News

Defining Wear and Tear

Web Admin - Tuesday, June 21, 2016

Defining Wear and Tear by Robert L. Cain, www.rentalprop.com 

A hole in a plaster wall, a broken window, crayon marks on the ceiling, cabinet doors torn off their hinges—those are obviously above and beyond normal wear and tear. How about a worn place in the carpet, or tiles on the kitchen floor that are cracked or missing? That is where the tenant can claim that he does not owe a dime of the security deposit because that was just “normal wear and tear” and you cannot charge him for that. Less than stellar tenants are experts in “normal wear and tear” because they have caused so much of it. So what really is considered “normal wear and tear?” A rule of thumb to follow, whenever there is a question about who should pay for damage, the landlord should pay. In this tip, however, I will remove some of the question and possibly enable you to get a better idea of when you should deduct money from the security or cleaning deposits. The first step in determining wear and tear is good record keeping. You need records, as complete as possible, of when you purchased items and/or when you installed them. If you do not have a starting point, you certainly will not have an accurate way of knowing how long they should be expected to last. If the fixtures or appliances were in place when you bought the property, try to find out their history from the seller. Many times the previous owner will have all the warranty and product information, including manuals. The other vitally important thing to have is the tenant move-in checklist, signed by the tenant. Without it, the tenant can claim that the damage was there when he or she moved in. In addition to that, some damage is the fault of the landlord for not checking the property regularly. As you well know, you cannot expect a tenant to take care of a property the way the owner does. Tenants just do not notice things that can do major damage to a building. For example, few tenants would think anything about earth-to-wood contact. They will shove dirt up against the side of a house and not even notice when the wood on the side of the house starts to rot. That is considered the fault of the landlord. You cannot collect damages from a tenant for dry rot due to earth-to-wood contact; you should have seen it. Once you have noticed that a tenant is piling dirt against a building, though, it is up to you to tell him not to do it anymore. Once you do, and you have left a paper trail proving that you have, then the tenant would have some responsibility. Even so, it is up to the landlord to take care of his investments. When a tenant moves in, make it clear to him or her that you want to be notified of damage as soon as it occurs. What follows is a list of common things you will find around the house that a tenant may use regularly and a range of life expectancy. For vinyl and wall-to-wall carpets you should have a pretty good idea of the life expectancy when you buy it, but for other items you may not.

Dishwashers Tenants will often use the dial to run the dishwasher through its cycle. This will strip the timing mechanism. Dishwashers should be allowed to run through their cycles fully, not set to rinse or dry again. A dishwasher should last between five and twelve years, so if the control knob breaks before that, it is above and beyond normal wear and tear.

Water Heaters Do not wrap them in an insulating blanket, no matter what the environmentalists claim. Doing so voids their warranties and the Underwriter’s Laboratory certification. The insulating blanket makes them too hot and can overheat the wiring. If a tenant wraps a water heater, thinking they are saving energy, and the water heater goes out, that is beyond ordinary wear and tear. Tenants will sometimes drain an electric water heater without turning the electricity off. That will burn out the elements. Water heaters last from eight to twelve years. Burnt out wiring or elements are beyond ordinary wear and tear.

Ranges Gas ranges will last indefinitely. About the only thing a tenant can do to damage one is break a knob, and it happens. But accidents happen, and it is probably ordinary wear and tear. Electric ranges, on the other hand, do not last as long, about 15-20 years. Tenants will remove elements to clean and not put them back in properly, shorting out either the element or the entire wiring on the stove.

Furnaces It is important to change the furnace filter once a month. Leave a dirty filter in and risk ruining the fan motor. If necessary, get the tenant a supply of filters with the instruction to change it the first of every month, whether he thinks it needs it or not.

Storm Doors Tenants remove the wind spring and the door flies open, breaking the glass, springing the hinges, or whatever. With no mistreatment, storm doors will last until they are too ugly to leave up. If a tenant breaks one, it is above and beyond ordinary wear and tear.

Driveways Concrete is damaged by something known as “point loading.” That happens when a heavy vehicle is parked on the same spot for a long period of time or over and over. Eventually that weakens the concrete in that spot and it cracks. The cracks radiate out from the spot of the point load. If your tenant has a heavy vehicle, ask that he park it in different places on the driveway. Point load damage could be considered above and beyond ordinary wear and tear.

Cabinets Most tenants will not pick up a screwdriver and tighten a screw that is coming loose. Many don’t know what a screwdriver is. Then, when the door comes loose from one hinge, they will let it hang from the other one. Cabinets should last for 20 to 30 years. If they are damaged from tenant neglect such as that, it is above and beyond ordinary wear and tear. It doesn’t cost a tenant anything to tighten a screw. At the same time, though, a periodic inspection would probably have discovered a loose cabinet door. Floors You know what the life expectancy is when you buy the flooring, and it varies by quality. If you buy cheap vinyl, and a tenant’s high heel pokes a hole in it, you got what you paid for. But if a tenant drags something sharp across the floor and scratches or cuts the flooring, that is above and beyond ordinary wear and tear.

