the matter is, the greater your effort should be to gather relevant evidence concerning the matter, to ensure that the proper decision is being and the record supports your decision. Acquire facts sufficient and relevant to the decision you must make (e.g. getting better and more pictures, talking to witnesses, inspecting the property, etc.). Speak to experts in the field on the question at hand. Get expert opinions in writing on the issue at hand. Fully document the steps taken to resolve or address the matter.
- Analysis. The depth of your analysis of the issue must correlate to the seriousness of the potential loss or damage that could result. Being able to analyze requires a thorough knowledge of the law, contracts, and guiding principles, as well as the facts relevant to the analysis.
- Communication. The more serious the situation is, the more critical it is for your communication to be accurate, precise and pointed, to avoid confusion, mistake, oversight and misguidance.
- Action. The greater the loss or damage can be, the more critical it is for you to take the correct action to resolve the item, or to instruct the tenant or landlord as to whose obligation it is to act or omit to avoid the loss or damage. An operations manual can play an important role in your action plan, but an operations manual cannot replace applying sound principles, analysis, and discretion to every day situations. You must learn the principles and how to ascertain what facts are relevant and whose obligations apply to take proper action.
PRINCIPLE 3 – BE EFFICIENT AND PROFICIENT AT YOUR JOB
Managing many properties can be very challenging if you are not using your time efficiently and in the most proficient manner possible. Effort and study must be applied to learning the most efficient manner of performing tasks, organizing data, inputing information into software, and making decisions.
Incorporate best methods of maximizing results and reducing costs. When more than one choice or option is available, in general, you should choose the most efficient method that produces the best results.
PRINCIPLE 4 – MAKE THE RIGHT DECISION
Making the right decision is based on the previous guiding principles but in a manner that balances the priorities and weight of interests that are involved, along with the overall view of carrying out and pursuing the vision and mission of your company. In so doing, you service the customer and public to the greatest extent possible.
Questions relevant to making good decisions:
- What is the problem or issue at hand?
- What is the objective of your response to the problem or issue?
- Whose obligation is it to act to solve the problem?
- What do you need to do to communicate that obligation to the tenant or owner?
- What time sensitivities are in play regarding the problem?
- Is there potential liability that needs to be avoided?
- If so, what are the steps that need to be taken to avoid those liabilities? Examples of liability include, but are not limited to, the following:
- The rental property being damaged.
- Occupants of the property being injured or killedTenant lawsuits against us and the owner for wrongful termination, breach of contract, violation of F.S. 83 pt. 2, personal injury, discrimination, retaliation, etc.
- Owner lawsuits against you for breach of the property management agreement and resulting damages.
- Allegations for violation of F.S. ch. 475 (FREC/DBPR complaints).
- Bad reviews online.
- What law or contract provision(s) applies to the situation?
- What company or legal procedures control the task in question?
- Is the situation outside of normal processes?
- If so, what person can best help to guide the best approach to the problem?
- If there is more than one method of handling the task in question, what is the method that conforms best to these guiding principles.
Have an Experienced Landlord-Tenant Attorney On Your Side
When you are in the day-to-day operations of a busy property management company, it can be difficult to see things for what they really are (missing the forest for the trees, as the old saying goes) and to know what is the best decision to comply with your obligations, avoid liability, keep customers happy, and be efficient in your operations.
Many times, the issues that arise in property management are legal questions, as they derive from F.S. ch. 83, pt. 2 (Landlord-Tenant Act), the lease agreement and property management agreement, and F.S. ch. 475 (governing real estate brokers). Thus, having a landlord-tenant attorney on call and on your side to run scenarios by and get sound legal advice and wisdom is key to helping you make sound, good, legal decisions.
You need such an attorney on your side. If your company does not have an attorney you can contact at any time and get a timely and pointed response, you need to find that attorney. Property Management Law Solutions, LLC can help.
Property Management Law Solutions, LLC is a Florida law firm that specializes in landlord-tenant law and is a landlord-only law firm. We provide statewide services including evictions, consultation plans, education and training, membership plans, lease agreement plans and more. If you are a landlord or property manager, contact us today or subscribe to one of our online membership plans.