The Ethics of Property Management

From tenants who default on their rent payments to building owners who look to place the blame, property managers often find themselves at the center of disputes. But how can they deal with potential conflicts both fairly and professionally?

Adhering to a professional code of ethics is an essential start, says Fred Thompson, 2009 president of the National Association of Residential Property Managers (NARPM®). In fact, subscribing to a code is the best way for companies and individuals to build relationships of trust with their customers, employees, suppliers, owners and communities in which they work.  

“If you don’t have good ethics, you probably shouldn’t be in business,” Thompson says. “And if you have a property manager who doesn’t subscribe to a code of ethics, I wouldn’t feel comfortable renting from them or having that individual manage my property.”

Continuing education
In the case of NARPM®, all 2,500 members receive comprehensive training on its Code of Ethics when they first join the organization.

“Our Code is taught as a three-hour course and goes over treating the tenant and owner fairly and abiding by fair housing codes,” he says, adding that continuing ethics education is built into the NARPM membership. Different articles of the code are often re-discussed at monthly chapter meetings across the country, says Mark Kreditor, past chairman of its ethics and professional standards committee.

“Every meeting we hold, we encourage chapter leaders to read and discuss the duties required to be an ethical property manager,” he says. “This is constantly part of our training.”

Tenants and owners
Putting that training to use is especially important for property managers, who can use any code of ethics to guide them in matters such as evicting a tenant or dealing with owner complaints about an existing tenant.

As part of the NARPM® Code of Ethics, property mangers adhere to 11 detailed articles that serve as an outline for sound business practices. Maintaining fair and professional relationships with both tenants and owners is a key element to the code; several of the additional articles address the duty to protect the public against discrimination, acting in the best interest of their employer/broker, keeping up the condition of their properties and refraining from criticizing competitors.

Kreditor and Thompson agree that client and tenant relationship ethics are two of the
most important components.

“If a property manager received a complaint—either from the owner or tenant—it would be investigated by NARPM®’s professional standards committee where appropriate action would be taken,” says Thompson, noting that no parties should take private action against a party before filing a complaint.
Similarly, a property manager wouldn’t evict a defaulted renter by removing his or her door, or threatening violence, Kreditor says.

“You use the steps laid out in your state’s property code,” he says.

Dealing with building owners can be particularly contentious, especially as it relates to tenants who break leases or cause damage to the property. As part of NARPM®’s Code of Ethics, he says it is important to keep a level head and remind them they were the ones who chose the tenant, even in the case of the property manager picking the tenant, the code of ethics keeps property managers on a straight path that they represent the owner through thick and thin.

“If a tenant destroys a property, they want someone to blame,” Kreditor says. “But ethics are all about disclosure and comprehension. They are a covenant. I want my owners to know they are picking the tenants. Too often, they don’t realize the risk.”

Additional articles
Aside from working with tenants and clients, Kreditor says the notion of “criticizing competitors” is another hot point in relation to the NARPM® Code of Ethics.

“If there is an owner who is in an agreement with a competitor and they are very unhappy with them because of the way they do business, I have the duty to tell them to fulfill their agreement with that competitor,” Kreditor says. Additionally, the Code dictates that property managers must refrain from soliciting competitors’ clients.

PM’s must also be mindful when marketing the values of their properties, Thompson adds. Stay truthful about the value and do not mark it up to get more money from the tenant. They also must comply with local banking ordinances, which can be easier said than done in the realm of property management.

“There is a lot of trust of accounting when you are in property management,” Thompson says. “You are handling funds of another party. You need to make sure you are handling those in compliance with state regulations.”

Ultimately, subscribing to a code of ethics will improve the business practices of every property manager in the long run, regardless of the details in the doctrine. “If you follow a strong code of ethics, you will simply be a better manager,” Thompson says.