Careless Key Management Makes Owner Liable

Careless key management makes owner liable

Robert S. Griswold | Steven R. Kellman | Ted Smith
30-July-2000 Sunday

This column on issues confronting renters and landlords is written by Counselor of Real Estate and Certified Property Manager Robert Griswold, host of Real Estate Today! with Robert Griswold (10 a.m. Saturdays on AM1130 - KSDO radio, or on the Internet at www.retodayradio.com), and by attorneys Steven R. Kellman, director of the Tenants' Legal Center, and Ted Smith, principal in a law firm representing landlords.

Q: Two apartments in my building were recently burglarized of blank checks and personal information. Then my apartment was burglarized and I lost a briefcase, cell phone, cameras and other possessions.

Police determined both apartments were entered with a key as no sign of forced entry was present. Our manager was on vacation and the keys were
clearly labeled by apartment and were left accessible to his roommate and
in plain sight of anyone visiting their apartment.

Is the property manager or owner responsible for our loss? If so, how do the tenants go about seeking reimbursement?

A: Griswold -- Yes, the owner and property manager are not maintaining proper key control, making the owner responsible. Prudent management keeps the number of keys limited and under tight control with access provided only to the owners and/or managers that need specific keys.

Keys should be kept in locked key cabinets that will deter unauthorized access and they should be marked with a code system to minimize the possibility that a lost key would be improperly used.

I strongly suggest that you submit a formal written demand for reimbursement directly to the owner so they can file a claim under their liability coverage.

You should also submit a claim to your renter's insurance policy. Your insurance company may then seek reimbursement from the owner or their insurance company through subrogation. Be sure to include a copy of the police report.

To joint or not

Q: My wife and I own a 13-unit apartment building. Currently, we hold title as joint tenants. I was told that it is better to change it to corporation or a Limited Liability Company (LLC). What are the legal advantages and
what you would personally do in this case?

A: Smith -- An LLC is an entity that combines characteristics of a corporation and a partnership. An LLC is a separate legal entity, capable of suing and being sued. Like a corporation, an LLC provides protection from liability for its owners (called "members").

An LLC usually is taxed as a partnership, subjecting its income to only one level income taxation, and allowing flexibility in structuring allocations and distributions of income. General business matters -- employment law, accounting, and licensing -- apply to LLCs just like other legal entities.

An LLC can be very effective for many real estate investors; however, be sure to consult with your own legal and accounting professional for your specific needs and concerns.

Spoiled food

Q: I am a tenant under a long-term lease. The refrigerator that was included in the rental of the house broke down two weeks ago, spoiling over a hundred dollars of food.

I notified my landlords immediately and was told that the fridge was left as a convenience to me and when it broke down, it was my responsibility to buy a new one. There is no written disclosure of this in my rental agreement, it is not specifically addressed one way or another. They have refused to replace the refrigerator. I have been without it for two weeks now.

A: Kellman -- The refrigerator is part of the rental just like a garbage disposal or doorbell. While the law does not require your landlords to provide you with a refrigerator (or a garbage disposal or door bell), if one is provided, it must be maintained in good working order.

Your landlords are simply trying to escape that responsibility by calling the refrigerator a convenience which, of course, becomes real inconvenient when it breaks down. It is especially inconvenient when your landlords surprise you by inventing a new rule that the refrigerator is now your responsibility.

Simply stated, your landlords are wrong. Unless agreed upon in your lease, the maintenance of all appliances in your rental are the responsibility of your landlords. While some food loss may be unavoidable, your landlords should reimburse you for the losses that could have been avoided if they acted promptly and responsibly.

They should also provide you with a repaired or replaced working refrigerator. If they will not cooperate in this matter, maybe they need to cool down in front of a small claims judge.

IF YOU'RE A TENANT OR LANDLORD, the authors stand ready to answer your questions in this column, although letters cannot be answered individually. Write them at: Rental Roundtable, Homes Section, San Diego Union-Tribune, P.O. Box 120191, San Diego, CA, 92112-0191. Or you may e-mail them at rgriswold.sdut@retodayradio.com

Copyright Union-Tribune Publishing Co.

Back to 2000 Rental Roundtable Index

Robert Griswold and the Real Estate Today! radio show strongly support the intent and the letter of all federal and state fair housing laws. As a reminder to all owners and managers of real estate, note that all real estate advertised is subject to the Federal Fair Housing Act, which makes it illegal to advertise "any preference, limitation, discrimination because of race, color, national origin or ancestry, religion, sex, physical disability, or familial status, or intention to make any such preference, limitation or discrimination." Additional state and/or local fair housing laws may also apply. Be sure to inform all persons that all dwellings offered or advertised are on an equal opportunity basis.

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Revised and Updated - Wednesday, April 26, 2006

Robert S. Griswold, CRE, CPM, CCIM, PCAM, GRI, ARM
Griswold Corporate Center
Griswold Real Estate Management, Inc.
5703 Oberlin Drive, Suite 300
San Diego, CA 92121-1743
Phone: (858) 597-6100
Fax: (858) 597-6161
Email: rgriswold.ret@retodayradio.com