Property Mgmt - First Right of Refusal Program for Maintenance?

Question

Has anyone come across their property management company creating a "First right of refusal program" for maintenance requests? Our property managers are trying to get us to sign a new clause stating that if we want first right of refusal to do our own maintenance on our properties (and not just have them handle it automatically), that we need to respond to any maintenance request within 24 hours (telling them we want to do it or telling them they can do it), complete the work in 7 days (if we say we want to do it), and do unit turnovers in 2 weeks.

Obviously all that is ideal and that is the timeframe we would love to get everything done in. However, if there is not an emergency or immediate need, then we will do our research on quotes or take our time figuring out how we would do it ourselves and make the time to do it. We communicate with the tenants or have the property mgmt company communicate with the tenants throughout. We've had tenants complain once or twice that something is not done fast enough but if it's not an urgent need, we just tell them to wait (Ex - an outlet not working).

Curious if this is normal practice or in other management agreements people have signed?

Ashley Shearer · Answer

So this is mostly in reference to us doing our own repairs, not necessarily looking to hire other people. We try to save money by occasionally doing our own work, we only have a handful of properties. For example we replaced a water heater recently. So this program is between the property mgmt company and us, mostly.

Casey Howe · Answer

Hi Ashley,

We have found what works well for us, as well as our clients is to ask them during the on boarding process if they have any preferred contractors.  We then reach out to those contractors and onboard them like any other contractor - so we ensure insurance is up to date, workers comp in place, licensed etc.   and if the client would prefer, for example, a specific plumber, that's fine as long as they meet our criteria, which 9 times out of 10 they do.  We can't risk a client sending an unlicensed or non-qualified contractor into the property as we share liability for that.  We've seen cases for example where clients want to send their brother or cousin to do electrical work that they aren't licensed for.

What I don't think would work is to have a ticket come in, and then reach out to a client so they can shop around for plumbers. If your property management company is good and has built an internal maintenance team which has set rates and had strong relationship relationships with licensed contractor which should keep costs in control, you should never need to shop contractors on your own I wouldn't think.

So in short, our policy is give us your preferred contractors upfront if you have them, but then we work all tickets to resolution including dispatch, and payment of invoices.

This is of course for operational expenses.  For larger CapEx jobs, we're fine with a client getting their own quotes, in fact, sometimes this is preferable.  If you want to quote out high efficiency boilers for six Tripple deckers for example requiring installation of separate gas, meters etc. etc. - that might be a situation where you would want to work with a contractor directly because you would have lots of different options with widely varying costs.

Drew Sygit · Answer

@Ashley Shearer good question!

Common problem, no easy answer:(

We try to allow our owner clients to arrange their own maintenance, but have learned the hard way there MUST be limitations:

1) They can't hire our people!

2) Their contractor must be properly licensed and insured and we require copies of all this. We also require that we be added to the contractor's insurance as Additionally Insured, so we're covered if they cause damage or liability issue.

3) If the property is occupied:- One of our people MUST accompany their person (and we charge for this). --- We were sued many years ago, along with the owner, because tenant claimed owner's contractor sexually assaulted them! Owner ended up settling with the tenant, but then we had to threaten to sue our own client to get them to pay our legal fees.

- Owner must sign a Hold Harmless to indemnify us against any potential tenant lawsuits relating to the work their contractor is doing.--- Another lawsuit resulted from owner's contractor taking down basement handrail to get supplies down the steps, then they didn't put it back and tenant fell down the stairs.

- We also negotiate a reasonable completion date, depending on the Scope Of Work (SOW). --- Who gets all the phone calls and wastes time calming a tenant down because the owner's contractor doesn't show up as scheduled after they took time off from work or a 3 day job takes 3 weeks? So, if deadline not met, we will send our people to handle.

4) Vacant properties are easier to deal with, but we still require:- Owner must sign a Hold Harmless to indemnify us against any potential lawsuits relating to the work their contractor is doing and add us to contractor's insurance.--- Another lawsuit from a prospective tenant that slipped during a showing and when they grabbed the handrail, installed by owner's contractor, it collapsed and person injured.

- Since we're not really in full control of the property, the Hold Harmless also indemnifies us against anything that goes missing at the property and squatters.

We get asked/told to do all kinds of crazy stuff by owners, who either don't care what happens to us or haven't really thought everything through.

Hope this addresses your question.