By Jo-Anne Oliveri, ireviloution intelligence, Brisbane, Australia

Speaking at a recent property management conference, I tackled a question posed by principals and business owners: How do you modify others’ behavior to get the results you need? This is about creating positive relationships with your clients – the cornerstone to building a successful business.

Quite simply, to create positive relationships with your clients, principals and business owners must write, implement, and manage effective policies and procedures so your clients get what they need from you and you get what you need from your clients.

But what makes policies and procedures effective? When they cover legislation, agency culture, agency standards, processes, and relevant codes of conduct.

Legislation

Write legislative requirements into your policy so your agency operates compliantly and its brand and reputation are protected. For example, legislation might state that certain communication, such as breach notices, must be in writing and on the prescribed form, so into your policies and procedures it goes!

Agency culture

Agency culture is about your business’ values, beliefs, vision, and personality. Don’t fall into the trap of copying other agencies’ cultures — this doesn’t give clients a reason to choose you over your competitors. Determine what points of difference your agency offers and create your unique culture around these points of difference…then uphold them by way of your policies and procedures.

Agency standards

Agency standards are your customer service and operational standards. A customer service standard could be that your all clients must be greeted in the same manner. An operational standard could be the quality of the property your agency is prepared to manage. When you create these agency standards and write them into your policies and procedures, you get consistency. This means that your clients know exactly what to expect — and that you and your team know exactly what to deliver!

Processes

Processes are the way tasks are carried out through to completion. Processes streamline tasks, allow them to be shared between your team, and provide the means to manage, monitor, and measure them. An example of a process is arrears management (e.g., sending a 3-day SMS, 5-day SMS, 7-day phone call, 8-day breach and then, if the client still fails to pay the rent, issuing a notice to leave). Basically, every task needs a process, and that process should be in your written policy so it is effectively implemented and managed to get the results you need from your clients, and your clients get the results they need from you.

Code of conduct

Your policy must refer to the code of conducts you are obliged to follow. If you belong to a franchise group, you normally have a code of conduct to follow. If you are licensed to any other organizations, you usually have a code of conduct to follow. My point is that all relevant codes of conduct must be embedded in your policies and procedures.

So there you have it: the key ingredients to writing effective policies and procedures for your agency. Do this and you are on your way to creating positive relationships with your clients. They get what they need from you, and you get what you need from them: loyalty, repeat business, and referrals.

By Colin McCarthy, J.D., Robinson & Wood, San Jose, CA

It’s pretty much a given that some of the best facts concerning accidents in cases involve tractors.  Someone is always getting his hand cut off, his fingers severed, or run over by one in these cases. These fact patterns breathe life into otherwise dreary reading, overly technical, and Latin-laced decisions with obscure rules. Some of my favorite fact patterns, as a history major, are those involving when cars were first introduced.  People were just reckless with them, and it showed up in the case law. And more often than not, a tractor is involved.

Here’s a fact pattern involving a tractor based on a real case in California. I changed the tractor to a ride-along lawnmower, but it’s more or less the same thing.

You are a tenant in a large apartment complex that’s managed by a large corporation with retained employees.  These employees mow the grass around the California complex, with its lush greenery and swimming pool.  You befriend one of these employees, well, because you want to ride on one of those sit-down lawn mowers that you’ve seen on TV but have never ridden on.  You gain the employee’s trust and then spring it on him. “Hey, can I drive your lawnmower? Can you teach me to drive it?”

Ever the devoted employee, he demurs. “No, I couldn’t.” There is a rule against riding along, he tells you.

“Aw come on,” you say, “it’s just one drive, and I’ve always wanted to learn.”

“No,” he says. “But maybe I could let you ride along with me?  I’d be on the lawn mower, after all. There’s no rule about having someone ride along with me. Yeah, I’ll teach you as I drive and you ride. That’s what we’ll do.”

There’s only one seat, but you decide to sit on the attached tool box. And so, you ride.

You ride free. Free as you’ve ever been on a lawnmower. Wind in your hair. Sky at your horizon, grass undercut at your feet. And then . . . you fall. Right into the path of the lawnmower. And you are severely injured. And you sue.

