COVER YOUR­SELF

Sharon Fox-Slater

Elite Property Manager - - CONTENTS - SHARON FOX-SLATER is the Manag­ing Di­rec­tor of EBM’s Ren­tCover. For more in­for­ma­tion, visit ren­tcover.com.au. Our ad­vice about in­sur­ance is pro­vided for your gen­eral in­for­ma­tion and does not take into ac­count your in­di­vid­ual needs. You should read the Prod

IT'S A FACT OF WORK­ING LIFE that some­times things sim­ply go ‘pear­shaped', so it makes good busi­ness sense to have Pro­fes­sional In­dem­nity in­sur­ance. But tak­ing out cover is just the first step; if you need to make a claim you'll need to have hard ev­i­dence to sup­port your case, as Sharon FoxSlater of EBM's Ren­tCover ex­plains.

No mat­ter how dili­gent an agent you are, some­times is­sues arise and you can find a ten­ant or land­lord ac­cus­ing you of fail­ing in your du­ties. This is where Pro­fes­sional In­dem­nity (PI) in­sur­ance is a safety net, pro­tect­ing you from fi­nan­cial loss fol­low­ing a claim of neg­li­gence against you by cov­er­ing your le­gal de­fence costs and dam­ages payable.

PI cover is a nec­es­sary and smart move, but it doesn’t re­place the need for you to meet your obli­ga­tions or pro­vide proof of what you pur­port to have said or done, in the event that you need to make a claim.

PROOF

If you are be­ing sued for neg­li­gence or breach of du­ties un­der con­tract, the ten­ant or land­lord will need to demon­strate that you owed them a duty of care; that you did some­thing or failed to do some­thing that a rea­son­able per­son in the same cir­cum­stances would have or not have done, and that they suf­fered some harm or loss be­cause of what you did or didn't do.

On your side, your PI in­surer will ask you to pro­vide ev­i­dence that you took ap­pro­pri­ate ac­tions to ful­fil your obli­ga­tions un­der con­tract, and took re­spon­si­ble and rea­son­able care to avoid loss or in­jury to an­other.

Records doc­u­ment­ing con­tact with land­lords and ten­ants can be use­ful if you need to make a PI claim and de­fend the ac­tion against you.

How­ever, a prob­lem can arise if you are not able to pro­vide the re­quired doc­u­men­ta­tion to prove that you ful­filled your obli­ga­tions.

AGENT LEARNS A COSTLY LES­SON

Is­sue A ten­ant was in­jured when they fell through rot­ten steps at a prop­erty. The ten­ant had ad­vised the agent of their con­cerns about the de­te­ri­o­rat­ing steps on sev­eral oc­ca­sions and even­tu­ally had no­tices is­sued for the prob­lem to be reme­died.

Agent's re­sponse The agent no­ti­fied the land­lord by record­ing the state of the stairs in their reg­u­lar writ­ten re­ports. How­ever, when writ­ing about the is­sue, the agent failed to say what ex­actly needed to be done and how soon the land­lord was ex­pected to fix the prob­lem; in other words, they didn’t ask for in­struc­tions from the land­lord or ad­vise that the re­pairs were ex­tremely ur­gent, or pro­vide a timeframe in which the land­lord needed to re­spond. The agent sim­ply awaited a re­sponse from the land­lord. In essence, by fail­ing to seek in­struc­tions in an ap­pro­pri­ate and very spe­cific man­ner, the agent’s rou­tine re­port to the land­lord amounted to ‘no ac­tion’.

The prob­lem was com­pounded by the fact that the land­lord didn’t have email, so the agent was post­ing the in­spec­tion re­ports and breach no­tices, and there was no cover let­ter draw­ing at­ten­tion to the press­ing is­sue with the steps.

Fall­out When the ten­ant was in­jured, the land­lord de­nied be­ing aware of the prob­lem – and the agent was not able to prove that they had no­ti­fied the land­lord. The land­lord said that none of the let­ters and no­tices posted were re­ceived, and as the cor­re­spon­dence was sent via reg­u­lar mail the agent could not prove that the let­ters had been sent or de­liv­ered. Cost The agent was held li­able for the ten­ant’s in­jury and will have to pay the cost of the claim, which is in ex­cess of $200,000.

