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Thursday, August 6, 2009

Setting Aside a Property Management Legal Fund

Being a good property manager these days sure isn't easy and each year our laws are shifting to favor tenants and renters over property owners even if it is the renters who fail to be truthful on agreements, fail to pay their rent on time, or damage the property. Obviously, there are ways to mitigate most lawsuits, and even when a renter claims or threatens a lawsuit most likely they have no money to pursue it, or they'd probably have paid their rent in the first place.

Still, there are times when lawsuits are filed and once the process begins even winning the lawsuit can be costly. Luckily, most of the filings are incidental and occur in small claims court and you can represent the property without hiring a lawyer, and if you have well-documented everything, generally you will win. But that's not always the case. This is why I often recommend that property managers set aside a small legal war chest; a legal fund for future lawsuits.

How much should your legal fund be? This often depends on which state your properties are in and which city. In rural areas you won't need much, but you will still need some. In larger cities you are playing with the sharks and you'll want to be the biggest shark of them all; and you thought property management was easy didn't you? Well, this is why you need a lawsuit war chest, and why each month you need to set aside a percentage of the rental monies. Please consider all this.

Lance_Winslow

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