Whether a community management company maintains a large and diverse portfolio or its sights are set on one particular property, risk management considerations are crucial for future success. Creating a safe, attractive environment draws quality long-term residents in, helps maintain property values and protects your overall investment.
But with so many factors that go into managing a property, and so many potential risks, incorporating adequate safeguards isn’t easy. Here, BCH’s risk management professionals offer insights into the broad range of risk factors that come into play for today’s properties and tips for creating safe, livable communities while lowering liability risks.
The Broad World of Property Management: Risks to Be Aware of
Assessing and addressing potentially costly dangers can be difficult across any field, but property management risks are more complex than most. This is because management companies aren’t concerned solely with the business side of things, but with communities people call home. Common considerations to watch out for include:
- Legal Liability: Owner disputes, vendor contract breaches, negligence claims and the like can all require costly legal fees or time-consuming court dates in order to reach an agreement.
- Property Damage: Natural disasters, accidents, vandalism and criminal activity often lead to significant repair or replacement costs — and substantial time investments to get communities restored to a livable state.
- Owner Issues: Noise violations, disruptive guests, criminal activity and property damage can all earn a property an unwelcome reputation, making it difficult to attract residents. Meanwhile, late payment of HOA fees impacts cash flow.
- Regulatory Compliance: Adhering to local laws and regulations, including building codes and zoning ordinances, is crucial but can be complex.
Remember, community associations or management companies aren’t merely protecting a building and its contents against potential damage. They’re creating safe spaces for families with small children. They’re working to comply with ever-changing regulations. They’re often contending with aging infrastructure and buildings. And they’re doing all this as residents go about their everyday lives.
We recommend working closely with BCH to pinpoint the particular issues which could affect your properties and the people who reside in them. Once you understand the risks, you can put a strategic plan in place to move your community forward in a safer, smarter manner.
Setting Communities Up for Success: Tips to Help Companies Move Safely Forward
An organized approach is the best approach to property risk management efforts. The following steps can help community managers keep their communities protected.
- Conduct Regular Risk Assessments: Bring your leadership team together with your risk advisor to discuss your portfolio and its associated risks. Once you understand the issues, work together to craft a risk management strategy that suits your unique situation. Repeat the process at least once per year to ensure you’re adequately prepared for whatever the future might hold.
- Perform Regular Property Maintenance: Preventative maintenance efforts are the best way to avoid costly repairs and replacements. Efforts such roof replacement, tending to minor pool repairs, upgrading lighting and keeping landscaping in check don’t have to cost much, but the benefits can save you a substantial amount of money (and heartache) over time.
- Evaluate Your Insurance: Regularly review and update your property’s insurance policies for peace of mind against wild weather and other concerns. Property and general liability coverage are common protections, but there are a wide range of available options customizable to suit unique properties and needs.
- Expect the Unexpected: Develop emergency plans and communicate them to your leadership team. Have tools and resources in place to handle unforeseen crises. This could include anything from stocking necessities for weather-related power outages to knowing how to handle an active shooter situation. Your risk advisor can offer meaningful guidance.
- Maintain Thorough Records: File documents related to property-related transactions, contracts and legal communications in a way that is easy to access when you need them — and consider backing them up in a secondary location, too. Documentation helps ease stress, streamline operations and prove your case if a disagreement were to make its way to court.
BCH Tip: In addition to creating communities that attract and retain quality residents, a well-maintained property can help you avoid liability issues related to trespassers. Download our Attractive Nuisance Dangers Quick Sheet to learn more.
How Leadership Can Help: The Role of Risk Management for HOA Boards
HOAs are often joked about due to their strictly enforced rules, but they play a vital role in creating safe communities where residents’ needs are attended to — and where things look good, too. In fact, because these associations are comprised of individuals who reside within the community, they are often extremely effective in getting results. Here are a few ways an effective homeowners association helps to manage risks.
- Enforcing Rules and Regulations: HOAs establish and enforce community guidelines for everything from street parking considerations to swimming pool policies and home upkeep. These rules help maintain property values, create safe environments and reduce conflicts among residents.
- Financial Stewardship: HOAs manage the financial aspects of a community. By collecting fees, managing records and seeking out services from quality, cost-effective vendors, they ensure all residents contribute a fair amount, and that funds are available should maintenance or emergency needs arise.
- Coverage in Place: Ideally, an HOA will secure insurance policies to protect against damage that impacts common areas and shared assets. Such coverage helps reduce the financial burden on individual property owners and managers, and can result in quicker repairs.
- Community Engagement: By creating platforms for resident input and opportunities for community members to come together, HOAs help build camaraderie. And a strong sense of community can discourage problematic tenants, reduce property damage, deter crime and aid in increasing property values.
There are countless concerns that come into play when crafting a quality approach to property risk management. With a strategic approach and the right team by your side, however, it’s possible to create safe, amenity-filled communities that attract quality residents for the long term.
If you have questions about any of the above, or if you’re interested in learning how BCH’s Community Association Programs team can help with insurance coverage or a custom approach to risk management, please feel free to reach out at any time. Our team is here to help when it matters, and we’d love to hear from you!