Doors (hinged) Tenants have been compared to teenagers: if something doesn’t work the first time, force it. Things get caught in doors, such as broom handles on the hinge side of the door, and then the door gets sprung. Screw holes are stripped and hinges get bent. Doors last indefinitely, if used properly. Damage to them is above and beyond ordinary wear and tear.

Doors (sliding) These come off their tracks, and despite the fact that it is easy and costs nothing, tenants don’t put them back on their tracks. Then they come loose and get banged around, damaging the tracks so they have to be replaced. Take the cost of damage out of the security deposit. You can’t be there all the time to watch to see that a tenant doesn’t do anything stupid or destructive. Previous landlords can often give you some insight on how well a tenant took care of a property. Some tenants are simply unconscious: they don’t mean to do any harm, they just have no way to connect what they have done with the damage. One of the mysteries of life. Deciding whether damage is beyond ordinary wear and tear often boils down to a landlord basic, deciding if something was used in a way it wasn’t designed for. If it wasn’t, it is damage which should be paid by the tenant. Thanks to Don Crawford of Crawford Home Inspection Service for much of the information contained in this tip. 

Copyright© 2007 NARPM®. Reprinted from the February 2007 issue of the NARPM® Residential Resource news magazine. For additional information about the National Association of Residential Property Managers, visit www.narpm.org.

WHO ARE THESE GUYS AND WHY DO WE HAVE TO PAY THEM?

Web Admin - Tuesday, June 21, 2016

WHO ARE THESE GUYS AND WHY DO WE HAVE TO PAY THEM? By Mark Tschetter, Senior Managing Partner, Tschetter Hamrick Sulzer

Almost all communities are playing music for resident listening, and/or TVs for resident viewing. However, most communities aren’t aware that if music, or TVs are being played for residents, a license may be required, and if a license is required and the community doesn’t have one it is in violation of copyright law. Many communities are discovering that copyright licenses are required, because more communities are being notified by performance right organizations (PROs) that the community’s current music and TV practices are in violation of copyright law. Specifically, performance rights organizations are notifying apartment communities that they are infringing on copyrights, and demanding that the communities start paying licensing fees. Does your community need a license to play music or TVs? The short answer is probably yes. However, evaluation of licensing requirements can be complicated. Copyright licensing issues are further complicated by the fact that licensing rules are different for music and TV. Licensing requirements depend on the facts and circumstance of each case, what is being played, where it is being played, and how it is being played. A multifamily community can be involved with copyrighted material requiring a license in variety of ways. Music from a host of sources may be being played at the community. Locations where music is played may include the leasing office, models, lounges, pools, fitness centers, business centers, game rooms, theatre rooms, and clubhouses. The community may be playing TVs in the fitness center and elsewhere. The community may be using social media and posting music videos or music to the Internet. If you are playing music anywhere in public at your community, or have any TVs in public at your community, you may be required to pay copyright licensing fees to avoid infringing the artists’ copyright. Copyright infringement is the unauthorized use of another’s creative work. If you play music without a license, when one is required, it is copyright infringement. Lack of knowledge of license requirements or intent is irrelevant. You can’t defend copyright infringement based on ignorance or lack of intent. You should not ignore this issue and hope that it goes away because the penalties for copyright infringement are severe. Statutory damages range from $700 up to $30,000 per song performed without a license. Willful infringement, could subject you to damages of up to $150,000 for each song performed without a license.

If music or television broadcasts are copyright protected, licenses are almost always required if publicly performed. Public performance is not limited to a live performance by the artist. If a song is played in public, then it is publicly performed. Under copyright law, publicly performed is much narrower than you would think. A public performance occurs where people gather. It doesn’t have to be a large gathering. If a gathering is more than a small circle of family or social acquaintances, then it is a public gathering. Similarly, any space that is open to more than a small circle of family or social acquaintances is a public space. For example, even though your fitness center is not open to the general public, your fitness room is a public space under copyright law, and any music played there would be considered to be publicly performed. Public performances also include any transmissions to the public, for example, radio or TV broadcasts, as well as content delivered over the Internet. Copyright owners have the exclusive right to publicly perform copyrighted music, and the legal right to compensation when anyone else publicly performs copyrighted material. PROs grant and administer licenses on behalf of copyright owners. Artists and copyright holders join PROs so that the PRO can enforce their copyrights. The three major PROs, that enforce copyrights in the United States, are ASCAP, BMI, and SESAC. ASCAP is the American Society of Composers, Author & Publishers; BMI is Broadcast Music, Inc.; and SESAC is the Society of European State Authors & Composers.

