Hiring a manager can free landlords from many time-consuming
tasks, such as handling repairs, collecting rent, and showing vacant units. But
it can also cause some worries of its own, such as meeting all the IRS tax
rules and other legal
obligations. Landlords also need to be concerned about properly training and
supervising their managers.
Potential Legal Problems Caused by Managers
Depending on the circumstances, you may be sued (by a
prospective or current tenant) and found liable for acts of your manager, such
- violating antidiscrimination
laws by refusing to rent to a qualified tenant who is a member of a
- sexually harassing a tenant
- failing to return a departing tenant’s deposit
within the time limit set by your state law
- failing to repair
a dangerous condition, such as substandard wiring that results in an electrical
fire, causing injury or damage to the tenant
- committing a crime such as assaulting a tenant,
- invading a tenant’s privacy
by flagrant and damaging gossip or trespass.
How to Protect Tenants and Yourself from a Bad Manager
Here are five key ways to limit legal problems with your
- Choose your manager carefully. If a
tenant gets hurt or has property stolen or damaged by a manager whose
background you didn’t check carefully, you could be sued.
- Make sure your manager is familiar with the
basics of landlord-tenant law, especially if your manager will be selecting
tenants or serving eviction notices. Provide detailed instructions to managers that
cover likely trouble areas, such as the legal rules prohibiting discrimination
in tenant selection
- Supervise your manager, and encourage your tenants to report problems
to you. If a tenant complains about poor maintenance of the building or
another problem, do your own investigating and try to resolve the issue.
- Get rid
of a bad manager before problems accelerate. Doing so may help avoid an
expensive tenants’ lawsuit.
- Purchase a good landlord’s insurance policy
that covers illegal acts of your employees. No matter how thorough your
precautions, you may still be liable for your manager’s illegal acts—even if
such acts directly violate your instructions. A good insurance policy is a must
for all landlords.
More Information on Managing
For additional details on hiring, training, and supervising
property managers, see Every Landlord’s Legal Guide, or,
(if your rental property is in California), The California Landlord’s Law Book: Rights &
Responsibilities. For a wide variety of useful articles on legal
obligations of employers, see Nolo’s
Employment Law Center.