IREM insider/know your code.
What do you say when someone asks you, "What do you do for a living?" There are a few different ways to describe what we do as property managers. Many of us serve as fiduciaries for our clients and don't even realize that this description defines our activities as property managers. Merriam-Webster Dictionary defines a fiduciary as "A person in a position of authority whom the law obligates to act solely on behalf of the person he or she represents and in good faith." When it comes to our properties and our clients, each action we take and each decision we make must be for the sole benefit of our clients.
Cover Your Clients' Assets
This obligation applies especially with regard to our clients' funds, and that is what Article 5 of the AMO Code zeroes in on. Our Code requires us not only to maintain our clients' funds in a proper way, but to take active measures to protect them. It sounds simple and straightforward, yet many complaints are filed with the Department of Real Estate each year against property managers who breach their fiduciary duty owed to their clients. Bringing it closer to home, the IREM Ethics Boards see a number of complaints against its members for breach of fiduciary responsibility, including managers who have commingled, diverted and personally used funds belonging to a client.
Know Your State's Laws
Knowledge of your state's laws regarding the handling of these funds is essential. For instance, in California, rents received must be deposited with in three business days of receipt. (Some states' requirements are as short as 24 hours.) The simple act of taking too long to make your deposits can inadvertently put you in violation of your fiduciary duty and of the law.
The commingling of your clients' funds with those of other clients--or with your own funds--is likewise illegal and can result in you losing your IREM designation (not to mention your real estate license).
When IREM was founded in 1933, its member firms were required to adhere to the following:
* Maintain separate bank accounts for its own funds and for the funds of its clients, with no commingling.
* Carry a satisfactory fidelity bond on all of its employees whose duties involved the handling of funds.
* Refrain from taking discounts or commissions from purchases, contracts or other expenditures of clients' funds without full disclosure to, and permission from the property owner.
Although IREM has, over the years, added to its list of member requirements, these three points are the core of our duty as IREM designees. Our clients can hire us with confidence, knowing that we will faithfully and diligently perform as a fiduciary, protecting their property and their finances.
LIZ G. WALKER, CPM, (LIZWALKER@RELIABLEPROPERTYMANAGEMENT.NET) IS THE PRESIDENT OF RELIABLE PROPERTY MANAGEMENT SAN JOSE, CALIF.
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|Title Annotation:||Institute of Real Estate Management|
|Comment:||IREM insider/know your code.(Institute of Real Estate Management)|
|Author:||Walker, Liz G.|
|Publication:||Journal of Property Management|
|Date:||Sep 1, 2014|
|Previous Article:||An asset management primer.|
|Next Article:||New CPM members.|