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PURE Property Management

Making Property Management Better for Everyone By Carole VanSickle Ellis At the beginning of 2024, roughly 10 million individuals in the United States owned rental properties. Of those 10 million, 51% work with a property manager to manage those investments, and those property management firms take between 8% and 12% of monthly rents, generating nearly $100 billion in annual revenue for these valuable services. Despite this professional management, in 2023, only about one-third of investors reported being “happy” with their cash flow, and many professed to a general dissatisfaction with their property management strategies and managers. This, said Joe Polverari, general partner and co-founder at boutique proptech property management company PURE Property Management, is something that must change. “Property management has historically been something of a ‘walled garden’ where companies have focused on keeping customers rather than actually making them happy,” Polverari explained. “The interesting thing about property management that made us want to get involved in the space is that there are very few innovation-focused participants in the industry. We could see if we had the right level of innovation, technology focus, talent, and the capital to back those things up, we could change the way the industry works for the better.” Polverari, who founded the company with longtime friend Mike Catalano in 2020, has spent the majority of his career buying, selling, and operating tech companies. “Mike is the one with real estate experience, and I am the one with experience looking at industries that are big and ‘suboptimal’ and figuring out ways to improve them,” Polverari explained. “After I sold my last business, we realized the time had come to bring our talents together and start a business that would benefit the massive asset class of single-family rentals.” Catalano has been active in real estate investing, sales, and property management for more than two decades. As a result of this long-term immersion in the industry, he had a close-up view of how technology and property management could be combined to create a better experience for real estate investors and residents of SFR properties. “Property management is a highly fragmented industry,” Polverari said. “There are about 40,000 property management companies in the United States that focus largely on local SFR management, and most SFR assets are owned by small investor-owners who own 10 properties or fewer. When you see a market that is fragmented, it naturally speaks to the question: Can it be consolidated, and would that make the industry better for customers and more valuable economically?” In the case of property management, Catalano and Polverari ultimately decided the answer to this question was a resounding, “Yes!” The result was PURE Property Management, a comprehensive property management platform that handles every element of SFR investing and management from acquisitions and market analysis to leasing, rent collection, and maintenance. “When we got started, there were no formal ‘best practices’ in place in the property management space,” observed Jennifer Stoops, PURE’s vice president of industry relations. “The property management industry is extremely disjointed. Everyone is doing pretty much the same thing, but they are all doing it slightly differently and using, in most cases, about a dozen distinct software tools in order to manage assets. PURE is taking what has been historically a very reactive industry and trying to change it into a proactive industry that is focused and simple.” Bringing a Positive Light to Renting & Rental Ownership When Catalano and Polverari first began examining the possibility of a proptech property management company, they knew they needed what Stoops calls “a fresh set of eyes” to truly effect change in the industry. The two brought in several leading property management companies and a team of technology experts in order to achieve this perspective, ultimately starting PURE with four property management companies willing to implement the newly developed processes and solutions. While this may sound complicated, PURE employees and the company’s leadership team explain the entire process is one based in simplification of existing practices. “We want to improve the property management experience, simplify it, and make it satisfying for everyone involved,” Stoops said. “We are not just serving owners; we are serving the residents, too.” The company started out with its team of four property management companies in 2020, debuting just after the global COVID-19 pandemic shut down much of the United States in the spring of that year. However, in October 2020 when PURE officially launched, it had become evident that the consistency and technology touted by the founders and initial members would be exactly what many investors were desperately seeking at a time when every state was enacting different regulations to keep their populations at home. “When we first got started, there was a lot of capital being deployed [into rental real estate] because of the [pandemic-related] stimulus and low interest rates, and there was a strong and obvious need for technology-driven business models,” Polverari recalled. He continued, “Ultimately, that led to a mindset shift in