The risk of unreasonable clients
As a property manager, you are the professional and its your job to guide your client to make the right decisions. If a client is forcing you to do something that you know is unethical, discriminatory, or illegal, you are equally at fault. In fact you may be found more at fault since you are the professional who should know better and its your responsibility to prevent your client from making those types of decisions.
While a property manager can have their client sign off on a series of disclosures stating that the client is knowingly doing something that is against the law, its still their job as a manager to advise the investor against it making that decision. If they ignore this advice, the best thing is to walk away because if something happens and legal action is brought against you and the client, both will most likely be found guilty despite the disclosures you have in place.
Recognizing these types of clients may not always be easy when you first meet with them making it hard to avoid these types of people. However, once you have recognized them as a potential threat to you or your company, the best thing is to walk away. If a client is refusing to make the necessary repairs, rejecting prospective tenants based on race / disability, or asking you to do anything else that is illegal, the relationship with that client should be terminated immediately.
While its not necessary, it is always a good idea for property managers to include a termination policy in the event a client asks them to do something that is illegal or unethical. If asked to do something against the law, as long as its documented, the investor will have little recourse if you terminate management immediately.
Another alternative is to inform the investor that you will be taking whatever action is needed in accordance to local law despite their direction unless the investor sends you notice to terminate management effective immediately. This is a backdoor approach so that they are the ones terminating management, not you.
The benefits of weeding out unreasonable clients
Clients who are unreasonable most likely will not change. In addition, they often make things more difficult and consume most of your time. A theory commonly known as the 80 - 20 rule is that 80% of your time is only spent on 20% of your clients. So image if you eliminate that 20%, how many more clients you could have! One of the first things I learned in real estate is that once you start to say no to clients, that’s when your business starts to grow. As odd as this sounds, its very true. When you eliminate unreasonable clients, you free up your time to grow your business.
While you may not have direct control over your clients, its important to recognize someone who is unreasonable and bring it to the attention of the person who does make these decisions. Whether or not they recognize the true benefits of eliminating unreasonable clients, at least you tried. As an added benefit, if you decide to branch off one day and open your own firm, you already would know what to look out for and how it will benefit you.
September 26, 2013