Under the law, PROs must offer licenses to anyone, and the PROs must charge all license seekers the same rates for the same or similar uses. Information, regarding PRO licensing rates, is available from individual PROs. One way PROs are executing their mission to enforce copyrights is by contacting businesses and demanding that they pay required licensing fees. PROs have been targeting the multifamily industry. Depending on what you’re playing, you may need multiple licenses, e.g. a music license with all three PROs. A music license with one PRO allows you to perform only copyrighted music represented by that PRO. Each songwriter or composer may belong to only one performing right organization at any given time, so each PRO licenses a unique repertoire of music. Thus, a BMI license doesn’t cover songs in SESAC’s catalog. Wait a minute we only play music from satellite, TV, cable, or radio stations at our community. Aren’t they already paying the PROs licensing fees, so we don’t need another license? Various content providers may already be licensed with PROs. However, broadcast licenses don’t authorize the performance of such TV, cable, and radio to the public by businesses and other organizations. Generally, businesses must secure public performance rights for TVs or radios under certain circumstances. With respect to TVs, licenses must be secured if the business is playing more than four TVs; has more than one TV in any one room; if any of the TVs has a diagonal screen size greater than 55 inches; if any audio portion of the audiovisual performance is communicated by means of more than six loudspeakers, or four loudspeakers in any one room, or there are any speakers in an adjoining outdoor space. With respect to radio, licenses must be secured if the business is playing more than six loudspeakers; more than four loudspeakers in any one room or adjoining outdoor space; or playing music on hold.

To evaluate licensing requirements, you must answer where, what, and how music or other copyrighted material is being played at your community. If music is not being publicly performed (played in public) at your community, then you don’t need a license. Keep in mind that the concept of public performance is broad. If the content of your music is not subject to copyright protection, then you don’t need a license. While there is a fairly extensive catalog of music that is not copyright protected, the reality is that any music your residents would want to hear is likely to be subject to copyright protection. In other words, your residents probably don’t want to hear 1928 elevator music. However, your music list or TV content may be limited to a particular PRO’s catalog. Thus, if you’re only playing BMI music, you don’t need to pay SESAC licensing fees as well. As discussed previously, the size of TVs, the number of TVs, and the number of speakers (both for TV and radio) can also factor into the analysis of licensing fees and rights.

Licensing options and pricing varies widely depending on content and delivery. Music and TV licenses from the major PROs will run $200 per year and up, per community per PRO. Some alternatives to the PROs exist. Under the alternatives, the licensing passes through so that you can play them without requiring an additional license from a PRO. Such services include SiriusXM Business or Pandora Business, which run from $25 to $30 per month. Other alternatives include MoodMedia (previously Muzak) at about $200 per year (MoodMedia touts itself as the world leader in background music). Royalty free music collections are offered by stockmusic.com and streamlicensing.com ($130 to $200 per year). While these services offer an alternative to the PROs, they may be subject to limitations on content and delivery, and do not cover TV. If you’re going to go with an alternative to a PRO, you should carefully read the fine print for limitations. 

June Chapter Update

Web Admin - Tuesday, June 21, 2016

Hello NARPM Denver Chapter!

Because June is typically a busy month for property management it may be a good idea to add the June meeting to your busy schedule. It will be well worth your time! This month the speaker will be sharing talking points anyone can use to encourage property owners to invest in more properties for you to manage. Just another way NARPM Denver Chapter is a valuable tool that helps you improve your property management business not to mention your profitability.

Treat your family and your management team to a Night at the Rockies! This annual Denver Chapter Event typically sells out quickly. Click here to purchase your tickets. Our nomination team is looking for property managers who would enjoy working with the Chapter volunteer leadership team as we continue to provide successful, professional events. If you are thinking of volunteering just contact Susan Melton or Bill Martin. Joining the leadership team is a fun and easy way to earn those much needed points for RMP or MPM designations. Thanks for taking the time to read this! Let us know of any suggestions you have that may help or improve your NARPM experience. Let’s work together to realize and appreciate the value of being a member of NARPM Denver Chapter.

Susan Melton

2016 NARPM Denver Chapter President

May Chapter Update

Web Admin - Sunday, May 15, 2016

May NARPM Denver Chapter Update. by Susan Melton MPM®, RMP®, 2016 NARPM Denver Chapter

The Colorado Property Management Conference was a wonderfully successful event due to the efforts of Cookie Hooper and Tony Cline.  Their leadership of the conference committee inspired many volunteers to put in the time and effort needed - many thanks to all who participated!  Please help the leadership team plan for an even better event next year by watching your inbox for and completing the conference survey.

Don’t forget, beginning this month the deadline for luncheon sign-ups will be 5 pm 3 business days before the luncheon meeting.  We can accept a few attendee payments at the registration table on luncheon meeting day; just bring a check payable to NARPM Denver Chapter.  You will want to show up early for same day registration as we have a limited amount of lunches and seating available.

