Reputational risk is something people don’t often think about. This may influence potential residents who read online reviews before signing a lease, which can kill your traffic. And poor operations or maintenance may result in bad reviews online. If you’re the owner/operator, however, you can’t fire yourself. This type of property management risk often results in the termination of the company. Operational risk can include a third-party company’s poor performance or neglected maintenance, which can lead to equipment failure or lawsuits. HUD officials can reclaim money allotted to the owner, and if there are problems in this regard, it can become very expensive. This last factor is a significant source of property management risk. Failing to document eligibility requirements.Improper processing of affordable housing.Not considering market rates in the rent calculation.Excessive rent hikes that affect occupancy.Ineffective or no advertising of available units.Delay in posting available units online.Improper billing of residents’ move out charges.These are property management risk items that may impact day-to-day operations. If water treatment isn’t completed properly, equipment can break down or leaks can occur on the property. This also covers preventative maintenance. For example, when an operator is pruning trees, that’s also an opportunity for roof inspections. Physical maintenance risks can cause equipment to break down or lead to property damage. But there are even more that we haven’t mentioned yet. There are a lot of things that may be property management risks from a liability standpoint. Tenant laws are violations or risks that may involve: But there’s an entire industry that specializes in finding non-compliant parts of your property, which can lead to litigation. Occasionally, failing to address ADA-related risk may be related to the physical characteristics or conditions of the property that were present when you bought it. Reasonable, documented termination practices. Discriminatory employment practices can be a significant source of property management risk.Ĭlearly established fair labor practices can reduce property management risk in this area, which includes: Property management is a people-centric industry and has high personnel-to-revenue ratios. If they don’t, and somebody claims that they are ill, you can be exposed legally, which can have significant consequences. Operators need to follow precise processes in those situations. Accusations of violating fair housing practices, for example, are a notable liability risk, as are accusations of harassment.įurther, if an operator mishandles mold or lead paint remediation, your organization can be put at risk. There are other risks at play in property management, however. These risks can lead to a lawsuit if something goes wrong or if someone is injured. That includes things like slip-and-falls, pool accidents, and playground injuries. Most of the time, people think of liability risks.
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