property management and real estate that there is a need for the ability to conduct business and commerce with less friction. That has created an environment where innovation can really start to flourish.” A People-First Strategy for Acquisitions Since October 2020, PURE has acquired more than 70 property management companies using what the company describes as a “people-first strategy” that is highly flexible and designed to fit many types of sellers in the property management space. This has enabled the company to acquire and establish anchor presences in Los Angeles and Orange Counties in California, as well as in Albuquerque, New Mexico; Dallas-Fort Worth, Texas; Denver, Colorado; Nashville, Tennessee; Portland, Oregon; and Tacoma, Washington. As of the end of 2023, PURE also had expanded existing services’ reach in Arizona, California, North Carolina, and Washington, the company reported. The accelerated pace of growth resulted in Catalano being named a HousingWire (HW) 2022 Vanguard for “outstanding leadership, vital contributions to [his company], and the dynamic way [he] is changing the industry.” “Because

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Santa Fe, New Mexico

“The City Different” Continues to Stand Out from the Crowd in 2024 By Carole VanSickle Ellis In 1912, when New Mexico became the 47th state in the United States, its capital city, Santa Fe (“Holy Faith,” an abbreviation for the original name La Villa Real de la Santa Fe de San Francisco de Asís, or the Royal Town of the Holy Faith of Saint Francis of Assisi), was already more than three centuries old. Founded in 1610, Santa Fe boasts incredible weather with more than 320 days of sunshine each year, carefully preserved historic architecture, and a booming real estate market. However, while the city is still making lists for housing appreciation and even made the 2023 nSkope Predictive Analytics list of cities where retirees are most likely to sell their homes for a profit, the real estate market in the “City Different” appears likely to remain, well, a little bit different for investors interested in the American Southwest. “We continued to see some price appreciation at the end of 2023 and into the first quarter of 2024, however…we are seeing pullback from buyers,” wrote Barker Realty analysts in the brokerage’s Q1 2024 Market Digest residential market report. The team noted Santa Fe “feeder markets” like Austin, Texas, have already begun to show signs of cooling and observed, “Santa Fe has typically lagged behind the major markets when these shifts occur, and, in March, we began to see the first signs of a cooling locally with homes staying on market longer than they have since before the pandemic.” Total units sold in Santa Fe County dropped by 28% year-over-year in March 2024. By May of this year, the decline in demand seemed to be leading to a leveling off of home prices in the Santa Fe area as well, with home values hovering just over $580,000, a 4.2% price change year-over-year (vs. a 51.9% price increase since May 2019). In 2023, in response to skyrocketing home values during and after the COVID-19 pandemic, the Santa Fe city council had resurrected a Great Recession-era 3% tax on transactions for homes valued at $1 million or more. At that time, more than 400 homes priced higher than $1 million were being bought and sold annually in the Santa Fe area. However, that effort was struck down by a First Judicial District Court judge in May. Interestingly, it appears nearly three-quarters of Santa Fe voters support the so-called “mansion tax,” so investors in the area should monitor developments around the policy. Relaxed Building Codes Create a Friendly Environment for New Multifamily Construction Another result of local concerns about the lack of affordable housing in the Santa Fe area has been the ongoing relaxation of regulations governing “vertical building” in the metro area. Vertical structures have multiple floors, and most people think of skyscrapers and high-rise multifamily condominiums or apartments when they hear this term. In the Santa Fe area, there is a centuries-old trend of intense concern over the preservation of the city’s historic architecture, which is reflective of the low-slung (horizontal), adobe structures encountered by the Spanish when they began exploring the region in the 1500s. At that time, Pueblo Indians were living in much of the Rio Grande Valley in “multifamily” buildings that could house hundreds of households and were sometimes several stories high. Spanish colonists used the same mud-earth-and-straw construction materials to make bricks for homes with round walls, corner fireplaces, flat roofs, and covered porches. These buildings were the predecessors of the Spanish Pueblo style that remains popular (and in the case of older buildings, protected) in Santa Fe today, and they played a key role in Santa Fe’s decision to dub itself “The City Different” in response to the “City Beautiful” movement of the early 20th century. Local planners at the time explained the city was already beautiful, so they would focus on elements that made it unique instead. In an effort to protect historic buildings and cultivate architectural tourism, buildings erected in the original style and original “horizontal” height of just a few stories in the Santa Fe region are often protected by historic preservation policies. Santa Fe is