You sue your dear friend the lawnmower driver, and you sue his employer. His employer denies liability. What the employee did here was unauthorized and not within his scope of employment, he says. It is not within Mr. Employee’s job to teach tenants how to drive lawnmowers.

Will the judge agree with employer? Will the employer escape liability?

Not in the case of Perez v. Van Groningen in California. ”Under the doctrine of [vicarious liability], an employer is vicariously liable for his employee’s torts committed within the scope of the employment.”* The court used this rule to find that the employee’s actions, “in the context of the particular enterprise,” were “not so unusual or startling that it would seem unfair to include the loss resulting from it among other costs of the employer’s business.”* So this court decided that teaching tractor lessons on company time was not that unusual. And liability attached.

*Perez v. Van Groningen & Sons, 41 Cal. 3d 962, 967 (Cal. 1986)

This blog submission is only for purposes of disseminating information. It does not constitute legal advice. The statements in this blog submission do not necessarily reflect the opinions of Robinson & Wood, Inc. or its clients. No attorney-client relationship is formed by virtue of reading this blog entry or submitting a comment thereto. If you need legal advice, please hire a licensed attorney in your state.

By Colin McCarthy, J.D., Robinson & Wood, San Jose, CA

These days the stock market seems to live or die, grow or deflate, depending on the “employment” report.  How many jobs were created, how many folks are seeking jobless benefits? How many folks are no longer seeking “employment” because they have been out of work so long?

Whenever these reports are given, I have always wondered (because one naturally wonders this): Does that include “independent contractors”? Would the economy tank if, all of sudden, people were not employees but because “independent contractors” because their employers (I mean the people asking for work to be done) no longer called them employees, but decided to call them “independent contractors” instead?

Why ever would they do such a thing? Well, they could not really, and get away with it. The IRS and your local state government would not really like it, because it might mean less payroll tax and less government services as a result. But one consequence of retaining an independent contractor, rather than an employee, is that if the independent contractor injures a third party by his negligence, the person who hired him is not liable for injuries to third parties.

How we determine who is an employee and who is an independent is frequently a fact determinative question requiring jury analysis and a lot of preparation work. Work that keeps lawyers employed. Kidding aside, it depends on a number of factors but there are two key ones that are usually determinative. They are the hirer’s control over the hired, and whether the hired works only for the hirer or has other gigs.

Let’s use a real-life example. Remember my New Year’s Day spigot fiasco?  Well, the one we fixed in the back yard, with the help of my neighbor handyman, sprang a leak. Rather than do it myself (remember there is probably a rule somewhere against lawyers wielding power tools), I asked my neighbor to do it for me. He had just finished a big job for another homeowner. I invited him to inspect it, and he gave me an estimate: $100 plus parts. He said he would go about it a particular way, go to Home Depot, and get some things he needed.  And he brought his son over to help. A couple of hours later, it was fixed and moved to a better location closer to the garage.

Was this neighbor my employee? Did I exercise any control over the handyman? No.  He told me how he was going to go about doing the work. I didn’t understand half of it but understood that he’d fix it.  Did I tell him how to do the work? Other than that I wanted the leak stopped, I did not really tell him anything, much less how to do it.  Does he do work exclusively for me? It may seem that way given the number of times I require his services, but he doesn’t! He works for others.  These facts, and others, mean he is not an employee — unlike, say, a live-in nanny that would (in my dreams) work exclusively for me, and do what we say with regard to the children.  Next time we’ll talk some cases . . .

This blog submission is only for purposes of disseminating information. It does not constitute legal advice. The statements in this blog submission do not necessarily reflect the opinions of Robinson & Wood, Inc. or its clients. No attorney-client relationship is formed by virtue of reading this blog entry or submitting a comment thereto. If you need legal advice, please hire a licensed attorney in your state.

By Colin McCarthy, J.D., Robinson & Wood, San Jose, CA

Relationships. Everybody’s got them, but not everyone is liable for the actions of those in their relationship. We’re talking about “vicarious liability,” where the landlord is liable to a third party for the wrongdoings of someone or somebody it hired. This is a legal doctrine wherein the courts hold a passive actor responsible for the acts of another if there’s a relationship there and if the circumstances warrant imposing liability.

