Take Inventory of Your Off-Campus Real Estate

Imagine receiving a call informing you that a fire escape collapsed at an off-campus party, injuring multiple students. What if your administrators didn’t know your institution owned the property where the injuries occurred? One small college experienced a similar scenario, resulting in claims from the injured students.

Understand Your Institution’s Real Estate Holdings

A surprisingly common issue in United Educators’ (UE’s) claims is that K-12 schools, colleges, and universities often don’t know if they own the off-campus property where an accident that is the subject of the claim occurs.

From a liability perspective, this is concerning because the confusion over ownership usually means the property in question isn’t adequately maintained. Additionally, if the institution doesn’t readily know whether it owns the property, needless money is spent in legal fees to determine ownership. Institutions may purchase off-campus properties for many reasons, including rescuing an historic building, cleaning up a blighted neighborhood, and obtaining properties for future expansion. Tracking these acquisitions can be challenging because they occur over time and under different administrators. Keeping accurate acquisition and maintenance records may ease confusion if a tragic incident occurs.

To ensure you are aware of all institution holdings:

• Conduct an inventory of all institution-owned properties. Review current property lists and conduct internal interviews with Finance, Facilities, Risk Management, and counsel to determine if properties are missing. Common oversight areas to consider include off-campus housing your institution uses as rentals or institution-owned office buildings the community uses. Search county property tax records in your location using all institution-related entities, including any limited liability corporation (LLC) used to purchase properties. Remember that records of properties acquired separately for different reasons may not be located together.
• Consolidate responsibility for recordkeeping and oversight. Once you compile a complete list of institution-owned properties, determine who will maintain the list and related records and oversee maintenance, insurance, and contract documentation. Weigh the benefits of assigning oversight to the Finance or Risk Management departments rather than the Facilities department. As key employees leave or retire, ensure that someone takes over the consolidated role and conducts periodic real estate inventories.

Manage Properties Strategically

Once you have your list, properly maintain the properties you own. Consider taking these actions:

• Assess property safety through periodic on-site reviews and correct any identified hazards. Schedule and track the progress of, and the party responsible for (such as institution facilities staff or outside vendors), correcting each identified hazard. To ensure accurate recordkeeping, involve the person or department charged with overseeing the properties. Make small repairs as quickly as possible. While waiting to make larger corrections, consider not using the facility or posting signs about the dangerous condition. For example, warn about uneven steps or take an elevator out of service until repairs can be completed.
• Develop a deferred maintenance plan, budget, and schedule. Keep accurate records of decisions to defer maintenance on large-scale improvements. Once the schedule is created, if your institution can’t adhere to the maintenance plan, document the reason and consider warning about hazards or eliminating use.
• Keep insurance records updated and include all properties on your master property insurance policy. Maintain copies of your policies in one place for easy access and be sure that they’re current and sufficient for all potential types of losses. Confirm the policies state correct property addresses. Also, note whether each property is used for residential or commercial purposes.
• Hire a property management company for institution-owned buildings located off campus. Ensure property management contracts state which party is responsible for each type of maintenance. Negotiate indemnification clauses to protect your institution. Conduct periodic checks to ensure the property management company is fulfilling its responsibilities, including safety inspections. Request proof that the property management company has the appropriate insurance coverages in place and has named your institution as an additional insured under the policies.

Centralize Purchases and Develop Plans

Consolidate decision-making for any new properties by centralizing purchasing decisions through your institution’s Finance department — even if the purchase is part of a larger initiative by the board of trustees or senior administration.

When acquiring new properties, develop an inspection and ongoing management plan. Also, communicate new property purchases to the office responsible for maintaining the comprehensive list of owned properties.