Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
11y
@Rayan Faris Simple answer...everything. The PM is responsible for carrying out the mechanics of the actual management...and not liable for the results. You can fire them if they don't deliver up to your standards, but by having someone else to the work, doesn't mean you are absolved of the liability.
Hate to use such a vulgar example, but it fits best. If you hired a a thief, and the thief got caught, you're still going to jail.
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
11y
@Rayan Faris Simple answer...everything. The PM is responsible for carrying out the mechanics of the actual management...and not liable for the results. You can fire them if they don't deliver up to your standards, but by having someone else to the work, doesn't mean you are absolved of the liability.
Hate to use such a vulgar example, but it fits best. If you hired a a thief, and the thief got caught, you're still going to jail.
Someone correct me if I am wrong but there is a difference between knowingly hiring a fraud and unknowingly hiring one. In the first case I am negligent and in the second case I am not.
If I hired an experienced, reputable PM what can I be held liable for?
Someone correct me if I am wrong but there is a difference between knowingly hiring a fraud and unknowingly hiring one. In the first case I am negligent and in the second case I am not.
If I hired an experienced, reputable PM what can I be held liable for?
The following is NOT LEGAL ADVICE. I understand where you are trying to go with this legally, but ... "THE AGENT IS THE PRINCIPAL, AND THE PRINCIPAL IS THE AGENT." They are considered one and the same as it pertains to culpability, responsibility, or liability. Just because I hired someone to provide a service to me is NOT considered the same as my relying on "professional advice" (from a certified or licensed professional) which might avoid the causes of tort listed above. Check with your local Real Estate experienced legal advisor.
Someone correct me if I am wrong but there is a difference between knowingly hiring a fraud and unknowingly hiring one. In the first case I am negligent and in the second case I am not.
If I hired an experienced, reputable PM what can I be held liable for?
In the case of liability, I believe the correct answer is
Specialist · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
11y
I agree with @Joe Villeneuve , I am an investor and also own a property management company. You want to make sure the document you signed with them clearly spells out their job duties and responsibilities. If you think that they are doing something illegal or unscrupulous I would recommend going to the state real estate commission and filing a complaint.
But ultimately it is your property and your rental business, they are hired to do a job and your job as CEO of your rental property business is verify it is being done.... I always tell owners that hire me, you need to trust but verify... Sticking your head in the sand and hoping we are doing the right thing is a surefire way to get sued or go bankrupt.
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
11y
@Rayan Faris actual liability is only part of the question and most cases is never settled in court.
My understanding is it works this way. PM is only a paper corporation and has little to no assets. Landlord owns real estate, so who are you going to sue? Even if you are completely innocent and can prove it, just defending yourself is costly and you have already lost. Then you have the brain damage of dealing with the insurance company. Lots of cases are settled out of court for X dollars because it is a known cost. Having a judge or jury decide the case is considered something like going to the casino from what I've been told by attorneys.
That is the risk to the landlord in having a bad PM that does people wrong.
Real Estate Investor · Silicon Valley, CA · Member since 2012 · 169 posts · 52 votes
11y
@Bill S. I have a good PM Co that does me right, and they asked me to put them on my policy as additional insured. Easy breezy and if someone gets hurt or has a gripe and sues, as y'all probably know, they sue everybody!
Real Estate Investor · Chicago, IL · Member since 2014 · 229 posts · 171 votes
11y
Everyone will get sued!
Really. I had a slip and fall case in which they sued the owner, the manager, and even the realty company that sold the property to the owner prior to the slip and fall.
But your question addresses liability, meaning who a court would actually rule against. Specifically, in some cases it seems the manager could be solely liable, such as when the company on its own practices racial discrimination in tenant selection practices and the owner reasonably had no knowledge. On the other hand, a slip and fall is going against the owner. In between those extermes is the slip and fall due to negligent upkeep by the management and that may be highly dependent on a specific case. (not legal advice)
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
11y
Your PM is your agent. If they mess up, they are messing up working for you. You can be held liable...or at the minimum be sued for their actions. We do live in a litigous society, and the old saying is "if you haven't been sued you, you will be" or something to that effect. It only took me two years to get sued. Lots of fun:) I ended up in court before my first open heart surgery...and right before the second open heart surgery (as if I didn't already have enough stress). The tenant lost but that wasn't any consolation for the worry, stress, and emotions they put them through. Some things can be covered with liability insurance and others cannot.
Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
11y
@Eva Salas, I don't understand why you would put your property manager on your insurance policy as an additional insured. Do they give you a discount for helping to protect them? Don't they carry their own insurance? If they don't you should be looking for another property manager.