If you would enjoy working with our volunteer leadership team as we continue to provide successful, professional events just let us know.  Let’s all work together to realize and appreciate the value of being a member of NARPM Denver Chapter.

The Once and Future Tenant

Web Admin - Sunday, May 15, 2016

The Once and Future Tenant. by Peter Meer MPM®, RMP®, 2016 NARPM Denver Chapter Vice-President

When renting a residential property all of us want to know who, exactly, is going to be occupying it. So how does it happen that different or more tenants end up in the property?  MUSICAL TENANTS! How do you stop this from happening?


All applicants (age 18 or over) for the property should be required to complete your rental application.  The lease I use (created by our attorney) prohibits subleasing or assignment. Unfortunately, that prohibition does not stop tenants from playing musical chairs.  Most often, a tenant who is about to break the lease will call you to discuss how to handle the “change”.  At the point of the phone call you need to look for solutions to the problem, rather than threats of legal action, and credit reporting.  Most often hardball tactics do not work.


Ask the departing tenant to locate a replacement, subject to your normal credit, criminal, employment and landlord checks.  They need to direct this new person to you, thus allowing the proper screening procedure to be followed.  If this individual meets your requirements, go for a substitution of tenants.  This procedure will require dealing with the security deposit of your original tenant.  The vacating tenant needs to provide a notarized letter indicating their actual departure date from the property and their relinquishment of all rights to the property.  They also need to provide a notarized letter that they have received from the replacement tenant, their proportion of the security deposit.  This letter should also release you from any and all obligations connected with the original tenant’s deposit.  With these letters in hand, you can remove the old tenants name and replace it with the new tenant.  The new tenant initials their inserted name and signs the original lease.  The above documents should be created by your attorney.


The above procedure should allow you to control who is actually living in the rental unit you manage.


MOLD – SIMPLER THAN YOU THINK – IT’S ABOUT THE MONEY!

Web Admin - Sunday, May 15, 2016

MOLD – SIMPLER THAN YOU THINK – IT’S ABOUT THE MONEY! By Mark Tschetter, Senior Managing Partner, Tschetter Hamrick Sulzer

Mold situations arise on a regular basis. Because we have handled a large number of mold situations recently, we thought it was time to revisit the issue. What if anything has changed since we last discussed this issue in October of 2010?

After extensive research and review of the latest court decisions, not much has changed. If anything, time has only reinforced that mold is not as much a legal issue but rather a business decision, or certainly not as much of a legal issue as most folks think. When a tenant complains, and there is some visible black mold accompanied by a dreaded black mold test, managers often get sidetracked from the real issue. Because mold cases are very defensible, mold situations should always be resolved by risk and financial analysis. When it comes to mold, the question always is what solution involves the least financial expenditure resulting in a permanent resolution?

Despite the hopes and dreams of the trial lawyers everywhere, mold is not gold. Even though there were some high profile cases in the late 90s and early 2000s with some ridiculous (many say unsupportable verdicts), mold certainly has not been the next asbestos. Major mold verdicts are few and far in between, and have all but come to a halt. Mold litigation has failed primarily over causation. Tenants simply cannot prove either general or specific causation. To prove general causation, a tenant needs to prove that mold at certain levels causes specific health issues. To prove specific causation, a tenant needs to prove the specific mold alleged to be in their apartment unit caused the specific health issues that the tenant is experiencing.

The American College of Occupational and Environmental Medicine succinctly summarized the issue over a decade ago. “The present alarm over human exposure to molds in the indoor environment derives from a belief that inhalation exposures to mycotoxins cause numerous and varied, but generally nonspecific, symptoms. Current scientific evidence does not support the proposition that human health has been adversely affected by inhaled mycotoxins in the home, school, or office environment.”

In 2003, the Center for Disease Control and Prevention of the United States Department of Health and Human Services, requested the Institute of Medicine (IOM) to convene a committee of experts and conduct a comprehensive review of scientific literature regarding the relationship between damp or moldy indoor environments and the manifestation of adverse health effects, particularly respiratory and allergic symptoms. IOM found that there was not sufficient evidence of a causal relationship between the presence of mold or other agents in damp indoor environments, and such health outcomes as asthma development, skin symptoms, gastrointestinal tract problems, fatigue, cancer, mucous membrane irritation syndrome, chronic obstructive pulmonary disease, rheumatologic and other immune diseases, and inhalation fevers.

Medical and scientific research simply does not support the outrageous legal demands by tenants. Medical and scientific mold research also doesn’t support the expert witnesses who try to support tenant mold claims through expert testimony. Many, if not most courts, now bar expert testimony in support of mold claims because the experts cannot establish through any acceptable methodology that a tenant was injured due to mold contained within the tenant’s apartment.