Les­son The agent did most things cor­rectly – in­spec­tions, writ­ing let­ters, no­ti­fy­ing the land­lord of the ten­ant’s com­plaints, call­ing the land­lord – but with­out the doc­u­men­ta­tion to back it up, they were ex­posed.

PROVE IT

The best way to pro­tect your­self and en­sure that you will be able to pro­duce the ev­i­dence if nec­es­sary is to Act and Doc­u­ment.

Act:

Im­me­di­ately no­tify the land­lord – in writ­ing and by call­ing – of ten­ant com­plaints, es­pe­cially ones that re­late to safety

Set a timeframe for im­me­di­ate ac­tion. If noth­ing hap­pens, ad­vise your client in no un­cer­tain terms that due to their lack of re­sponse and in­struc­tions, you no longer hold your­self re­spon­si­ble for any con­se­quences that may stem from their in­ac­tiv­ity

Do what­ever you can in the cir­cum­stances to mit­i­gate losses – cor­don off the dan­ger­ous area, ap­prove ur­gent works within your au­thor­ity, and so on Take pho­tos

Never rely on giv­ing or re­ceiv­ing ver­bal ad­vice or in­struc­tions – use email or reg­is­tered mail to con­firm con­ver­sa­tions, ver­bal agree­ments, proof of de­liv­er­ing copies of let­ters or no­tices, and so on

No­tify your PI in­surer. It is a re­quire­ment un­der cover that you in­form your in­surer ASAP af­ter you first be­come aware of a sit­u­a­tion which could po­ten­tially re­sult in a claim be­ing made – in other words, as soon as you are ad­vised that a ten­ant or a third party sus­tained an in­jury, even if the land­lord or ten­ant hasn’t made a for­mal com­plaint or en­gaged a lawyer.

Doc­u­ment:

Log ev­ery­thing – com­plaints from ten­ants re­ceived, calls made, in­clud­ing time of call and what was dis­cussed, emails, land­lord re­quests and re­sponses, and so on – in your CRM and client files. Record your notes, con­ver­sa­tions, emails, cor­re­spon­dence, mile­stones and, if red flags are raised, record the facts and events

Put the no­tices or in­spec­tion re­ports in a let­ter on your com­pany let­ter­head

In­clude a cover let­ter care­fully de­tail­ing what the is­sue is

Seek in­struc­tions from the land­lord. Give the land­lord a timeframe – maybe 24 hours or less if ur­gent – in which to re­ply and in­struct. Ad­vise the con­se­quences of fail­ing to do so (such as costs in­curred, will be in breach of ten­ancy agree­ment and leg­is­la­tion, and so on). Do what­ever you can to mit­i­gate the ex­ist­ing sit­u­a­tion un­til such time as you re­ceive ap­pro­pri­ate in­struc­tions to act

Em­pha­sise that now the land­lord has been no­ti­fied and in­struc­tions sought, re­spon­si­bil­ity for any sub­se­quent is­sue that may even­tu­ate will rest with the land­lord. Let the land­lord know you’ve met your obli­ga­tions and it is up to them to pro­vide in­struc­tions to act

Email the let­ter or no­tices and also send a copy by reg­is­tered mail.

THE BOT­TOM LINE

In the eyes of the law, un­less you can prove it – it didn’t hap­pen. So make sure you ’re cov­ered by col­lect­ing all the ev­i­dence you need to back up your case. Re­mem­ber: com­plete pa­per­work and doc­u­men­ta­tion is the key to a suc­cess­ful de­fence. Your PI in­surer will thank you and you’ll be re­lieved that you have suc­ceeded in prov­ing your case.

RECORDS DOC­U­MENT­ING CON­TACT WITH LAND­LORDS AND TEN­ANTS CAN BE USE­FUL IF YOU NEED TO MAKE A PI CLAIM AND DE­FEND THE AC­TION AGAINST YOU.

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