The facts
Property Management Brothers was hired by ABC Enterprises to manage a 330-unit apartment complex. Soon after being hired, Property Management Brothers entered into five-year contract with Landscape Now 2 to do landscaping and turf management for the apartment building. Not long after that, Property Management Brothers hired Pools Now 2 to manage the community pool.
While working on ABC Enterprises’ quarterly taxes, their accountant noticed Property Management Brothers, Landscape Now 2 and Pools Now 2 all showed the same physical address on a tax form.
The accountant called ABC Enterprises to confirm all three entities were contracted vendors and alerted ABC Enterprises to the address being identical for all three. Immediately, ABC Enterprises contacted Property Management Brothers to question the address being identical. Property Management Brothers then revealed they also owned the businesses Landscape Now 2 and Pools Now 2.
The result
ABC Enterprises filed suit against Property Management Brothers with allegations of concealment, fraud, intentional/deceptive acts and misappropriation of funds.
The case is still pending with indemnity totaling $750,000 to date.
Risk factors
Risk factor #1
Property managers should solicit multiple ids for services to ensure the best services at the best pricing.
Risk factor #2
A property management professional has a fiduciary duty to act in his or her client’s best interest and to put the client’s interest above their own. By not disclosing that Landscape Now 2 and Pools Now 2 were related entities, the property manager put his interest above the interest of his client.
*The claim scenario is strictly documented for illustrative purposes only and provides an example of what a policy could cover. It is intended to provide a general overview of the program described. Please remember only the insurance policy can give actual terms, coverage, amounts, conditions and exclusions. Program availability and coverage are subject to individual underwriting criteria.