The fact that mold is not the deadly agent it is made out to be makes perfect and logical sense. After all, mold is everywhere. Mold makes up twenty- five percent of the earth’s biomass. This explains why almost everyone has had some form of mold growing in his or her residence at one time. Given how much mold naturally occurs in the environment, if mold were extremely toxic, serious mold related illnesses would be an everyday occurrence.

Even though mold concerns are not supported by scientific evidence, the mass hysteria over mold is all too real. With Google reporting over half a million hits for “toxic mold”, it is not surprising many tenants believe that even a small amount of mold has immediate and serious health effects. Tenants often think mold is a winning lottery ticket, or a get out of a lease for free card.

This is where risk and financial analysis comes into play. If it is a break lease scenario (tenant wants out of their lease because of mold or at least allegedly over the mold), we normally would advise our clients in today’s environment to grant this request, subject to several caveats. First, the market is favorable, thus the likelihood of replacing any tenant almost immediately is good. Obviously, in a tough market allowing somebody to break over mold would be a tougher decision. Second, allowing the tenant out doesn’t also mean (in most instances) writing a check. Third, the tenant should sign a release. If the tenant wants out, this is your leverage. If you allow the tenant out without making them sign a release, the tenant might come at you again with the same mold claim, costing you more time and money. If you’re going to let the tenant break their lease, it should and has to be over.

If it is a demanding damage scenario (tenant wants money or big money because of mold in their unit), the risk and financial analysis is more involved. If the financial demand is small, for pure economic reasons, you should strongly consider just paying it. Unfortunately, payment of settlements is a cost of doing business. Payment of small settlements, even when not justified, usually will leave the community financially far ahead. For example, settling for $500 and getting a release, is always preferable to racking up several thousand dollars in attorneys’ fees you probably will never be able to collect.

In dealing with higher dollar mold demands, you should base your risk analysis on a number of factors. If you have mold insurance, you should always turn over high dollar mold demands to your insurance carrier.   One of the biggest downsides of mold (like many other claims) is the cost of defense. If a tenant is determined to pursue a mold claim, even though you are likely to prevail in court, you will spend a lot of money defending the claim. If you have insurance, the insurance company must defend you. If an insurance company defends you, you normally don’t have to pay attorneys’ fees and therefore one of the major risks of a mold claim (cost of defense) is minimized. Obviously, if you can settle the claim for less than the deductible, you should consider it.

Because most owners and managers either don’t have mold insurance or the deductible is significantly higher than what the claim can be settled for, owners and managers end up having to settle mold claims. If you have to resolve or settle a mold claim, you should consider the following factors in your risk and economic analysis.

Was there a water source? Almost all molds are caused by water intrusion events, or leaks either from inside a unit or outside of a unit. Except for tenant-caused water intrusions, most water intrusions are maintenance related, and therefore in most case your responsibility. Even if the tenant caused the water intrusion, you are still responsible for remedying mold in most cases. Regardless whether you’re responsible for causing the problem or remedying mold, tenants will always look to you. If there is no, little, or ongoing water source, you have much more leverage to resolve a mold demand.

How good on your lease documents? If your lease documents require tenants to immediately report any mold growth and water intrusions, you are in a stronger position. Strong mold language gives you the leverage to greatly reduce tenant damages claims, especially in the worst cases when tenants demand the most. “Yes, we know it is bad. However, it is bad because you failed to report the situation as required by your lease.”

How good are your vendors? Specifically, how much do they know about mold and mold tests? In providing legal services to the multifamily industry, we are constantly exposed to vendors for a variety of reasons. While many mold related vendors we have come across are good at remediating mold, few know much about mold, why it generally is not harmful, and most importantly cannot review a mold test, and offer opinions why mold tests are inherently flawed

Having a strong mold expert (vendor) can help resolve mold disputes. Mold reports scare tenants because mold reports use terms such as “black mold” and “toxic mold”, and refer to “adverse health consequences”. A knowledgeable mold vendor should be able to clarify a tenant’s mold report, and provide other information and insight that demonstrates the inherent limitations of a tenant’s mold report. Your vendor should be able to discuss the inherent limitations and flaws associated with mold testing.

One reason tenants believe that mold is a significant health hazard is because the Internet contains substantial information about mycotoxins produced from mold. This probably led to the expression “toxic mold”. But as the Center for Disease Control points out, “[t] he term “toxic mold” is not accurate. While certain molds are toxigenic, meaning they can produce toxins (specifically mycotoxins), the molds themselves are not toxic, or poisonous. Hazards presented by molds that may produce mycotoxins should be considered the same as other common molds that can grow in your house. There is always a little mold everywhere - in the air and on many surfaces.”

