Property Management Record Keeping: Risk Management
All business is subject to litigation. Knowing and understanding local, state, and federal laws is your first step towards avoiding legal issues or violations. Property Management is certainly no different.
Federal Fair Housing Laws strive to regulate industry practices in order to eliminate discrimination; local housing and building codes require residential properties to meet minimum health and safety standards; the lease you draw up between yourself and your tenant is a legally binding contract in which what is not stated is as impactful as what is. Maintaining a thorough and complete record of your contracts, your adherence to laws and regulations, and receipts of your fulfillment of obligations will be your saving grace should a claim be filed against you.
Record filing and organization isn’t simply a matter of housekeeping – it’s risk management. Whether in court or financial analysis, the truth comes down to what can be proven on paper. Anything undocumented is simply not accounted for, and its absence can be costly. Mitigate your risk by understanding which records will support what kinds of issues! A few examples are listed below:
Fair Housing Claims
Statute of Limitations:
Renters have up to two years to file a fair housing claim in federal court, and up to a year after the alleged discrimination to pursue it through the Department of Housing and Urban Development (HUD). States and municipalities that have their own fair housing laws often have similar limitations.
What You Will Need:
- All records on all prospective, current, and past residents.
- Written screening policy and documentation showing that policy is uniformly and consistently applied to each applicant.
Tax / IRS Audits
Statute of Limitations:
Generally, the IRS can include returns filed within the last three years in an audit. If they identify a substantial error, the IRS may add additional years. They usually don’t go back more than the last six years.
What you Will Need:
- Documentation for the income, losses, expenses, and deductions that you claim on your tax return. In most cases, electronic records are acceptable for the purposes of an IRS audit. You are required by law to retain and safeguard all records—in physical or electronic form—that you use to file your returns for at least three years. Most tax professionals recommend you keep records for seven years, just to be safe.
Personal Injury Lawsuit
Statute of Limitations:
Two years after the day the cause of action (accident that caused injury) accrues.
What You Will Need:
- The move-in condition checklist of the rental unit and common areas filled out by the tenant upon move-in. This documents the condition of the unit as accepted by the tenant.
- Written documentation of all security, safety, and maintenance reports and how and when they were handled.
- Statement in the lease that describes the clear division of duties and responsibilities between the landlord and tenant in regards to maintenance and repair. (Who is responsible for what.)
- Instructions provided to tenant that describe how to make a maintenance request.
Already up to your ears in paperwork?
Let a property management company like Frontline Property Management handle the details for you! Eliminate the need for filing cabinets and overstuffed desk drawers – we manage our records digitally and keep everything on file from tenant application to move-out! Your repair receipts and monthly statements will never be lost again! Find out more today about how we can help you manage your property and all the paperwork that goes with it!
