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Blackbird Realty - Approved Contractors

Blackbird Realty - Approved Contractors

Blog Image I am frequently asked during management interview if I will agree to use the owner’s pool guy, or the nice man who mows the lawn or sprays for bugs.  The short answer is yes, as we are an equal opportunity company, and are more than happy to use your licensed and insured contractor. However, often the owner’s  contractor is a Mom and Pop operation and are unwilling to meet our contractor requirements.

In order to be a Blackbird Realty and Management, Inc. (BRMI) approved contractor they must meet the following is requirements.

  1. They must first provide us with proof that they are  properly licensed with the Nevada State Contractor’s Board (NSCB), and sign our Independent Contractor Agreement  (ICA) which includes a code of conduct, and a set of requirements of what I expect from them in way of behavior while on the job. 
  2. The next step is that they must carry a general liability policy with endorsements that state their policy will be primary, and our/your insurance will be secondary and non-contributing to any claim.
  3. Worker’s Compensation Insurance is also a requirement and the mom and pop operation normally doesn’t have this insurance because, they will not be allowed as sole proprietor to make a claim against it. 
  4. A waiver for the sole proprietor can be used for the worker’s compensation policy.

If you are leasing out the property, you must follow State Law with regards to the use of licensed contractors.  Essentially, any work needed that is in excess of $500 must be done by a licensed contractor if the home is being readied for lease or sale. 

Licensed plumbers, electricians, or HVAC contractors must be used regardless of the dollar amount.  If you hire us to manage the property, we already have screened all the contractors we use and have copies of insurance certificates and licenses on file.

Consider the following scenarios - 

  • Owner Bob hires landscaper Larry to maintain the landscaping and his rental property.  Bob has known Larry since he went to high school with Bob’s eldest son.  Larry’s business has grown and he now has two neighbor boys helping him out.  
  • While mowing Owner Bob’s lawn on Saturday, the lawn mower Larry’s helper is using hits a rock and shatters the blade. Part of the blade flies across the street and hits the neighbor’s child and she is rushed to the hospital. The remaining part of the blade sever’s Larry’s helper’s right foot just below the ankle. Naturally this wasn’t just any helper, Larry's helper was the all star place kicker for the local high school, and was on his way to college on a full scholarship because of his right foot.  Not too worry though, as Larry’s general liability insurance will cover the costs on the child across the street, and his worker’s comp policy will cover the place kicker's foot being reattached.  
  • You now discover that Larry didn’t have insurance, so all of this will be for your homeowner’s policy to cover.  You file a claim, and It is at this time the insurance company discovers that you aren’t living in the house, and that it is a rental and therefore you may not have the right policy.  The home is now considered a business and needed a different policy type.  Your insurance company wants to know who the insurance carrier is for Larry’s general liability and worker’s compensation policy,  so they can subrogate the matter.  Oh No!!!  After the accident, is a terrible time to find out that Larry didn’t have insurance.  Chances are that your policy limits may not be enough to cover the problem created by Larry, and you are liable because you hired him.   Larry feels terrible, and is sorry about all the problems, and hopes you will keep him on.

 

  • Owner Mary’s grandfather passed away last summer, and he left Mary the family home that two generations grew up in and $38,000.  Mary lives in a one bedroom condo, and is going to college, and can’t afford to live in the house now.  For sentimental reasons, Mary doesn’t want to sell the home now, because it is free and clear and has been for 40 years. She plans to manage it herself and becomes a landlord, but has no experience whatsoever. She thinks property manager’s are too expensive, and since she is majoring in business, thinks she can handle getting the place fixed up and then find a tenant on her own.  
  • Mary had a licensed contractor give her a bid for the work, but thought his prices were outrageous at $7000. The home needs painting inside and out, plus some other repairs, which include two ceilings that have water stains on them. She places an ad in the newspaper and on the internet looking for workers to help her paint it.  Fly By Night Frank responds and listens to Mary’s story,  and tells her he had a grandfather too, and will paint the whole place inside and out for $2500, because she made him think of his grandpa, and he is in between jobs right now. Mary will have to act fast to get Frank at such bargain prices, because in 7 days he has to start building the new mall. Mary is going to save $4500 by using Frank which is a bargain. She really doesn’t believe Frank’s story but hires him anyway.
  • Fly By Night Frank shows up the next day with his crew, and power washes the outside of the home, and is sanding the walls, and has cut holes into the ceiling to find the origin of the leaks. The contractor that provided Mary with the $7000 bid stops by to follow up with Mary,  and sees Frank and the crew working, and knows all about Frank.  Mary explains that Frank was $4500 cheaper and tells the contractor better luck next time and asks him to leave.  
  • The contractor knows that Fly By Night Frank isn’t a licensed contractor, and contacts the State Contractor’s Board and reports Frank. He also reports the disregard Frank and Mary have for the environment to the EPA.  This is the third time Frank has been reported and soon inspectors from OSHA and the EPA show up. Turns out that the house was built in 1956,  meaning special precautions must be used during renovations because lead based paint could have been used in the construction, and no reports to the contrary are known to exist.  The ceilings that were cut into had asbestos in the popcorn finish.  Fly by night Frank didn't do any testing.  The license contractor accounted for that in his bid with testing, as required under the law
  • Frank didn’t count on that, or that he would get caught.  Frank is not licensed and not an EPA certified renovator. Frank does have a grandfather however, but that doesn’t seem to help. Mary now faces fines of $37,500 for not having the certified renovator, and for contaminating the soil,  and must also pay for the cost of hazardous materials cleanup from the lead that is all over, and into the soils from the power washing of all the paint chips and asbestos.  
  • Mary will now have to hire a lawyer, and everyone knows lawyer are much more affordable than property managers.  The lawyer Mary hired contacted her after he read about her in the local newspaper. He agrees to take her case and plans on using the “Ignorance is an excellent excuse defense”.  Mary doesn’t know that the only bar the lawyer has past is located on 1st street and serves hot wings during happy hour.  She will pay the con man posing as a lawyer the rest of her inheritance, and must sell the house to cover the cost of the HAZMAT cleanup.  
 

Most owner’s can’t afford to save money the way Mary did in the above scenario and most don’t think things like this will ever happen. Bottom line is that they do, and if they didn’t, we wouldn’t need insurance companies, lawyers, and court houses. Managing property is so much more than collecting rent.  Managing risks when you don’t know the dangers or rules is only tempting fate.  Do you feel lucky?  Professional Property Managers are less expensive than an amateur. If you have further questions, please feel free to call us.

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