Your mold vendor should know about mycotoxins, including the following facts. Visible mold may not be producing mycotoxins. Whether the tenants tested for mycotoxins. Mold itself is not toxic. Even if the mold is producing mycotoxins, the level of mycotoxins is probably nowhere near a level considered to be a health hazard. For example, a tenant recently had a mold report with seven spores per cubic meter of stachybotrys. Stachybortrys is also known as “black mold”, and is widely viewed by tenants as the cause of many ailments. But according to OSHA the air does not even become potentially contaminated until there are 1,000 colonyforming units of stachybotrys in a cubic meter of air. Obviously, there is a huge difference between a seven spore count and 1,000 colony-forming units.

Armed with an expert review of the situation and the tenant’s mold test, you should be able to strongly respond to the tenant’s demands. Your vendor should provide you with the knowledge to refute the tenant’s claims, and to provide the reasons why you’re not going to write the tenant a check for several thousand dollars. After reading this article, you should discuss your vendor’s specific mold experience and knowledge. Your vendor should know more about mold than your attorneys. We could be wrong, but most mold remediation vendors we have encountered do not have the qualifications discussed in this article. If your vendor can’t provide specific insight and guidance in responding to tenant mold claims and assist you in dealing with a mold remediation vendor, you should find a vendor that can assist with such claims.

Regardless of the facts and the low probability that the tenant would win in court over a mold claim, many tenants and attorneys will not go away without compensation. While the scientific literature indicates that the tenant should not recover for health-related damages, no result is automatic in court. You may also face claims for potential legal liability for property damages, rent abatement, and moving costs, among other items of damages. While you are likely to win cases involving insignificant amounts of mold, the cost of victory may greatly exceed the cost of a settlement with the resident.

In any potential lawsuit, defense costs and chances of losing in court should be immediately considered in settlement analysis. This is especially true with mold because it usually is just about the money (weighing the cost of what you can get rid of it for now versus what it will cost to get rid of a tenant lawsuit). The cost of defense will vary greatly based on the situation, and whether or not the tenant has hired an attorney. However, attorneys’ fees to defend even a simple mold case in county court could easily total five thousand dollars. Further, even if you win in court, you may not be awarded your attorneys’ fees, and if awarded you may not be able to collect them from the tenant. There is also the significant cost of lost staff time to participate in the lawsuit. Each potential mold lawsuit needs to be individually evaluated based on the facts. However, based on defense costs, like any other litigation, settlement may be advisable, and even desirable, especially if the resident is wiling to move on for a reasonable amount.

Are You Ready for a Cyber Attack?

Web Admin - Wednesday, April 13, 2016

Are You Ready for a Cyber Attack? by Michael Barnett, Legal Shield

You need to understand the risks of a cyber attack on your business, learn how to minimize risk and recover in the aftermath of an attack. Attacks come in many forms, such as viruses, malware, cyber extortion and data theft. Cyber extortionists hold your information or system hostage in return for payment. Data thieves will steal client information for use in identity theft rings or other criminal activity. A data breach could be disastrous for your business. While losing a customer’s data would likely mean losing their business, depending on the nature of the loss, the client may seek damages from you in court. Protect your business by preparing for a cyber attack. Here is where to start:

Eliminated Common Vulnerabilities – Cyber criminals will generally seek the path of least resistance. These often include weak passwords, unchanged default settings and untrained users. It is important to require the use of strong passwords throughout your business. Never leave default security settings on devices or share common passwords throughout your business. Limit access to critical systems and client data to employees who truly need access.

Install Updates – You should complete software updates in a timely manner. Hackers are constantly looking for software vulnerabilities. Software developers create updates to fix known flaws. Failing to update your software is like leaving your door wide open to cyber criminals.

Utilize Security Tools and Settings – Protect your network with a firewall, which will block any unauthorized access. Use a virtual private network (VPN) to secure your network. Use encryption software to protect data traveling outside of your network. Install antivirus programs on all computers and update them frequently to prevent the latest viruses and malware.

Back up Your Data – It is vital that you back up your data. Having an offsite backup service will help shorten recovery time from a cyber attack of other IT disaster. Consult a trusted IT professional about the best options for your business. There are now a number of could-based backup services that can sync your data on a daily basis. This will speed up the recovery process if your data is damaged or corrupted as a result of an attack.

Protect Your Smartphone – For many small business owners and employees, the smartphone is a vital piece of workplace equipment. It is important to treat security on your smartphone as you would on a desktop at work. Use encryption software, follow password policies, install updates and backup your data.

Cyber Security Policy – A cyber security plan should set clear and concise ground rules for your employees and managers. The FCC offers a helpful online tool that allows you to develop a customize cyber security plan for your small business. You can access the FCC Small Biz Cyber Planner 2.0 at www.fcc.gov/cyberplanner

Train Employees – Once you have a plan in place you must pass that knowledge on to your employees. Provide them with a copy of your cyber security policy and have them sign an acknowledgement that they received, read and understood the policy. Make sure employees feel comfortable reporting potential vulnerabilities and asking questions.

