Documentation is a Property Manager's Best Friend in Court

By
Services for Real Estate Pros with Rentec Direct Property Management Software

I was reading a property management advertisement the other day from a property management company trying to earn my business and on their information sheet they say "less than 1% of our leases end up in court".  1%?!!?!?  So as many as 1 in 100 leases end up in court.  They were bragging about this, so perhaps other property managers are 2 in 100 or more?  That tells me that of all the industries I participate in, the property management (landlord) industry by far and away spends more hours in a courtroom than any other that I'm aware of.

Nobody wants to end up in court, it's a drain on valuable resources; time, money, energy.  Then there's always the worst that can happen and the tenant has a better case and walks away with the prize.  Granted, some property managers run bad business and it is good that tenants have a recourse through the court system; however, in many cases property managers are doing their best and are just winding up defending a frivilous claim because the tenant felt they should really live in your house free for a year, plus emotional damage of course for the eviction letter trauma you caused.

This leads me to my next point.  Documentation is EVERYTHING.  Whether your initiating a proceeding and your sitting on the right side of the courtroom or a past or current tenant did and your on the left the best protection you can enter with is full and complete documentation of the event.  Some may argue having an attorney at your side is the best protection; however, while attorneys do know the system well, I would certainly say having documentation is your first defense, and an attorney (if one can be afforded) will present that documentation.  However, without the documentation the attorney won't have much ammo to defend the case.

You never know what might end up in court, so it's best to document everything.  Here's some tips I've learned through the years.

  • Ask for it in writing.  Unless you can legally and are recording every call and voicemail, a phone call is as good as nothing.  Get it in writing whether it's a complaint from a tenant, an invoice, an issue with a neighbor, whatever it is, get it in writing, scan it, and save it electronically where it can be easily accessible if needed.
  • Save all your receipts.  Great tip not only for documenting repairs, etc, but this also provides solid proof of expenses in the event of a tax audit.  I scan my receipts and upload them with the expense transactions to my property management software.
  • Take pictures.  A picture is better than almost anything.  If one person says it was this way, and another person says it was a different way, it's simply word vs word and a court cannot make a decision.  However, if one or another brings a picture to backup what they are stating their position all of a sudden is much stronger and can also dis-credit the others thereby not only proving this point but strengthening the whole case.
  • Take video.  If you have a lot of area to cover, it may take a hundred pictures to cover everything.  On the other hand, video handles this situation nicely.  If you want to record the condition of a property for instance, walking through with a video is a great way to document the condition of a large area.  Ideally use the highest quality video setting on your device so if need-be the video can be paused and details of that area can be seen.  Also pan slowly as to be sure not to blur your video.  Taking a video to document the condition of a property before a tenant moves in is a very good idea. 
  • Save your documentation, pictures, and videos electronically in a safe place.  Paper can be messy, especially if you have file cabinets (or chronologically filed piles as the case may be) which means it can take a very long time to find what your looking for.  Scan and save your documentation electronically where it can easily be accessible if the need arises.

There's a bit of a misconception about how hard it is to electronically store documents.  Nowdays it's very easy.  Drop by your local office supply, Costco, Staples, or almost any electronics store and pickup a multi-function printer that includes a sheet feed scanner.  They can be purchased for as little as $150.  There's also scanners designed strictly for the purpose of scanning documentation which work very well, do two sided scanning, rarely jam, and cost a bit more.  Any of these options work.  Also, most scanners include software to automatically save to PDF, which is a universal format that can be opened on any computer.

Now saving it somewhere safe.  If you maintain your own IT infostructure, be absolutely sure you are backing everything up.  Hard drives die *all the time* and people can lose all their valuable data when this happens.  Backup your data ideally offsite to a secure storage medium or online backup service.  Another very convenient method is if you use a property management software that allows attachments and a file library, simply upload your documentation here for safe keeping and easy access, which is what I have found the most convenient.

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The author is a founding member of Rentec Direct.  Rentec Direct provides property management software which includes ach for landlords, tenant screening, and online documentation and file storage.  While the above article may speak of products we offer or use screenshots from a product we offer, we encourage landlords to do their research and make up their own minds when selecting a new product.  That said, we of course welcome ActiveRain members with open arms.

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Danny Frank 09/16/2010 12:22 PM
Topic:
Real Estate Technology & Tools
Location:
Virginia Prince William County Woodbridge Lake Ridge
Groups:
Active Rain Newbies
Investing in Real Estate
Investors
Property Management
Real Estate Agent-Investors
Tags:
documentation
landlord
courts
property management software

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Ambassador
1,010,412
Harry F. D'Elia
Precision Real Estate Inc. - Phoenix, AZ
Investor , Mentor, CSSN, Radio Coach, REOs, ABR

Your title says it all. Documentation is key when going to court with a renter.

Sep 08, 2010 09:40 AM #1
Rainmaker
150,883
Aaron Seekford
Arlington Realty, Inc. - Arlington, VA
Arlington VA Homes 703-836-6116

Dead on Nathan. Thanks so much for all of the tips... I'll be passing them along to our PM.

Sep 13, 2010 11:50 AM #2
Rainmaker
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Danny Frank
Coldwell Banker United, Realtors 713-581-4702 - Pearland, TX
The Real Estate Expert

Great info

Sep 16, 2010 12:18 PM #3
Rainer
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Carol Andersen
Navarre Beach Agency - Navarre, FL
NW Floridanulls Real Estate Pro, TRC, ICREA

Thanks for the great info.  I've just bought my first rental property and having been trying to decide whether to manage it myself or hire a pro.  Now I've got a bit more advice under my belt!

Sep 19, 2010 04:07 PM #4
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Nathan M

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