Vendors and Our Liability
August 1, 2010
You are careful about your tenant selection. Every applicant gets a thorough screening including a credit check, criminal background search and verification of all the information on the application. In fact, you make sure the application is filled out completely when the applicant hands it to you and if it isn’t, you hand it back and tell him to fill it out.
As a result, you have almost no problems with bad tenants. They simply don’t get by your careful attention.
But what about your vendors. You know, the people you have come to work on your properties. A bad vendor can cost you more in lost income and grief than a bad tenant. It turns out we are not helpless against the lying and criminal vendor.
I had never thought much about it until I received a call the other day from Terri Lee, the owner of Pro Compliance, Inc. When she explained the services her company provides, I immediately thought what a great idea! I know that I have seen the results of crooked, sleazy and incompetent repair people. We screen for competence by calling references, looking at current projects and such. But we can also screen for licenses, and lots of other things. As the Pro Compliance website explains, “Vendor compliance is a procedure that ensures your current and future vendors comply with policies related to your company.”
A bad vendor can cost you more in lost income and grief than a bad tenant. It turns out we are not helpless against the lying and criminal vendor and we can easily check more than just the quality of work he or she does. I have almost always checked to see if a repair or maintenance person is licensed, and I have checked the company’s Better Business Bureau record. But there is far more we can do. And that’s the service the Pro Compliance offers so we don’t have to.
The company will “perform your vendors screening and verify that their business information is valid and ensure your vendor compliance.”
I am sure there are repair people you have used for years. And if they do good work for you, there is no reason to change or run them through a check. But if you are hiring a new vendor for something you have not had done before, there are some excellent reasons to screen them just as thoroughly as you would an applicant.
Here’s what Pro Compliance says is important to check.
Business Status and Identity
Personal Identity of the Principal
Professional business, trade license and bonds
Criminal background and sex offender reports
Bankruptcy, tax liens and judgments search or business credit reports
Better Business Bureau search
Most important for liability are the liability insurance tracking, workman’s compensation verification, and the criminal background and sex offender reports. Those are the items that can empty our bank accounts quickly if we hire someone without workman’s compensation insurance, liability insurance or a criminal or sex offender record.
We could probably do all of these things ourselves, but it would take time that might be better spent actually managing properties. Plus, we can require that our vendor actually get the report him or herself.
I hadn’t thought much about the liability we have when we allow a vendor to work on our property except for that of liability for shoddy or dangerous workmanship. But think of what we could end up paying for contracting with or hiring a company that hired a sex offender to work on a property.
We need to screen the people who will work on our properties, have access to our tenants homes and access to tenant records even more carefully than we do the tenants we rent to.
Visit Pro Compliance’s website at www.procompliancesource.com.