Consider Cyber Security Insurance – Not everyone needs cyber security insurance but it may be worth investigating depending on your business. Does your business store confidential or personal data on your network? Do you or your employees have access to confidential data via vendors on in the cloud? Cyber insurance may help mitigate some of the liability and recovery costs related to an attack.

April Chapter Update

Web Admin - Wednesday, April 13, 2016

Hello NARPM Denver Chapter! by Susan Melton MPM RMP, 2016 NARPM Denver Chapter

Our annual Property Management Conference is being held this month!   Space is limited so sign up now.  Don’t miss your chance to attend the best Property Management Conference our Chapter has ever held.  Take advantage of networking with other property managers, hearing from national and local speakers and not traveling any farther than Lakewood, Colorado!

Earn Colorado CE credit, earn points toward your NARPM designation AND improve your property management business by attending one of the classes – Office Operations (6 CE hours), Advanced Risk Management (6 CE hours) and Ethics (3 CE hours) on April 27th to be held at the Sheraton Denver West hotel. 

NARPM Denver Chapter is one of the best in the nation because of our exceptional, hardworking volunteers.  This month please join me in thanking Geff Kempsel, Education Chair, Cookie Hooper &Tony Cline, 2016 Property Management Conference Committee Chairs.  Geff, Cookie and Tony began working on the conference in November of 2015!  Geff is handling all the details for the CE designation classes on April 27th plus he is in charge of planning, scheduling and CE certificate processing for all three classes.  Tony and Cookie have both served as Chapter President and have both put in countless hours putting together a super well-organized, excellent program at an outstanding hotel.

If you would enjoy working with our volunteer leadership team as we continue to provide successful, professional events just let us know.  Let’s all work together to realize and appreciate the value of being a member of NARPM Denver Chapter.

Beginning in May, 2016 the deadline for luncheon sign-ups will be 5 pm 3 business days before the luncheon meeting.  

Adopt Policies to Avoid Public Relations Nightmares

Web Admin - Wednesday, April 13, 2016
IF YOU ARE NOT AWARE, SOMEBODY IS WATCHING YOU! ADOPT POLICIES TO AVOID PUBLIC RELATIONS NIGHTMARE by Mark Tschetter, Senior Managing Partner of Tschetter Hamrick Sulzer, P.C.

Some claim that the average urban American is photographed or videotaped 75 times a day. Inexpensive digital photography and video equipment have crept into all aspects of our daily lives and are here to stay. Inexpensive digital video now streams to the cloud for storage and access 24/7 on any computer or mobile device. Accordingly, the probability of a community employee being subject to live video monitoring when they enter a tenant’s apartment is substantial, and becomes greater every day.

A number of video “situations” have hit the THS situation board. Specifically, tenants have complained to onsite management, including threatening legal action in some instances, because onsite team members have engaged in inappropriate behavior while inside of a tenant’s unit during maintenance or inspection. Most of these issues have not dealt with blatantly criminal behavior like theft or damage to the tenant’s property. The most common complaint from tenants, with hidden video cameras, is that an employee is exercising a more than appropriate interest in the tenant’s personal property. Tenants produce videos of staff members going through their clothing, drawers, refrigerators, music and video collections, and otherwise just plain snooping. These videos can create the impression that the staff member is “casing” the unit for later criminal activity or stalking the tenant.

Under Colorado law, a landlord’s right to enter a tenant’s apartment is entirely dependent on the terms of the lease agreement. Historically there was a legal presumption that all rights of possession of a property were transferred to the tenant when a landlord leased that property to the tenant. Consequently, without a contrary agreement in the lease, a Colorado landlord has no right to enter a tenant’s apartment unit.
Most leases allow a landlord to enter for most reasonable business purposes, including maintenance and inspection. However, we’ve never seen a lease that authorizes a landlord to go through a tenant’s possessions. However, no matter how broad your right to enter a tenant’s rental unit, it doesn’t cover the overzealous observation of the tenant’s personal property by an onsite team member. Such conduct is a clear breach of any lease agreement.

Some states have modified a landlord’s right to re-enter a tenant’s rental unit by severely restricting the landlord’s right and ability to enter or re-enter a rental unit. These states have imposed a burdensome regulatory framework that describes when a landlord may or may not enter a leased property. In addition to impacting management’s ability to efficiently perform maintenance, these laws also impose liability on landlords for wrongful entry, or entry made without proper notice.

