By Robert L. Cain, Copyright 2021 Cain Publications, Inc.
For the want of a nail the shoe was lost—and eventually the kingdom. For want of a 57-cent part, General Motors could have been lost. That’s the 57-cent ignition switch part that caused General Motors to recall 2.6 million vehicles in 2014. For want of a screw, a rental property investment could be lost.
Even the biggest rental owner can’t approach the financial resources that General Motors has much less the likelihood that the government will bail him or her out. And a kingdom? No matter how proud you are and how many rental properties you own, it just doesn’t qualify as a kingdom. Instead, the damage and lawsuit from a lack of such a little thing as a screw can and will bankrupt a rental owner. Replacing a screw and preventive maintenance are akin to the 57-cent part: it is usually both cheap and easy. Let’s look at the legal principle that governs a landlords’ liability in preventive maintenance and the kinds of things that can arise from it.
General Motors’ liability and subsequent recall falls under the “Constructive Knowledge” principle. That’s defined as a fact a person who applies reasonable care should have known. For example, if a screw was missing so a door lock on the front door of an apartment building didn’t work properly, an owner should have known and would be liable for crimes and injuries to tenants resulting from the broken lock.
Explains wiki.legalexaminer.com “The owner/occupier has a duty to exercise reasonable care in the management of the premises to ensure persons are protected from an unreasonable risk of harm.” A worst-case situation is in those states that have a “strict liability” law. The Free Dictionary defines it as “the legal responsibility for damages, or injury, even if the person found strictly liable was not at fault or negligent.” That means even if someone diligently carried out a thorough preventive maintenance program and wasn’t negligent in most states, and the door lock broke seconds before the mugger broke into the apartment complex, the owner will still be held liable. Fortunately few states apply that standard except for dog bites.
Prime targets for lawsuits are apartment complexes and office buildings. How can rental owners protect themselves?
It involves making a plan and carrying it out. Auto repair companies recommend, unnecessarily now, changing your oil every three months or 3,000 miles. Many of us change the oil in our cars regularly even if it is a little longer. That costs infinitely less than a new motor. Yet, too many rental owners don’t deal with repair issues until something breaks and a tenant complains. How much cheaper and better PR it is to do maintenance checks every three months or so.
That kind of maintenance preserves the physical integrity of the building. Mostly it involves walking around and through the property to discover potential problems before they become expensive. The result of preventive maintenance is corrective maintenance.
Corrective maintenance is nothing more than fixing things that are broken. Repairing leaky faucets, broken windows, broken furnaces and balky locks fall under this category. These are calls you get from tenants saying something needs fixing.
Routine maintenance is the scheduled stuff. (Sometimes the definitions for it and Preventive Maintenance are reversed.) Cleaning the gutters once or twice a year, picking up litter in common areas every day, lawn mowing, parking lot striping and fence painting all fall under this category. Routine maintenance and cuts down on corrective maintenance costs. But it can be a large budget item, especially if regular maintenance has been ignored until it costs considerably more than replacing a screw. In a commercial building, for example, routine maintenance can swallow up 18 percent of the budget, but rental properties may not get the same constant use commercial buildings do.
Why don’t landlords do preventive maintenance and routine maintenance? The excuses are often such as “I don’t have time,” “It costs too much,” or “I just never think about it.” I know exactly what you mean. Even so, here’s an example that may encourage you to find the time or remember to do it. A number of years ago I got a call from a lawyer who was representing a property owner in a lawsuit because someone had gotten injured on the owner’s property. The owner didn’t do much preventive maintenance. He was ordering a book I sold at the time, Preventive Maintenance for Apartment Communities. The book, actually a schedule/checklist, is a list of what things to do when. Follow that and preventive maintenance is complete. The attorney was buying it to give to his client.
It was like shutting the barn door after the horse was out but was likely an effort to show that the property owner had changed his negligent ways and was taking more attentive care of his property.
Preventive maintenance means spending a little now to save more later. It has the additional advantages of first, showing tenants you are on the ball, and second, giving you the opportunity to inspect your properties for not just repair issues but tenant issues. It’s interesting what you see when you notice how your tenants are living, isn’t it?
Take the time, put it on your calendar, and walk around your property with a checklist of things that could require repair. Wiggle handrails, check the locks, look for leak evidence, both roof and plumbing, and take care of little things before they result in a lost property. Here’s one free checklist I found.
For Want of a Nail
For want of a nail, the shoe was lost.
For want of a shoe, the horse was lost.
For want of a horse, the rider was lost.
For want of a rider, the message was lost.
For want of a message, the battle was lost.
For want of a battle, the kingdom was lost.
And all for the want of a horseshoe nail.