How to Not Get Sued (Much): Property Manager's Edition

The Best Way to Win in Court Is to Stay Out of Court

Every property manager has had -- or will have – that sinking sensation you get from being served with notice of a suit at some point. Being sued is a reality of the job, but it is possible to reduce the likelihood of being sued. Not surprisingly, every single thing on this list comes down to "do your job thoroughly and efficiently," but there's a surprising amount of PMs and DIY’s out there who can't seem to understand why…so we'll tell you.

Screen Your Tenants Well

Screening tenants is one of those things that saves a property manager such an insane amount of time, money, hassle, and pain down the road that it's appalling that there are any that skimp on this process. When it comes to avoiding lawsuits, the number one most important part of the screening process is investigating a prospect's relationships with their previous landlords. Call every single number they give you, and chat with each and every one of them for a few minutes about the tenant. Be certain to ask them a question or two that they would only be able to answer if they were actually a landlord -- you'd be amazed how many prospects give us fake numbers every month.

Make Certain Your Lease Is As Detailed and Specific as Possible

Don't ever accept a tenant on a handshake. Ever. Always get their signature on a lease, and make that lease as ironclad as possible. The last thing you want is to go to court for nonpayment and not have a signed lease proving that the tenant agreed to the rental amount and date. The second last thing you want is to go to court because the tenant is making some ridiculous claim that simply isn't covered by your lease. That's why we have frequently talked about the importance of a comprehensive lease. The more you get in writing, the less wiggle the room they have down the road. If you can show them on paper that they have no legal legs to stand on, the chances they'll take you to court plummet.

Record All Your Communications

Similarly, one of the most upsetting things to have a tenant do is claim you made some promise (or threat!) that you never made -- or claim that they made some request that they never actually made. The easiest way to avoid that claim is to record absolutely every communication you have with the client. Scan in and save every document, record every phone call, BCC every email sent and received to a backup account, get your texts through a service that will record them for you, and so on.

Don't ever give a verbal promise without, at the minimum, texting it to the home office. Again, if you show a client that you have a complete record of all of your communications, the chances that they'll take you on with a faked-up claim in court all but vanish.

Know the Law (or at Least a Great Lawyer)

There's no substitute for being intimately familiar with the laws regarding your job -- being able to cite the precise statute that applies to a situation and explain to a tenant why they're on the wrong side of it goes a long way. But it's understandable that you might have a lot of other things on your plate -- so if you can't commit that kind of brainspace, at the minimum, build a solid working relationship with a real estate and rental law attorney. Keep them on speed dial, and don't skimp on their retainer; you'll save money in the long run.

Protecting yourself from lawsuits completely is impossible -- there are always professional criminals, insanely stubborn 'eternally wronged' tenants, and people who simply misunderstand who will try to get the law to nail you to a barrel. But if you're through, consistent, and wise, you can avoid all but the most extreme cases -- and a good chunk of those cases will be thrown out before they start because of your rock-solid preparation.

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