one of the National Trust for Historic Preservation’s “Dozen Distinctive Destinations in America” as a result of this architectural heritage, and construction higher than 25 feet in height is still carefully regulated, although housing ordinances passed in 2016 did remove many roadblocks to developing multifamily residential development for builders willing to pay a fee to the Santa Fe Affordable Housing Trust Fund. “Our version of density is three stories,” said then-mayor Alan Webber in a statement about the policy. He explained the move was designed to create more housing in the area while preserving “Santa Fe’s small-town feel, architectural heritage, and mountain views.” Because the fee negates developers’ obligations to preserve 15% of new multifamily units for affordable housing, the result of this policy has been a slew of mid-rise, luxury-living developments. Local investors report the most attractive of these are located in walkable areas, pet-friendly, and offer high-end amenities like quartz countertops, “wood-style” flooring, and high ceilings. These buildings offer high-end, multifamily living and cater mainly to affluent professionals and their families. A Concerted Effort to Support Construction & Renovation Since 2020, when Santa Fe was fully involved in the pandemic-era “zoom town” phenomenon, city planners and legislators have remained laser-focused on creating policies to support the creation and construction of properties priced in such a way as to be realistically available to buyers and renters in the area. Examples of these programs include $50,000 no-interest loans and grants for homeowners to renovate existing homes after purchase and financial support for developers building affordable rental units. The local lack of affordable housing has impacted Santa Fe school systems because even with recent pay raises, many Santa Fe teachers say they cannot afford to live in the metro area unless they opt to rent with roommates. In response, the city’s branch of the National Education Association (NEA)

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Legislative Advocacy for the Private Lending Industry

A Focus on National, California and East Coast Legislation By Amy Kame The National Private Lenders Association (NPLA) is committed to protecting the interests of the private lending industry. Through strategic partnerships with the Mortgage Bankers Association (MBA) and various state associations, the NPLA ensures that its members are well-informed and actively involved in the legislative processes that impact their businesses. As part of this initiative, the NPLA holds bi-weekly meetings with its members, providing crucial updates on legislation and other important matters. These meetings empower members with the knowledge and resources they need to navigate the legal landscape effectively. The NPLA’s Mid-Year Legislative Update 2024 In the most recent NPLA meeting, members received a comprehensive national legislative update from the Mortgage Bankers Association (MBA), a California-specific legislative update from Robert Finlay of Wright, Finlay, and Zak LLP, and an East Coast legislative update from Jon Hornik of Private Lender Law. National Legislative Update Stephanie Milner, Associate Vice President, and Liz Facemire, Director of State Government Affairs at MBA, provided insights into the main issues and trends at the local and state levels impacting commercial real estate and NPLA members. The key areas of focus included: Building Performance Standards // Regulations mandating energy usage and greenhouse gas emissions for buildings. Local Law 97 in NYC has begun implementation, with penalties starting in 2030. MBA is working on an advocacy primer to guide policymakers. Good Cause Eviction // Laws listing reasons for eviction, potentially conflicting with existing landlord-tenant laws. MBA has successfully opposed such laws in several states but faces challenges in New York, where localities must opt-in. Rent Control // Policies that negatively impact the supply of affordable housing. MBA has opposed rent control proposals in states like Colorado and Nevada and continues to combat these policies. Licensing Concerns // In South Dakota, non-bank lenders were subjected to federal anti-money-laundering laws. MBA’s intervention led to the memo being rescinded. Foreign Ownership // Numerous bills across the U.S. aim to restrict foreign ownership of land, impacting commercial development. MBA monitors and opposes overly restrictive applications. Investment Equity Ownership // Legislation limiting large investment firms’ ownership of residential homes could affect the supply of multifamily property. MBA is vigilant in addressing these trends. These updates reflect the MBA’s extensive efforts to advocate for policies that support the stability and growth of the private lending industry. Their proactive approach ensures that NPLA members are well-informed and prepared to address these evolving legislative challenges. The NPLA and MBA meet monthly to discuss legislation, trends we are seeing, and ways we can partner to ensure our members are equipped to navigate their businesses effectively in a constantly changing regulatory environment. California Legislative Report Robert Finlay, Partner at Wright, Finlay & Zak, LLP, and Co-Chair of the NPLA’s Legislative Committee, updated members on California-specific