You are careful about tenant selection and employee hiring.  Every applicant gets a thorough screening including a credit check, criminal background search and verification of all the information on the application.  In fact, you make sure the application is filled out completely when the applicant hands it to you, and if it isn’t, you hand it back and tell him to fill it out.

As a result, you have almost no problems with bad tenants or poor employees.  No way can they escape your careful attention.

But imagine this.  You need a company to maintain your landscaping, so you check around to find one that is not only reasonably priced but does good work. The company you find has an excellent price and after you have looked at the other properties they service, you can see they do excellent work. You hire them, and they do excellent work for you, too.  One problem, though, comes to the fore after a few weeks.

A couple of tenants complain that someone broke into their apartments while they were at work.  They have called the police, so the police are aware of the problem and promise to “keep an eye out.”  One day, another tenant stays home from work and catches someone breaking into her apartment.  As it happens, a police patrol is nearby, as they suggested they would do, and they catch the criminal.  He works for the landscaping company you hired, the one with the good price and that does the excellent work.

After some investigation, you learn that the criminal had been released from prison a few months earlier after serving five years for burglary.  When you call the owner of the landscaping company, he tells you that yes, he knew this employee was an ex-con and that he had been in prison for burglary, but he wanted to give him a “second chance.”  Needless to say, you fired the landscaping company.

That’s all great for the ex-con, but not so much for the landscaping company or your responsibility to protect the quiet enjoyment of your tenants and your tenant relations.  Both tenants who were robbed had renter’s insurance, something you insisted on at move-in, and that covered their losses.  The criminal had already pawned all the stolen goods, so they couldn’t get those back.  Your tenants didn’t sue, but those of another landlord sued the landlord and the landscaping company for their losses.

We all have seen the results of crooked, sleazy and incompetent repair people.  We screen for competence by calling references, looking at current projects and such.  We also screen for licenses, and lots of other things.

A bad vendor can cost more in lost income and grief than a bad tenant.  We are not helpless against the lying and criminal vendors or their employees and we can easily check more than just the quality of work he or she does.  I have almost always checked to see if a repair or maintenance person is licensed, and always checked the company’s Better Business Bureau record and Angie’s List.  But there is far more we can do.

For  repair people we have used for years who do good work, there is no reason to change or run them through a check.  But when hiring a new vendor, there are some excellent reasons to screen them just as thoroughly as we would an applicant.

Here’s what is important to check.

• Business Status and Identity
• Personal Identity of the Principal
• Liability insurance
• Professional business, trade license and bonds
• Workman’s Compensation
• Criminal background and sex offender reports
• Bankruptcy, tax liens and judgments search or business credit reports
• Better Business Bureau search

Most important for our liability are the liability insurance tracking, workman’s compensation verification, and the criminal background and sex offender reports.  Those can empty our bank accounts quickly if we hire someone without workman’s compensation insurance, liability insurance, or a criminal or sex offender record.  That’s not to mention the unhappy and legitimately irate tenants in an apartment complex.

We could probably do all of these things ourselves, but it would take time that might be better spent managing properties or running our business.  We can require that our vendor actually get a report him or herself on his company and employees.

I hadn’t thought much about the liability we have when we allow a vendor to work on our property except for that of liability for shoddy or dangerous workmanship.  But think of what we could end up paying for contracting with or hiring a company that hired a sex offender or criminal to work on a property.

Screening the people who will work on our properties and have access to our tenants homes and access to tenant records is every bit as important as screening the tenants we rent to.

 

By Robert L. Cain