Risk management: Knowledge is power

I came from a sales background and moved to the Real Estate Institute of Queensland (REIQ) where compliance, training and legislation became my most passionate subjects.

After working with the REIQ for five years and returning to the world of real estate as general manager for the Place Property Management department, I came to the realisation that in real estate, it is more imperative than ever to be fully compliant and ensure your staff are continuously developing their skill set and refreshing themselves on ever- changing legislation.

In the past you could get away with the small things. However, in the current world of litigation and public awareness you cannot afford to step outside the lines. Property management is becoming more and more challenging with the risks of taking on properties that have outstanding issues or maintenance.

Since the Diefenbach inquest, which centred on a baby falling off a balcony, the world of property management has been turned upside down.

Recently, the Residential Tenancies and Rooming Accommodation Act (RTRA Act) was under review, providing the industry with an opportunity to submit to the discussion paper on changes the industry supported.

One of the items up for discussion is item 1.25 – Standard of premises S185 – with reference to the coroner’s recommendations of mandatory building and pest inspections to ensure properties are maintained to lower the risk of death or injury.

Risk management has become the forefront of every property manager’s mind. We have reduced risk by:

• Conducting full audits on all our contractors’ appointment forms and sending follow up reminders to obtain contractors’ public liability insurance certificates to ensure they are current
• Conducting a full audit on routine inspections, ensuring they are up to date and including extensive procedures to visibly identify where there may be risk
• BDMs taking on new managements must have strict criteria as part of a checklist that are met and, if there is any doubt, they must request a building report on the property from the lessor before taking on the listing
• Properties that have been renovated in the past five years being supported with a building report to ensure the works are compliant with local standards, and completed by professional and experienced contractors and not DIY owners
• Upon taking on a new listing ensuring all landlords have landlord insurance and provide the agency copies of public liability insurance certificates and PI insurance to a minimum of $10 million
• At sign-ups the BDMs must draw the landlord’s attention to relevant sections of the terms and conditions of their obligations towards ongoing maintenance issues and emergency repairs on the property to lower their risk
• Implementing procedures for property managers to draw the tenant’s attention at sign-ups to their obligations to reporting all maintenance in writing immediately
• Tenants and landlords being informed of sections of the RTRA legislation and the implications if they are in breach of any of their obligations. If there is a current landlord who is not in agreement to proceed with risk maintenance on a property in an acceptable time frame, they are informed of the implications this causes to them as a landlord and the agency. If still no action is adhered to, the risks are explained and the only option is to terminate the management agreement, providing a minimum 30-days written notice

We recently implemented tenant and landlord handbooks to hand over at sign-ups and refer them to their obligations.

For continuing professional development, ensure your staff are educated on sections of the RTRA Act by holding regular training sessions and attending seminars or conferences to ensure compliance is met in such a high risk sector of real estate.

Knowledge is power in this industry, and education is the key to that knowledge.

Written by SANDRA LARKIN, general manager of property management at Brisbane-based Place Estate Agents, a new role created in 2012 to support the group’s booming property management division