legislation affecting the commercial lending industry. Notable updates include: Investment Ownership Restrictions // SB1212 — Prevented investment entities from buying real estate after January 1, 2023. It was quickly shot down. AB2584 — Limited business entities to own no more than 1,000 single-family units. Defeated with the help of the California MBA. AB1133 — Restricted home builders from selling multiple residential units to one owner. Also shot down. Foreclosure Limitations // AB2024 — Likely to extend the foreclosure process by adding 90 days through extensions tied to listing agreements and signed sales agreements. Effective January 1, 2025. Commercial Tenant Protections // SB1103 — Aimed to extend residential tenant protections to commercial tenants. MBA remains optimistic about defeating it. Mortgage Interest Deduction // AB1932 and AB2616 — Proposed limiting the mortgage interest deduction to primary residences, excluding investment properties. Opposed by MBA due to negative impacts on fix-and-flip lenders. Debt Collection Practices // AB1286 — Expanded the Rosenthal Fair Debt Collection Practices Act to cover small business debt and loan guarantees. Still being fought by MBA. Fix-and-Flip Regulations // AB968 — Requires fix-and-flippers to disclose all repairs and permits, effective July 1, 2024, increasing costs and delays for flippers. Usury Law Modifications // SB1146 — Clarifies that forbearance, extensions, or modifications of loans by licensed brokers do not violate usury laws. Helps consumers and lenders. With the support of the California MBA, significant strides have been made to protect investment ownership and streamline foreclosure processes, ensuring that NPLA members can operate effectively. California is often considered a bellwether state, meaning that its legislative trends frequently set the precedent for other states across the country. This status poses a risk to NPLA members because laws enacted in California can influence similar legislation in other states. For example, if California implements stringent regulations on investment ownership or foreclosure processes, other states will likely observe these developments andpotentially adopt comparable measures. This ripple effect can create a challenging regulatory environment for private lenders nationwide. By understanding and addressing California’s legislative landscape, NPLA members can better anticipate and prepare for similar changes in other states. Proactive advocacy and strategic planning are essential to mitigating the broader impact of California’s legislative trends on the private lending industry. East Coast Legislative Report Jon Hornik of Private Lender Law provided updates on East Coast legislation, focusing on rent control expansion, foreclosure rights limitations, and enhanced borrower protections: Covered legislation included: New York // Bill A10210 — Extends existing rent control laws until June 30, 2027. New Jersey // Bill 5595 — Expands the Residential Foreclosure Prevention Program. Bill A819 — Requires maintaining age-restricted housing during foreclosure. Bill A2269 — Expands eligibility in foreclosure actions for properties sold below fair market value. Bill A2535 — Amends the Fair Foreclosure Act, adding a private right of action for violations. Bill A3154 — Provides a 6-month forbearance for high-risk mortgage loans, halting foreclosure and freezing interest rates during this period. The legislative updates from the East Coast highlight areas of concern for private lenders, including rent control and foreclosure processes. The recent changes to foreclosure laws in New Jersey can significantly impact lenders by delaying the recovery of their investments. Extended foreclosure

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Real Estate Reimagined

Leveraging Data and Partnerships for Investment Success By Dan Noma, Jr. The real estate investment landscape is rapidly evolving, presenting both exciting opportunities and significant challenges. Traditionally, the most powerful tools for making informed investment decisions — such as institutional-grade market analytics and access to off-market properties — were reserved for large, well-funded institutional investors. However, thanks to new marketplaces like Easy Street Offers, these advanced tools are now available to individuals and mom-and-pop investors. This democratization of data and access means that new or part-time investors, who own a handful or less of rental properties while juggling full-time jobs, can now make investment decisions with the same level of confidence and expertise as professional portfolio managers. Easy Street Offers, for example, provides comprehensive property valuations, market trend analyses, and access to exclusive off-market opportunities, empowering everyday investors to compete effectively and maximize their returns. This article will explore how these new tools and platforms are transforming the real estate investment landscape. We will examine the critical role of data and analytics in making sound investment decisions, and how leveraging these resources can help busy, part-time investors build robust and profitable portfolios. With the demand for rental properties on the rise, efficient and effective property management is also essential and worth the additional cost of doing business. The New Investor Profile Today’s real estate