Here’s the doctrine. A landlord is almost always going to be liable for her employee’s negligent acts. In California there’s cases on it and a statute or two. (For all us working stiffs out there, remember, too, that in California the employer has to defend and indemnify you for negligent acts committed doing your job). As long as the employee does not stray from his duties and commit acts outside the course and scope — intentional acts that have nothing to do with the job — the employer will be liable for the employee’s act. If the delivery driver employed by a package delivery company runs someone down in a cross walk while delivering packages, the employer is liable. (As a practical matter, both the driver and the company are named as a defendant, but the employer is liable to the third party and foots the bill pursuant to insurance.) A landlord will also be liable to a third party for the acts of an independent contractor if there are particular risks involved in the activity being done by the contractor.

As with most legal doctrines, there is a thought process behind it. “The principal justification for the application of the doctrine of [vicarious liability] in any case is the fact that the employer may spread the risk through insurance and carry the cost thereof as part of his costs of doing business.”* So the landlord who employs folks to do maintenance around the yard, in the common areas, will be liable to the third party injured by the deficient work-related acts of that employee. Like the janitor that left the chairs near the window in a post a few months back, the doctrine applies.

There is an issue of whether someone is an employee or an independent contractor. Some businesses attempt to avoid the consequences of liability and other payroll obligations by classifying folks who do work for them as independent contractors. There is a whole body of law on that and what constitutes an employee or independent contractor. So we’ll talk about that in the next post, and then move on to some examples of landlord employees gone wild . . .

*Johnston v. Long, 30 Cal. 2d 54, 64 (1947)

This blog submission is only for purposes of disseminating information. It does not constitute legal advice. The statements in this blog submission do not necessarily reflect the opinions of Robinson & Wood, Inc. or its clients. No attorney-client relationship is formed by virtue of reading this blog entry or submitting a comment thereto. If you need legal advice, please hire a licensed attorney in your state.

By Brooke McDonald, VSM Real Estate, St. Paul, MN

The federal government has dedicated the month of April to spreading awareness about fair housing in the United States, especially legislation like the Fair Housing Act. For property managers, understanding fair housing legislation is vital to ensure a smooth, fair and respectful tenant selection process that does not result in unwanted lawsuits. Choosing the right tenants (people who will respect your property and reside in it responsibly) must also be balanced with complete compliance with federal, state and local laws concerning discrimination.

A thorough understanding of fair housing legislation (both federal and state-specific) is important, whether you own a large property management company or simply manage a few rental properties on your own. The legal implications for discrimination are not nice, and you risk tremendous financial loss, as well as respect in the community, if you refuse someone housing for the wrong reasons.

A brief history of fair housing legislation

Current fair housing legislation began with the federal Fair Housing Act, Title VIII, in 1968, which prohibited discrimination in the sale or rental of housing based on race, color, religion or national origin. An amendment from 1974 prevents discrimination based on sex, and in 1988 the law was further amended to protect disabled persons and families with children, and it also introduced stiffer penalties for violators of the law.

Real estate practices covered by this legislation include your advertising pre-sale, the terms of your rental agreement or sale, and the actual denial of housing based on whatever reason.

Legal implications for discrimination

The legal implications for property owners charged with discrimination are grim and often financially serious. If a tenant has perceived discrimination in the buying or rental process, they can file a complaint with their state department of human rights. They may also contact an attorney. Tenant advocacy groups protect tenants too, and the last thing you want is to go to trial for perceived discrimination.

If found guilty of discrimination, you can potentially lose your real estate license and be required to pay substantial damages, settlements or attorney’s fees.

Having respect for all in real estate: Be aware and be informed

Nolo has an informative article on the types of housing discrimination prohibited by the Fair Housing Act. I’d recommend that all property managers read it. Here is some further advice for property managers on maintaining awareness about fair housing and discrimination:

• Be consistent in your meetings with prospective tenants. Having a standard set of questions you always ask and speaking with a polite, respectful tone will help you ensure that your standard of communication is always high. If you consistently strive to maintain a respectful tone in every screening, showing and phone call, you will do much to avoid unintentional discrimination or anything that could be perceived as unlawful.

