Navigating Compliance: A Guide for Property Managers

When it comes to managing your commercial real estate, compliance is king.

A firm understanding of all the regulations, legalities and safety standards that govern your property is crucial for successfully managing said property. This knowledge will help you stay ahead of potential issues, mitigate tenant concerns, stay profitable and continue succeeding in the competitive CRE realm.

Here’s a guide for navigating real estate compliance like a pro.

What is Commercial Real Estate Compliance?

In a nutshell, compliance is the adherence to a set of standards, laws and regulations within an industry. Real estate compliance involves a combination of factors stemming from your property’s location, age, type and more, plus local laws, tenant relations and finances.

Failure to successfully meet these compliance standards can result in legal action and financial damages. Non-compliance will also affect your reputation in the industry; if you’re seen as a potential risk, any potential investors, partners and tenants will likely keep their distance.

What Property Managers Can Do to be More Compliant in CRE

Research Regulations

The first step to ensuring compliance is to understand the regulations you’ll be complying with. Take the time to research every local, state and federal regulation that impacts your CRE; learn their history and how they’ve been addressed by other property managers in your area. Be as informed as possible of the risks on noncompliance and make sure your team is aware of what might happen if certain standards are not met.

Types of Compliance Regulations

Compliance regulations are categorized into the following types:

• Local Regulations: These are the ordinances and zoning laws that specifically affect your neighborhood and surrounding county. These regulations can be very unique to each locality, so be sure to do your research.
• State Regulations: These higher-level regulations vary from state to state. They can include maintenance standards, safety laws, eviction procedures, specifics on tenant relationships and more.
• Federal Regulations: These rules apply to every property manager under the CRE umbrella and establish laws for discrimination, tenant relations and safety standards. Violating these regulations could come with hefty fines and other legal issues.

Be ADA Complaint

One of your top priorities should be adhering to the standards set forth by the Americans with Disabilities Act, or ADA. Make sure your property is accessible to any tenants with disabilities by upgrading and regularly inspecting your parking areas, ramps, elevators and restrooms. ADA compliance isn’t just about avoiding fines or lawsuits; it’s about creating an inviting, inclusive property where all tenants feel welcome, cared for and safe.

Be Environmentally Compliant

Keeping a property environmentally friendly has never been more important or highly enforced. You can ensure that your CRE is meeting environmental regulations by keeping an eye on local laws and regularly inspecting your property for issues and places of improvement.

Keep an eye on your waste disposal systems and how much electricity your property produces. Check your local laws if you plan on keeping hazardous materials stored on your property and consider opting for green solutions – such as solar panels, composting and recycling bins – wherever possible.

Create Safety and Inspection Protocols

A major part of commercial real estate compliance is establishing consistent inspections for your property. The most important inspections will be for your safety systems and regular maintenance on your mechanics and infrastructure. By establishing protocols for each, you can ensure continued compliance.

Here are some suggested guidelines:

• Fire Safety: Give your property’s fire alarms regular checkups for functionality. Test any sprinklers and fire extinguishers and make sure your “Exit” signs are properly lit.
• Electrical Systems: Improperly maintaned electrical systems can lead to power outages and fires. Inspections should survey electrical outlets, circuit breakers, panels and wiring.
• Plumbing/Water: Keep a close watch on your property’s pipes, sump pumps, water heaters, washer and dryers, sanitary facilities and drainage systems. Make sure everything is tightened, insulated and as thoroughly cleaned as possible.
• Regular Maintenance: If an inspection finds an issue with any part of the building, it should be addressed as soon as possible. These issues can range from problems with doors and windows to burnt-out lights, worn-down parking lots, damaged flooring, roof repairs and much more.

Keep Detailed Records

Every inspection and repair you oversee should be recorded in detail. Note the date and time of every step, from the discovery of the issue to its resolution. Archive as many insights as you can and, if possible, include photos.

Detailed records can be pivotal to proving that compliance is being met and that problems are being dealt with quickly and proactively. You can use this documentation in court, as validation to investors and to help guide future inspection efforts.

The Consequences of Non-Compliance in Commercial Real Estate

As mentioned before, failure to comply with property standards can lead to some messy issues. Here are a few worth considering:

• Lawsuits
• Fines
• Government Intervention
• Loss of the Property
• Damage to your Reputation
• Loss of Trust from Property Owners
• Loss of Trust from Tenants

Conclusion

Being a property manager means juggling a mountain’s worth of responsibilities, and real estate compliance is one of the most crucial. Without compliance, you likely won’t have a property to manage for very long. By staying on top of the regulations that affect you, you’ll be positioned for success in the CRE realm.

Remember to research every regulation and understand how each will impact your venture. Be mindful of ADA regulations and environmental concerns while performing regular inspections and fixes for any problems you find. Be aware of the risks of non-compliance and keep a detailed record of every improvement and solved problem that happens on your watch.

Need some advice for navigating compliance and securing your next CRE purchase? The expert team at DRK will guide you through the process and answer any questions you may have along the way.

You can scout commercial real estate available in the Columbus, Ohio, area here.

 

Until next time,

Other blog posts you may enjoy