investors often juggle full-time jobs while venturing into rental property investment. These mom-and-pop investors want financial independence and long-term asset growth which often out-earn traditional investments of stocks, bonds, and mutual funds but are faced with challenges due to limited time and expertise. If you are a new or part-time investor, you most likely do not have the time or knowledge yet to find deals, run neighborhood value comparisons, or analyze the deals for maximum profit. Having the right resources and contacts is crucial to ensure the growth and success of your portfolio. Platforms like Zillow, Redfin, and others, put properties in front of investors, yet provide little insight as to viability and profitability, which often leads new investors to waste time and lose money chasing the wrong properties. We recommend finding a partner who can help you avoid these costly errors; a trusted partner who can do the heavy lifting and fill the knowledge gap. Further, new investors often lack the time necessary to effectively manage properties. Regular and critical tasks such as tenant screening, contract management, rent collection, property maintenance, and tenant communication can be overwhelming. Partnering with a company that has a large network of trusted property managers allows investors to focus on growth and the next opportunity. Best Practices and Insights Exploring best practices from technology and finance reveals how investors and property managers that harness advanced tools and professional networks are more successful. In real estate, new marketplaces like Easy Street Offers democratize access to institutional-grade analytics and off-market properties for mom-and-pop investors. Access to data analytics allows smaller investors to make smarter decisions faster and have more options on what works best for their real estate investment portfolio. The Property Manager Profile The demand for rental properties has surged, driven by urbanization, lifestyle changes, and economic factors. Many younger generation Americans are renting longer and moving to a wider range of places in the United States. This has increased the pressure on property managers to maintain property value, availability, and tenant satisfaction. Property managers are invaluable and crucial for ensuring efficient operations and property value enhancement through strategic pricing, tenant screening, property maintenance and consistent lease enforcement. New or part-time investors rely on property managers for day-to-day operations, allowing them to focus on their careers while benefiting from real estate investment income. Easy Street Offers has observed a number of new technologies that have enabled property managers to handle more data points, manage more properties, and become better partners for investors. Property managers can handle many aspects of a rental property, including marketing, leasing, the handling of late payments and evictions, tenant screening and satisfaction, finances and taxes, and maintenance and inspections. However, despite their benefits, property managers also face traditional challenges. Managing multiple properties requires prioritization, delegation, and technology utilization. Good property managers balance these demands while maintaining high service standards using the latest tools the tech industry has to offer. Enhanced Efficiency and Better Investment Outcomes The value of having team support is immeasurable to mom-and-pop investors. Being able to leverage other’s time, talent, and resources can help them start and scale effectively. When securing a partnership, look for companies that provide:  » Technology Integration // Incorporating property management software, business analytics, and automated communication systems can streamline administrative tasks and improve tenant interactions.  » Professional Networks // Building networks of contractors, legal advisors, financial consultants, industry experts, and fellow investors can enhance service quality and operational efficiency.  » Data-Driven Decision Making // Leveraging data allows for faster, smarter property management. Having a team find and analyze the data and present it saves valuable time on each deal. Strategic Opportunities for Growth The real estate investment landscape is constantly evolving, presenting numerous opportunities for growth. By staying informed about emerging trends and understanding how to leverage them, new and part-time investors can capitalize on these opportunities to maximize their returns. To remain competitive and achieve long-term success, investors must be proactive in adapting to industry changes. Platforms like Easy Street Offers provide the tools and support necessary to stay ahead of these changes. In today’s dynamic real estate market, mom-and-pop investors are more demanding. Investors want to see as much data as they can to make an informed decision and manage property as efficiently as possible. As discussed, tools once reserved for large institutional investors are now accessible to mom-and-pop investors. Real estate investing is a team sport, and success comes through collaboration and partnerships. Strategic partnerships and support teams can transform the investment experience, making it manageable and profitable. Staying educated, informed, and adaptable is essential in building a rental portfolio.