• Decide on the level of accommodations you will employ across the board. Set a standard for yourself about the kinds of accommodations you make for tenants, and then follow it in every situation as best you can. You don’t want one tenant to accuse you of withholding advantages that you offer other tenants, or accusing you of favoritism or inconsistency.

• Stay away from preconceived notions or stereotypes. Always give prospective tenants the benefit of the doubt. Obviously if warning signs arise, take heed, but do not let peripheral factors or preconceived ideas about someone color your treatment of them, whether in the tenant screening process or once they have inhabited the property.

• Stay up-to-date on your state laws. A secure understanding of local legislation will protect you from unwanted legal action. Taking the initiative on this to educate yourself will pay off in the future.

Conducting your real estate business with respect and consistency will do much to ensure great interactions with prospective and current tenants. Awareness and education about what is expected of you legally as a property manager is the next step. For cultivating awareness about this whole issue, HUD’s new fair housing app on iTunes is a great start.

By Colin McCarthy, J.D., Robinson & Wood, San Jose, CA

From time to time, a property owner or possessor will give permission to others to use or rent out parts of her property and put things on it. A soda machine, a vending machine, a gas line, or even a pipe trestle. Those who use that land in this manner have a duty of care to third parties to prevent injury. The same duty that the possessor has.

Here is a fun fact pattern. The land possessor runs a horse farm. He rents out horses to be ridden on the property. A customer asks for a mild horse. The land possessor gives the customer what he believes to be a mild horse. The customer takes said horse out for a ride. Said horse is not mild. Said horse goes where it wants to go and takes the customer along with him. Injury ensues:

“Plaintiff and his wife rode under the trestle along the indicated road, with plaintiff’s horse in the lead. After proceeding about 400 feet to the north at a walk, plaintiff turned his head to the left and called to his wife. As he made this movement, plaintiff’s horse suddenly reeled about to the left and began racing back on the road toward the trestle, gaining speed as it went. Plaintiff attempted in vain to control or stop the horse by pulling back on the reins as hard as he could with both hands, but the horse kept going faster, passed plaintiff’s wife and ran around the bend in the road toward the trestle. Immediately before the accident and at a distance of some 8 to 10 feet from the trestle, plaintiff noticed some underhanging beams stretching over the traveled area at a height of about 6 feet. Plaintiff was then lying flat in the saddle, with his head held down as far to the right as he could get it and his left shoulder pointing upwards. His left shoulder and neck hit a stationary object such as the understructure of the pipe trestle, and plaintiff blacked out. When he regained consciousness he was lying immediately to the south of the pipe trestle, approximately 5 feet from the nearest substructure of the trestle and immediately south of the traveled area under the trestle. As a result of the accident, plaintiff is permanently paralyzed from the waist down.”*

Not what the customer asked for or intended. Setting aside the interesting discussion of the owner’s responsibilities regarding knowledge of his horses in making recommendations (i.e., knowledge of the propensities), there is a holding in here that helps landlords defend against property-related lawsuits.

The parties installing that pipe trestle were defendants to the case as well, owing the injured plaintiff the same duty of care regarding that pipe trestle as the possessor. It turned out that there was no duty — again, due to the no-longer-applicable classifications. But the principle will help the landlord identify the culpable party in any such lawsuit.

*Palmquist v. Mercer, 43 Cal. 2d 92, 97 (1954)

This blog submission is only for purposes of disseminating information. It does not constitute legal advice. The statements in this blog submission do not necessarily reflect the opinions of Robinson & Wood, Inc. or its clients. No attorney-client relationship is formed by virtue of reading this blog entry or submitting a comment thereto. If you need legal advice, please hire a licensed attorney in your state.

By Colin McCarthy, J.D., Robinson & Wood, San Jose, CA

“The childish propensity to intermeddle was the characteristic which the [property possessor] should have taken reasonable precautions to guard against.”* Sometimes the courts come up with lyrical gems that get right to the heart of the matter. Through pages and pages of drivel, more often than not there is one pithy sentence which sums up the whole case and rule. I often wonder why the esteemed appellate justices do not just give us the facts of the case and the one pithy sentence. The books would be a lot smaller and cases a lot clearer.**

The above quote comes from a case which held both a tenant and the janitor the tenant retained liable for personal injuries to a three-year-old. The proof was that the tenant was in charge of a school. The tenant also, in the same building, housed families. (It was a hotel, and the tenant was the United States Navy). The tenant retained a janitorial service to clean said school on the weekends. Said janitorial service did so. Sometimes, they would stack the furniture — desks and chairs — in a pile. (To make cleaning the floor easier?) One weekend, a child was present in the school. Not a stretch, considering the building also contained living quarters. He climbed up on the furniture pile and promptly fell out the window. From the fourth floor.

