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— Property Management Quarterly — February 2015
I
am a fan of football, especially
of the Broncos, so please allow
me to use some football jargon/
metaphors as I address tackling
the extraordinary. As property
managers, when we are faced with
an unusual or infrequent situation,
we need to use x’s and o’s in order to
achieve victory.
Strategizing for an unfamiliar task
requires time and thought. Property
managers must determine what is at
the heart of the issue that needs to be
resolved. From there, property manag-
ers must research and have succinct
communication with the asset man-
ager and landlord, as well as constant
tenant communication.
It is also imperative that property
managers hire the right team of play-
ers to undertake the problem at hand. I
would like to share two challenges I’ve
dealt with that resulted in extraordi-
nary solutions.
Construction Compliance
The first involved a tenant who
was not in compliance with his lease.
The tenant’s lease stated that tenant
improvements were accepted “as is,
where is.” If improvements were to
be completed, the tenant must first
receive landlord approval in writing,
the lease said.
However, in my weekly visit to the
property, I met with this new tenant
and observed that construction was
taking place without notice or approv-
al. Immediately, I created a game plan.
The first step was to hand deliver
and mail a letter to the tenant, plac-
ing him on notice that he was not
in compliance with the lease, citing
the various lease clauses. The letter
stipulated that construction must
halt immediately until the tenant
met a variety of provisions. First,
the tenant must
provide:
• Plans and
scope of work to be
approved by land-
lord and or its agent;
• Proper contrac-
tor licensing and
contractor business
information;
• Certificates of
insurance for the
general contractor
and all subcontrac-
tors as defined in the property man-
agement agreement, which includes
general liability, auto and worker’s
comp; and
• A construction schedule that
adheres to the building rules and regu-
lations.
The tenant also must submit and
post a copy of the permit (if applicable)
and stipulate that final/unconditional
lien waivers will be required by all
contractors.The final permit must be
signed off by the jurisdiction, and the
plans must be in fire-life-safety com-
pliance. The tenant also must address
heating, ventilating and air condition-
ing as well as plumbing concerns,
specifically in the suite or common
areas. There also must be proper floor
protection of the common areas and
elevators, as well as compliance with
building construction rules and regu-
lations. Prior to construction re-com-
mencing, the suite and common areas
must be inspected for existing damage
versus new damage, which would be
the tenant’s responsibility.
Additionally, as the property man-
ager, I did the following:
• Notified the landlord and provided
a copy of the letter submitted to the
tenant;
• Posted notarized notices of nonre-
sponsibility at the building and suite
entrances;
• Contacted the building tenants
regarding the construction work, time
frame and noise levels;
• Made sure the tenant met its
agreed-upon responsibilities; and
• Made sure that any and all poten-
tial risks were mitigated on behalf of
the landlord.
As long as the tenant submits the
requirements stipulated above, it’s like
Manning throwing a beautiful 40-yard
pass that gets the offense into the red
zone.
Payment Reimbursement
Leases usually outline all of the
steps property managers must follow
to collect annual payment reimburse-
ment from tenants. However, even if
the property manager follows all of
the rules, occasionally you still can
have problems. For example, once
when I was collecting this payment,
I followed all the lease provisions
regarding the timeline for request and
the standard mailing requirements.
The lease stated that the request for
payment was time sensitive.
Several months later, when follow-
ing up with the tenant regarding the
outstanding receivable, the tenant
indicated that the landlord would
not receive the payment because the
tenant never received the letter. The
letter was not returned to manage-
ment, which indicated that there had
not been a problem pertaining to
incorrect postage or mailing. However,
given that the letter was sent via the
U.S. Post Office, we had no record that
it was received or lost by the tenant
once delivered.
Another property we managed that
had a lease with the same timeline
and standard mailing requirements
did receive a similar letter, and we
received that reimbursement in a
timely manner. The only difference
was the outgoing letters were mailed
within days of one another.
After receiving the letter that the
tenant was denying payment, I
informed the landlord of the situation
and re-read the lease to be reminded
of the landlord’s versus tenant’s rights.
I discussed the landlord’s position
and arguments with the tenant. I was
persistent on multiple levels, writ-
ing letters and calling people who
could possibly assist with the situa-
tion, and tried to make sure no stone
was left unturned. The landlord and
I sought counsel and, as a last resort,
filed a claim.While re-supporting the
lease facts, I discovered that the lease
language could be argued and sup-
ported with precedents. Months later,
the authorities ruled in the landlord’s
favor. The ruling stated that not only
was the entire payment due, but also
interest was to be paid.
By documenting (yes, this was
a three-inch file), having accurate
records, and continuously communi-
cating and speaking confidently to the
facts of this issue, this ordinary event
became very extraordinary.
My final moral of this story is:
Always send a letter return-receipt
requested, even if the lease doesn’t
call for it. This was a touchdown with
a two-point conversion!
Consistently in our property man-
agement world we find ourselves at
the one-yard line, and we’ve got 99
yards to go to score.The determina-
tion, strength, attitude, fortitude, grit,
resolve and creative play calling need-
ed to achieve the win is well worth it.
It’s easy to lose heart, but huddle up,
engage your team and keep moving
forward.
s
Perspective
Susan Nord, RPA
Senior property
manager, Aurora