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Creating Opportunities

Mino Lending Solutions Prioritizes What Investors Need Most By Carole VanSickle Ellis When you think of private lending, the word “scrappy” is not usually the first word that comes to mind. However, when you think of Mino Lending Solutions, the Detroit-based, full-service, nationwide mortgage originator specializing in financing for real estate investors and actively engaged in making loans that other lenders simply cannot tackle, “scrappy” seems to fit the bill. “From the beginning, we have had that scrappy, gritty, creative element ingrained in us because it is in the culture that drives us in Detroit,” said Cason Thorsby, co-founder and CEO of Mino Lending Solutions. Although the company is based in Detroit, it operates nationally and makes not only the lower-dollar loans that investors are desperately seeking in that market but also higher-end loans on what Thorsby calls “million-plus fix-and-flips.” “If a deal makes sense, we love it and we are going to do it, period,” Thorsby said proudly. “It sometimes might seem to real estate investors that no one wants to play in the smaller-dollar sandbox, but if that is what investors need, we are going to be there.” Thorsby and co-founders Chad Skop (COO/CFO), Grant Drzyzga, and John DeSilva started the company in response to the need for real estate investors and property managers to access equity in their current portfolios, fund new acquisitions, and grow their businesses, Thorsby explained. Drzyzga and DeSilva, who are also founders of property management software platform Revela, initiated the conversation when they noticed an ongoing flow of requests from their clients for more funding for their investments. “Our clients are smaller, non-institutional real estate investors driving positive change in local economies, and there is no market where that opportunity and the need for funding is more evident than in Detroit,” Thorsby said. “Smaller investors’ appetite for risk and willingness to take on hard work and hard projects helps stabilize neighborhoods and shore up local markets. We believe they should have access to the same type of financing as the ‘big guys.’” Providing a New Point of Access to Profitability & Cash Flow When the co-founders first broached the idea of a lending company with each other, they did so in response to a clear gap in the market when it came to serving individual investors engaged in markets like Detroit, Michigan, where Mino Lending is based. Although investors are often able to get into deals with short-term loans in markets like Detroit, of which there are many in the Midwest in particular, it can be difficult to exit that funding to create profitability and cash flow. “We have roots in Detroit, and the characteristics of this market bleed into others like Cleveland, Ohio, or St. Louis, Missouri, to name just a few,” Thorsby said. He continued, “In these types of markets, valuations and properties can vary greatly street by street and even block by block, and asset prices are still relatively inexpensive compared to the rest of the country. This means there is an opportunity for people to create portfolios here that they could not create anywhere else. We are determined to help them do that.” Thorsby recalled his early days in private lending just after leaving his food-and-beverage business to become a lender. “I had a lot of experience raising money, but I had not seen how it usually worked in the real estate space up to that point,” he said. “From the ‘outside’ looking in, it just did not make sense that someone with good credit, good experience, and good liquidity could not get financed for a deal in a place like Detroit. If there is money to be made, it can be a good loan, and we are proud of our success in lending to investors in Detroit with a 0% late payment, 0% delinquency track record. We are proud that we saw something that needed to change and we are helping change it.” The Truth About “Small” Loans “Small” real estate loans are hard to come by, and this can make investing in highly attractive deals in certain markets extremely difficult for investors who rely on loans to finance acquisitions and renovations. Historically, the investor maxim regarding borrowing was, essentially, “If you’re willing to pay the price, you can borrow on anything.” However, this has never fully applied to small property loans, typically defined as $100,000 or less. To Thorsby, that inaccessibility was a problem. “In markets like Detroit, which is our home base, you can still buy a house for $50,000 and put $30,000 into it for a cost basis of $80,000. That is huge for an investor with decent liquidity who wants to invest in the Midwest,” Thorsby said. “They can create portfolios with many cash-flowing properties despite higher interest rates, but only if someone will make the loans.” Mino Lending has prioritized these types of borrowers from the beginning. “We have roots in Detroit,” Thorsby said. “As a private money lender, we understand what makes a good deal and we believe it is important for investors to be able to do those deals when they make sense.” With the average home loan amount in the U.S. today hovering just over $400,000, most lenders, “conventional” and private, tend to avoid making loans below $100,000 because they simply are not as cost-effective as larger loans. It costs roughly the same amount to originate a loan of any size, and most lenders do not choose to specialize in these small loans since relatively few of them are originated each year. While these reasons might make good business sense for lenders, Thorsby said, the truth is that the practice of only making larger loans leaves investors active in some of the most affordable markets in the country out in the cold. For Mino Lending, which already specializes in making loans of all sizes nationwide, the correct course of action was clear. “The feather in our cap is that we are an up-and-comer willing to do financing in cities