The case had a lot to do with outdated and inapplicable classifications of the child — whether his activity of playing on the furniture made him a “trespasser.” But the case did have confirmation of the agency liability principle, which should help exonerate the tenant for a good deal of liability for the injuries this contractor arguably caused. Here it is: “One who carries on an activity on land on behalf of the owners in possession is subject to the same liability and enjoys the same immunity from liability, for bodily harm caused thereby to others as though he were said owner.”***  Translation: the folks hired to do work on the property are not immune from liability because the owner hired them. They are liable. If they are insolvent, or cannot be located, then maybe the owner will assume their liability. If the owner also had control over the activity (arguably always?), they may have some independent percentage of fault.

*Roberts v. Del Monte Properties Co., 111 Cal. App. 2d 69, 74, 77 (1952)

**And the lawyers less numerous?

***This quote is not as pithy as the one that opened this post, but it is arguably as important.

This blog submission is only for purposes of disseminating information. It does not constitute legal advice. The statements in this blog submission do not necessarily reflect the opinions of Robinson & Wood, Inc. or its clients. No attorney-client relationship is formed by virtue of reading this blog entry or submitting a comment thereto. If you need legal advice, please hire a licensed attorney in your state.

By Colin McCarthy, J.D., Robinson & Wood, San Jose, CA

One of my practice areas is insurance coverage work. I represent people and help businesses work out issues with insurance companies regarding whether a particular lawsuit, loss, or claim is covered by insurance. For many people and businesses, insurance is a must and coverage is a matter of everyday life and business practice. Drive a car, get insurance. Own a home, get homeowners insurance. Run a business, purchase a CGL policy. Get business interruption coverage.

A gray area is when we are not quite acting as a person or a business. We are volunteering. We are working selflessly for others. For the common good. Sometimes we are paid. Sometimes we are not. The soccer league, church council, and the HOA cannot get along without us. There are important decisions to be made for the soccer league, for the church, and for the condominium complex.

But those decisions have implications! People are affected by them. People are denied permission to do things. The HOA must act if it has information. If the collective “it” of the HOA knows of a dangerous condition, act it must, as we know. But what if only some of the directors are aware of the dangerous conditions? What if that director or directors do nothing? And what if someone gets hurt?

He gets sued! And he could, in California, be personally liable for not acting on that knowledge. Yes, personally liable, separate and apart from the HOA entity on which board he serves. In a recent post we talked about a case that holds the HOA to the same duty as a landlord. That same case also involved a cause of action within the lawsuit against an individual director for ordering the removal of the installed lights (which were put in to deter criminal activity) and then failing to report the criminal activity to the board. Ordinarily, the law does not make the individual director responsible for the board’s actions. That’s one point of having the board. But when the individual director personally participates in conduct which is a “tort,” he can be joined as a defendant.

So this director was sued. And the lawsuit survived legal challenges. I hope he or the board bought Directors and Officers liability insurance!

Meanwhile, California has enacted some legislation that mitigates against liability for certain classes of directors in these situations. And we’ll discuss them in the next couple of blog posts.

This blog submission is only for purposes of disseminating information. It does not constitute legal advice. The statements in this blog submission do not necessarily reflect the opinions of Robinson & Wood, Inc. or its clients. No attorney-client relationship is formed by virtue of reading this blog entry or submitting a comment thereto. If you need legal advice, please hire a licensed attorney in your state.

