Legalities (Part – 2):  How to Protect Yourself while Managing a Rental Property

 Legalities (Part – 2):  How to Protect Yourself while Managing a Rental Property

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Being a landlord puts you in vulnerable situations sometimes. Property management laws give certain rights to tenants and if you violent them – even unintentionally, you can land in legal troubles. Though you may have to face legal challenges from time to time, it is best to think ahead and avoid these disputes in the first place because resolving them through courts can be a time consuming and complicated process. It’s a problem where prevention is better than cure.

Here are a few steps you can take to protect yourself legally:

Put everything in writing

Any complaint you receive from clients or tenants should always be in writing. It could be an email or a letter. Make sure that you have recorded in writing the steps you have taken to resolve a complaint. This record will help you prove that you acted according to the standard operating procedure (SOP) outlined by your agency.

Have a business entity

You should set up a business entity for the sole purpose of property management to protect your personal assets or those assets you have amassed through your other businesses. If you don’t have a business entity, all your personal and business assets will be subject to a lawsuit. It’s a risk you should always avoid.

You should also be covered by a limited liability insurance policy. It should cover all the expenses in case a lawsuit is settled in favor of the other party. If you have a team of contractors, trades people or general workers, they should be covered by a limited liability insurance policy separately. It will protect you in case a mishap occurs at one of your properties.

Have an SOP

It is important create a standard operating procedure (SOP) for you and your staff to follow. The SOP brings transparency to your agency’s functioning and helps you determine how you and your staff should act in a particular situation. Give SOP documents to your clients and tenants so that they know what to expect in a particular situation.

Be aware of property management laws

It’s the most important obligation that you must follow all the time. Be well versed in the property management laws. Keep in mind that property management laws are state-specific, so you should be aware of those which apply to Colorado. Consult with an experienced real estate lawyer when you come across a complicated situation.

These tips are for your general consumption. You should approach a licensed lawyer in case you need specific legal advice.

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