Managing your property manager

Pity the poor property manager. There he is, stuck between a rock and a hard place.
Every day he sees or hears from tenants. Every day he sees or hears from applicants. Who are the people who always call the property manager? Who are the people who drop in and see the property manager? Who are the people who write notes to the property manager? And who does the property manager get the rent from?
It’s certainly not from the property owner, it’s from the tenants.
So when the property manager thinks about what’s supposed to happen regarding a property he manages, what he is supposed to do, whom does he think of first? It is the tenants, because they are the ones in his face all the time. Those are the people he pays attention to, because those are the people who are most in his consciousness.
Where is the property owner in all this? The owner only is often thought about  one time in the month, when the checks are written and the monthly reports are mailed. The rest of the time, who is in the property manager’s consciousness?  It is the tenants and the applicants.
Here is where the issue arises. Here’s where you experience the rock and the hard place. The property manager’s first duty is not to the tenant, it is to the property owner, his client, the person who hired him. The owner is the client of the property manager. The tenants are the customers of the owner.
Two national property management associations confirm that duty in no uncertain terms in their codes of ethics.
The Code of Ethics of the National Association of Residential Property Man­agers (NARPM) states:
Duty to Client
The Property Manager has a fiduciary responsibility to the Client and shall at all times act in the best interests of the Client.
The Code of Ethics of the Institute of Real Estate Management (IREM) which bestows the Certified Property Manager (CPM) Designation is even more descriptive of those requirements:
Fiduciary Obligation to Clients
A CERTIFIED PROPERTY MANAGER (CPM) shall at all times exercise loyalty to the interests of the client and shall not engage in any activity which could be reasonably construed as contrary to the best interests of the client.
On the other hand what do those Codes of Ethics call for in regard to tenants? NARPM’s code states:
Duty to Tenants
The Property Manager shall treat all Tenants professionally when applying for, living in, and vacating a managed residence. The Property Manager shall hold a high regard for the safety and health of those lawfully at a managed property.
Similarly, IREM’s Code states:
Duty to Tenants and Others
A CERTIFIED PROPERTY MANAGER (CPM) shall competently manage the property of the client with due regard for the rights, responsibilities, and benefits of the tenant and others lawfully on the property. A CERTIFIED PROPERTY MANAGER (CPM) shall not engage in any conduct which is in conscious disregard for the safety and health of those persons lawfully on the premises of the client’s property.
Notice that tenants are lumped in with “others.” The point is clearly delineated in both Codes of Ethics that the interests of the client come first.
Sometimes the Same, Sometimes Not
Many times, of course, the interests of the property owner and tenant coincide. Keeping good tenants is in the best interests of both parties. Selecting good tenants is also in the best interests of both the owner and the good tenants.
Maintaining the property with care and diligence is also a situation where both interests coincide. The “best interests of the client” include proper maintenance because good maintenance protects the client’s investment and attracts a higher quality tenant.
Those interests do not coincide if a tenant is late with the rent and the manager does nothing to remedy the situation and allows it to continue. They also do not coincide when tenants are quarreling and creating disturbances for other tenants and neighbors.
The Rock and the Hard Place
Then there are “rock and hard place” issues. Many times the representation question arises because of foggy thinking by the owner.  The owner insists on 100 percent occupancy.  In order to do that the manager would have to rent to less-than-qualified applicants. The result is unpaid rent, damage to the property, quarrels between tenants and good tenants moving out.
Obviously that is not looking out for the best interests of the client. The manager owes a fiduciary responsibility to the client. A fiduciary duty is “one of moral or personal responsibility, due to the su­perior knowledge and training of the fiduciary as com­pared to the one whose affairs the fi­duciary is handling.” (law.com dictionary).
That means if a client insists on “full occupancy” it is the duty of the manager to call on his “superior knowledge and training” to explain and show how full occupancy is desirable only if it is with qualified tenants and that less than 100 percent occupancy may not be such a bad thing if it ensures 100 percent quality tenants. Failure to do that is a violation of fiduciary duty.
Other times the owner wants to skimp on repairs and maintenance. In that case an ethical property manager might refuse to continue managing the property.  The NARPM Code of Ethics requires “The Property Manager shall not manage properties for Clients who refuse or are un­able to maintain their property in accor­dance with safety and habitability requirements of the local jurisdiction.”
All properties have two lives: physical and economic. It is not enough to want to make improvements. Everything needs to be financially justified. In addition to the aforementioned, property managers should be able to deliver advice and effective consultancy to the owner.
The ideal prop­erty manager should be proac­tive, not reactive. Anticipation is  the mark of professionalism.
Property managers must not simply pay the operating expenses each month, but must also always be on the lookout for new ways of minimizing the client’s costs through more efficient and effective management. That can be done effectively through full physical financial analysis, insurance analyses and legal analyses. Every decision should be financially based, meaning if you spend money on new carpeting: when will the owner receive his investment back and with what benefit?
Duties of a Property Manager
•  Asset management—the fiscal health of the property
•  Property management—staffing, maintaining and operating the build­ing and its systems
•  Relationship management—the quality of life in the building and accom­modation of the diverse interests of the…owners.
Yes, the property manager is stuck between a rock and a hard place. But the truly professional property manager knows where his responsibilities lie, with the interests of the property owner.  It is those interests that need to be kept in the forefront. When those interests coincide with the interests of the tenants, that is all the better.  But when they do not, the property owner and the property take precedence, no matter how often a manager hears from and about tenants.