I should've had rental property owner's insurance

Landlord learns lesson after contractor steals fixture, damages door


By Robert Griswold
Inman News

Question: I own a condo that I've rented out for the last 13 years. My current property manager is my concern. The last tenant sublet my condo to another person who was not on the lease. This new occupant caused considerable damage before he was removed, and I found out about the damage through a third party, not my property manager. Then, without my knowledge, the property manager brought in a "contractor" he found through a small ad in a local newspaper to do the repairs. The work was never completed, but my property manager bugged me about paying this contractor that he apparently uses on many of his managed properties. After I paid the contractor I found out later that he was unlicensed and had an arrest warrant out on him. He had stolen a custom fan from the dining room and other materials I had purchased to repair the condo. The front door, which again is a custom-fit door, also was damaged and will be expensive to replace. I was able to track down the former tenant who was on the lease and got him to pay for most of the repairs except the front door. I can't find the contractor, and both the fan and the front door to the condo still need repairs that I feel I have already paid. What should I do?

Property manager Griswold replies:

Consider yourself lucky that you were able to get the former tenant to voluntarily pay for most of the damages. You will have to pay for the front door repairs and you should do this immediately through a licensed contractor or trusted handyman that you hire and supervise. The next item on your agenda should be to terminate your property management agreement as soon as legally allowed under the existing contract. As a property manager, it can happen that a tenant quietly leaves without telling you and another tenant moves in, especially if the rent payment continues to be made by the original tenant. However, the other issues about the contractor clearly indicate that the property manager is not a professional and that you are bound to continue to have problems with this unprofessional firm. I would cut your losses and hire a competent property manager. You should also file a police report about the stolen property and you may want to seek reimbursement for the stolen items with a small claims action against the property management company.

Unless gross negligence, property managers are typically not responsible to indemnify their clients in all circumstances where the rental property is damaged by a contractor, or the work is not completed properly or there are items stolen. That is why you carry rental property owner's insurance. However, this property management company apparently failed to conduct any background or reference checks on the contractor. The arrest warrant may not have been reasonably discovered by the property manager, but the lack of a contractor's license is easy information to obtain in most jurisdictions. References should always be verified if this is the first time the contractor is being used by the property manager.

Question: Isn't it illegal for a condominium homeowner association's Covenants, Conditions and Restrictions, commonly referred to as CC&Rs, to prevent a condominium owner from renting to Section 8 tenants?

James McKinley, an attorney for landlords, replies:

Section 8 housing is a federally subsidized program that pays for a portion of the qualified tenant's rent. Currently, I am not aware of any jurisdiction where a landlord would be engaging in illegal discrimination for turning down a Section 8 resident if the landlord is not participating in the program. However, a condominium homeowner association does not have the right to prohibit a property owner from participating in the Section 8 program.

Steven Kellman, an attorney for tenants, replies:

Condominium homeowner associations function like mini-governments. They many times conflict with local law and they also seem to get away with many things that they should not. They accomplish this because they are a private governing body empowered by the homeowners who sign on to the governing rules (i.e. CC&Rs) when they buy the unit. These rules may include what color you may paint your door and whether you can put a banner of your favorite football team in the window. (Before buying any condominium, read all the CC&Rs carefully.) There may also be rules about using the units as rentals or restricting them to only owner-occupied. If the units may be used as rentals, limiting the units to nonsubsidized ones only may run afoul of federal law because some subsidies such as Section 8 are governed by federal law. I believe that an association not allowing Section 8 tenants but allowing market-rent-paying tenants raises a red flag that the rule is an illegal one.

This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of "Property Management for Dummies" and co-author of "Real Estate Investing for Dummies," and San Diego attorneys Steven R. Kellman, director of the Tenant's Legal Center, and James McKinley, principal in a law firm representing landlords.


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