We are exposed to the landlord and tenant laws of other states daily. Landlords have it good in Colorado. Colorado has some of the most reasonable landlord tenant laws in the country. Colorado does not take on the difficult (impossible) job of describing in detail the appropriate circumstances and notice for every possible landlord re-entry into a rental unit. Rather, in Colorado, a landlord’s right to enter a rented apartment, is created and limited by the parties in the lease agreement. Bad legislation can easily be born from a few highly publicized cases or tragedies. One bad video playing on the news and then over and over on the Internet could result in legislation that could dramatically increase the cost of maintaining apartment units.

In addition to altering the industry negatively for everyone, the list of potentially bad consequences to your individual community is long. It doesn’t take much of a leap of imagination for a tenant to claim that a video of an unprofessional inspection serves as evidence of an employee’s involvement with a later theft (real or falsified). Tenants could also use videos to break their lease. If onsite team members do inappropriate things in a tenant’s unit, the tenant will argue that this is a clear breach of the covenant of quiet enjoyment. Because everyone thinks that somebody rifling through their belongs is an unacceptable violation of someone’s privacy, many judges may agree, and conclude that a tenant is justified in breaking their lease when onsite team members are caught on video doing inappropriate and unacceptable things inside the tenant’s unit.

Potential fair housing liability is also significant. A protected class member could easily argue that the community is providing different maintenance “terms, conditions, and privileges” when onsite team members are captured on video violating the tenant’s privacy. This type of video would be particularly damming if other tenants had hidden video cameras, but none of them complained. It then looks like the team member is only violating the privacy of the tenant because of their protected class status.

Tenant videos could also make it more difficult to defend fair housing complaints. Tenants frequently lie in connection with fair housing complaints to bolster their complaint by attempting to make onsite team members appear racist. For example, tenants will allege that a maintenance tech hurled a racial slur or epithet at the tenant. We usually can defend against these types of “he said, she said” fabrications. However, such a lie will be given more credibility, and thus will be much more difficult to defend against, if the tenant has the maintenance tech, who allegedly made the racial slur, on video disrespecting the tenant’s privacy by going through the tenant’s personal effects on multiple occasions.

You should promptly alert your staff members about the possibility of being filmed while they are inside a tenant’s home. Onsite team members should always assume that they are always on camera. When inside a tenant’s unit, onsite team members should always behave as if the tenant was home. Staff should be all business while inside a tenant’s unit. Inspection activity should be clearly focused on the apartment itself rather than the resident’s personal property and should be as un-intrusive as possible for the legitimate purpose being served by the entry.

Owners and managers need to adopt these types of SOP (Standard Operating Procedures) policies, including harsh consequences for violations, including termination of employment. Because videos can be instantly uploaded to YouTube or posted on other social media sites, the community can’t tolerate any inappropriate behavior inside a tenant’s unit. The consequences for violation have to be harsh because a single video could quickly turn into a tenant relation’s nightmare. Even worse, the video could be picked up by the news and posted on their website forever. Zero tolerance policies may be necessary or warranted to avoid negative publicity and financial impact on a community that could be caused by a single video.

Pets or No Pets!

Web Admin - Wednesday, April 13, 2016

PETS OR NO PETS! by Peter Meer MPM RMP, 2016 NARPM Denver Chapter Vice-President

Probably two-thirds of would be renters for single-family homes have a pet (we are talking dog or cat here).  By automatically excluding pets the landlord is drastically reducing the number of potential renters available.  The balance of this article will look at the pros and cons of such a decision.

THE REASON TO ALLOW PETS

Getting the unit rented quickly is guaranteed to put more money in the owner’s hands. Allowing pets increases the potential number of would be tenants, thus reducing possible lost rent.  Additionally, the rent may be higher by allowing the pet.

It is common to get a higher dollar amount for the security deposit when a pet is involved.  You should NOT identify this additional amount as a “pet deposit”, as that may limit how your total security deposit can be used when the tenant vacates the property.    

Remember that service animals are not considered a pet.  Also keep in mind that service animals may be needed for psychological reasons and may well be protected under federal law. 

THE REASON NOT TO ALLOW PETS

For the last 30 years, every tenant I have talked to about his or her dog, tells me the same thing.  Their dog is Lassie (for those of you not knowing who Lassie is—sorry).  Their perfect dog would never mess in the house, never chew or scratch the doors, etc. Their cat is equally well trained, never touching the drapes or failing to use the litter box. 

In fact, pets cause damage that can be very expensive.  I tell my clients that this is a business risk decision.  The previous landlord may or may not give you an accurate picture of the pet’s behavior.  If the carpet is more than five years old and the doors are not perfect to begin with, allowing a pet is not as difficult.  With brand new carpet, it is a very difficult decision.

It really comes down to the owner deciding if taking the added risk of a pet is worth the extra rental dollars.  As a residential property manager, my job is to give my client the pros and cons and let them make the business decision.


National Association of Residential Property Managers

Copyright © 2018 Denver NARPM. All Rights Reserved.
Website built by PMW | Tenant Screening | Sitemap | Areas Served | Join NARPM