Indemnification in Property Management Agreements

An important part of a management agreement between property owners and property managers is the indemnification clause, in which the owner protects the manager from certain types of liabilities. In the sample clause below, the owner indemnifies the manager against all claims except for five specific exclusions:

Owner shall indemnify and hold harmless Manager against any and all claims made against Manager arising out of the management, ownership, leasing, supervision or operation of the Property by Manager, except for claims arising from or related to (i) the gross negligence of Manager or its officers, agents, or employees; (ii) wrongful willful acts of Managers or its officers, agents or employees; (iii) acts or omissions of Manager or its officers, agents or employees which are outside of the scope of authority established by this Agreement or which are in breach of the obligations of Manager under this Agreement; (iv) misapplication of funds by Manager, its officers, agents or employees; or (v) fraud of Manager, its officers, agents or employees.

However, if the manager allegedly violates the Fair Housing Act, both the owner and manager may be sued by the aggrieved renter. While such actions may be considered gross negligence under the contract, it is wise to explicitly include a clause in the agreement of this type: “Manager will manage the property in full compliance with the requirements of the Fair Housing Act, and Manager is authorized to take those steps deemed appropriate to effectuate the purposes of the Act.”

Since Ohio courts look to the plain language of indemnification clauses (see Stambaugh v. T.C. Wood Realty, Inc., 2010-Ohio-3763 (Ohio Ct. App. 2010)), it is important for property owners to consult an attorney to ensure that they are properly protected by the management agreement.

Reasonable Accommodations and Live-In Aides

The Fair Housing Act requires landlords to make "reasonable accommodations" in their rules, policies, practices, or services, when such accommodations may be necessary to afford a disabled tenant or prospective tenant equal opportunity to use and enjoy a dwelling. The tenant may make the request at the time the tenant first rents or after the tenancy has begun.

One common reasonable accommodation request occurs when a disabled tenant asks a landlord to allow a permanent live-in aide to live in his or her unit and assist with daily activities such as cooking, bathing, or administering medicine. This request can be evaluated on a case-by-case basis by asking some of the following questions:

• Is this request reasonable? It might be if the unit can accommodate an additional person living there without creating a safety risk. It might not be if the proposed live-in aide does not meet the landlord's tenant selection criteria or violates provisions in the resident's lease.
• Is the live-in aide necessary? The tenant’s disability and related need for a live-in aide should be well-documented. Landlords may also determine if the requested live-in aide is qualified, was not part of the tenant's household, and is legitimately there to serve as an aide.
• Will accommodating the request provide the tenant equal opportunity to use or enjoy the property? This language addresses the extent of the accommodation; permitting the live-in aide must allow the tenant to use the property as equally as other tenants - not more or less.

Landlords should be prepared for a tenant to request a live-in aide and should train their staff to evaluate and respond to the request. Failing to respond correctly can expose the landlord to a lawsuit under the Fair Housing Act.

Fair Housing Act: Reasonable Accommodations

The federal Fair Housing Act outlaws discrimination in housing, including discrimination based on disability.  The law prohibits housing providers from discriminating against 1) a disabled buyer or renter; 2) a prospective disabled buyer or renter; or 3) a disabled person associated with that buyer or renter. 42 USC § 3604(f)1.

The law also requires housing providers to “make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling.” 42 USC § 3604(f)3(b).  For example, a landlord that does not permit pets must allow a blind tenant to have a guide dog, and an apartment complex with unassigned parking places must reserve a spot close to the building for a tenant who cannot walk.  These  accommodations are necessary to provide a disabled individual an equal opportunity to use and enjoy the dwelling.  However, housing providers can deny the accommodation request if the request is not reasonable – for instance if it causes an undue financial or administrative burden or fundamentally alters the provider’s operations.

Property managers should have an established process for evaluating reasonable accommodation requests, including a reasonable accommodation request form for tenants that can be distributed with the lease and other documents given to the tenant.  If a request is determined to be unreasonable, the landlord should explain the decision in writing and offer to discuss alternative accommodations.

For answers to more frequently asked questions about the Fair Housing Act, visit http://www.hud.gov/offices/fheo/library/huddojstatement.pdf.