Chapter 15 Quiz - Property Management

Chapter 15 Quiz - Property Management

• Negligent Hiring: A tenant suing a company for negligent hiring must prove the company knew of a danger posed by the employee before hiring them. The danger must relate to the injury inflicted, and the tenant cannot have provoked the employee.

• Independent Contractor Hiring: A manager should verify the contractor has proof of insurance, and a policy for errors and omissions. Criminal history is also relevant.

• Employee Handbooks: Handbooks should explicitly avoid discriminatory practices, sexual harassment, and unacceptable tenant behavior. They should not address issues like tax liability on operational profits.

• Labor Laws: State and federal labor laws govern issues like maximum working hours, overtime limitations, but not remodeling regulations, which are covered by building codes. Worker's compensation is covered as well.

• Risk Reduction: Property managers must avoid keeping permanent records of maintenance problems, regularly inspect the property, promptly notify tenants of unfixable problems, and swiftly repair issues.

Emergency Procedures

• Utility Shut-off Procedures: Methods for shutting off utilities are detailed in the emergency procedures manual not the employee handbook, insurance binder, or lease agreement.

• Emergency Procedures Manual: An emergency procedure manual details an important process, in which an issue is identified by someone and then relayed to the maintenance supervisor, property manager, and skilled worker. This "phone tree" ensures multiple people are notified, each handling a different part of the process.

• OSHA Regulations: Workplace OSHA regulations often require a first aid kit, and at least one staff member must be trained in first-aid. This is not always a requirement that all staff be first-aid trained.

• Local Regulations: Local laws might require specific numbers of fire extinguishers, emergency lighting, tenant notification, and training on fire safety.

Risk Management

• Insurance Policies: Hazard insurance policies are often restricted by a set price per incident (e.g., $100,000) or year. Replacement values, as opposed to depreciated value, can impact the amount received.

• Property Value: Depreciated value and replacement value both impact insurance payouts if a building is damaged. For an older building, the replacement cost can exceed the building's depreciated value.

• Homeowner Insurance: Basic homeowner policies cover typical perils (damage from broken plumbing, windstorms, etc.). Other policies cover earthquake, flood and certain other natural disasters. This typically requires additional endorsements.

• Business Interruption Insurance: If a property is damaged or unusable, this policy can help cover lost rental income.

• Errors and Omissions Insurance: This policy protects managers from claims of negligence by owners.

• Fidelity Bonds: These bonds protect against losses due to employee fraud or embezzlement.

• Insurable Interests: Owners of a building have insurable interest, not necessarily tenants or guests.