By Colin McCarthy, J.D., Robinson & Wood, San Jose, CA

That’s not the quote, is it? No that’s right, it’s not. The quote is “With great power comes great responsibility.” Notwithstanding, we discussed the immunity provisions granted by the California Civil Code with respect to a volunteer director’s conduct that might be considered a “tort.” So what the legislature gives, it also gives duties. That’s not the quote either. It’s something about what the legislature gives it also takes away. My right hand does not know what the left is doing, either, by the way. But I digress. Are you still reading this?

The same Article of the Act that provides immunity for such volunteer directors also sets forth affirmative duties that all HOAs must follow. They can give themselves “more stringent” duties, but at a minimum, they must: 1. review operating accounts quarterly; 2. review reconciliation accounts of association reserves; 3. quarterly review reserve revenue and expenses; 4. review account statements from financial institutions in which reserve funds are placed; and 5. every quarter review income and expenses for operations and reserve accounts.

There is a subset of requirements regarding reserve accounts, in place to protect the maintenance of the complex and its maintenance areas. Who can sign checks, how much has to be in the reserve, what it can be used for. But there is another affirmative duty that dovetails into the theme of our last two blog entries and indeed, a lot of these entries regarding landlords in general. That is the duty to inspect.

“At least once every three years” the HOA board is to have the premises inspected, visually, in a reasonably competent and diligent manner. This is in conjunction with keeping the right amount of funds in the reserve accounts. But included in all of these inspections are requirements of identifying costs of repairs, for the “repair, replacement, restoration, or maintenance” of any identified repair needs.

In essence, the HOA is required to document what needs work, what arguably could later cause injury or property damage, how much it will cost to fix, and even estimate how much longer such conditions will exist (useful life). This would be great evidence in a lawsuit. Sounds like a subpoena for documents to me. So if folks were hoping for the protections of immunity without corresponding responsibilities, they might have been reminded of another quote: “Be careful what you wish for, you just might get it.” That quote is right. I’m pretty sure of it.

This blog submission is only for purposes of disseminating information. It does not constitute legal advice. The statements in this blog submission do not necessarily reflect the opinions of Robinson & Wood, Inc. or its clients. No attorney-client relationship is formed by virtue of reading this blog entry or submitting a comment thereto. If you need legal advice, please hire a licensed attorney in your state.

By Colin McCarthy, J.D., Robinson & Wood, San Jose, CA

I like insurance law. Not many people do, but I do. But then again, I like heavy metal and not many people like that either. (Their loss. And my hearing loss. I digress). I like insurance law because it feels good to help policyholders obtain insurance coverage, and I am also rewarded when the insurance contract is upheld to enforce the mutual agreement of the parties — insurance coverage is denied because there was no agreement to cover a particular loss. I work with both policyholders and insurance companies and I see both sides of the equation. Sometimes the law interjects to help or hinder the implications of the insurance contract in real-world situations, such as when a volunteer HOA director participates in negligent conduct that leads to an injury.

In California, the Civil Code has some statutes that protect the volunteer director from the liability scenario we discussed last post. As a refresher, that director participated in conduct that was arguably negligent with respect to known criminal activity and ordered some lights installed in the common area removed. Later, someone got hurt and sued the HOA and that director for removing the lights and leading to a criminal assault. The director was a volunteer but nonetheless was potentially personally liable. Enacted a couple of years after that lawsuit, Civil Code §1365.7 provides some protection for similarly situated directors.

That section provides immunity for a volunteer director of a residential HOA, as long as the HOA maintains certain levels of certain types of insurance. If the HOA manages less than 100 units, there should be $500,000 of coverage for both general liability (i.e., CGL policy for the complex) and also for the directors (i.e., D&O — Directors and Officers insurance). As long as that insurance is maintained, and the person does not get paid for being a director, he will receive the benefit of this section. He also will have done the tort while in course and scope as a director, done in good faith, and without reckless or intentional conduct. The protections go away if that “volunteer” owns more than two interests in the development.

The net effect of these rules is that the volunteer director will not have to pay anything out of pocket when he otherwise might have had to. See? Insurance is fun!

This blog submission is only for purposes of disseminating information. It does not constitute legal advice. The statements in this blog submission do not necessarily reflect the opinions of Robinson & Wood, Inc. or its clients. No attorney-client relationship is formed by virtue of reading this blog entry or submitting a comment thereto. If you need legal advice, please hire a licensed attorney in your state.