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Property Management & Insurance

What Coverages are Necessary? By Shawn Woedl If you have hired a property manager (PM) for your rental properties, they likely will (and should) carry Professional Liability or Errors & Omissions coverage. These insurance policies help protect them if their inadequate work or negligent actions while performing property management duties lead to a lawsuit. But what if you perform property management duties yourself? Did you know that if, while performing these responsibilities, your negligence results in a claim, your Premises Liability offers you little to no protection? What Activities are Considered Property Management? When comparing the activities of a landlord to a property manager, there is certainly some gray area. Essentially, the role of a landlord is to own the property and provide for its ability to function properly, for example, plumbing, gas, heat, water, etc. The property manager, who might be, but is not always a third party, handles most of the responsibility for maintaining the property and managing the relationship with the tenant. Specific activities may include:  »             Setting rent rates based on market standards and collecting rent from tenants  »             Advertising property vacancies to attract new tenants and showing the location to potential occupants  »             Performing background or credit checks and screening of potential tenants  »             Finalizing lease agreements with new tenants and coordinating placement  »             Paying bills and managing the budget or financial records for the property  »             Specific maintenance duties to ensure the property is safe and inhabitable — This may include responding to tenant requests, performing maintenance, or hiring contractors where necessary to fix issues and updating facilities when warranted.  »             Resolving tenant complaints and enforcing lease requirements — As part of this responsibility, the property manager should understand local landlord-tenant laws and ensure that both parties fulfill their requirements. Performing these tasks, or similar ones, could classify you as a property manager. As such, you may be at risk of liability claims due to inadequate work or negligent actions when acting in this capacity. However, as a property owner who performs these responsibilities (as opposed to a professional property manager), finding the right coverage can be challenging. What is Property Management Errors & Omissions (PME&O) Insurance? Errors & Omissions (E&O), also referred to as Professional Liability insurance, is coverage carried by businesses that provide specialized services or play advisory roles, such as professional property managers, financial service providers, lawyers, and consultants. These coverages insure against claims made when the work provided or advice given causes harm to the recipient of those services. Similarly, Property Management Errors & Omissions is for property owners who perform the duties listed above, or similar ones. This coverage protects you from tenant allegations that you were professionally negligent in these responsibilities or failed to perform duties as promised in your contract while acting as the property manager. What Does PME&O Typically Cover? Property Management Errors & Omissions (PME&O) insurance covers a range of issues that may arise while performing property management activities. This includes legal defense costs such as judgments, settlements, court costs, and attorney fees. Issues falling under this coverage may include, but are not limited to: Errors and Contract Performance Disputes If maintenance or upkeep is not as per the lease agreement or legal documentation has been misrepresented. Tenant Discrimination Fair housing laws protect all individuals seeking housing, including renters, homebuyers, and those obtaining a mortgage or homeowners insurance. The federal Fair Housing Act prohibits discrimination based on race, color, religion, national origin, gender (including sexual orientation and gender identity), disability, and familial status (presence of children under the age of 18 and pregnancy). Some states require you to rent to the first applicant for your listing, regardless of whether or not they can produce an acceptable rent history or are employed. If you do not adhere to these laws, overlooked applicants could sue you for tenant discrimination. Advertising Misrepresentation Examples include advertising that the property you are leasing is handicap accessible when it is not, unintentionally not disclosing mold, rental history, etc., or including incorrect property information in the listing. An Important Note for Hiring Professional Property Managers If you choose to utilize a professional property manager, it is very important that you require them to carry Errors and Omissions coverage, with you or your entity listed on the policy as an additional insured. The owning entity of the property, which should be the same entity that pays the property manager, must be the one listed as an additional insured. This ensures that you and/or your entity are protected from potential legal and financial liabilities arising from the hired property manager’s actions. In Summary Property Management Errors & Omissions (PME&O) insurance is essential for property owners who self-manage their rentals, protecting against legal and financial risks that may arise from claims of negligence, discrimination, or failure to fulfill contractual obligations. By understanding the importance of PME&O insurance and obtaining adequate coverage, you can safeguard your investments and manage your properties with greater confidence and security.

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