Happy New Year! It’s going to be a good one if you are keeping track about such things. However, before we launch our apartment buildings into this brave new year, we need to ruminate and cogitate about where we are going and what we want to accomplish. A plan is always a good idea. To help you, we have compiled the following list of eight must things to do, to make sure you are not caught short in 2010.

First: Inspect your apartment units, inside and out.
Yes, it’s an old saw, but a good one. The most important thing that you can do to protect your property is to inspect it. We recommend a full inspection at least once every six months. Take your clip board and iPhone (with camera) with you. You are looking for illegal alterations to the premises, water leaks (mold), peeling paint, overloaded electrical wall plugs, leaking facets, oil leaks from cars, planted plants on stairs, anything that needs repairs or correction. Make notes of your inspections each time and keep them in your diary. It is just as important to document that the apartment unit is in good condition as to find defects in the unit.

Second: Keep a Diary.
You should keep a diary for each apartment building you own. There are excellent software programs for your computer (and you can down load the pictures you have taken of the building or unit to your entries), or you can keep a more traditional paper / book diary. How helpful would it be to have photos of your units along side of your notes (entries of inspection)? Each time anything happens at your building, write it down in the correct date page. This becomes invaluable if there is a lawsuit later on. Remember, lawsuits usually come one to three years after the alleged event.

Third: Install a video system which will photograph all the common areas of your property.
These systems are getting better each year. The quality is going up and cost is coming down. These systems can download to a hard drive within a computer on the premises, and then can broadcast the video over the internet to a protected site. You can see your apartment in real time at any time of the day or night from any where in the world. The video is stored, can be transferred to a DVD and will be available for 10 years. Video coverage protects you against alleged slip and falls on your property, against theft, and gives you complete control over your buildings. Systems cost around $4,000 for approximately four cameras, to have them professionally installed.

Fourth: Review your insurance policies.
Take your insurance policies to your insurance agent and have him / her explain them to you. Not just your apartment building policies, but any policies for your own home. You need coverage against lawsuits alleging state and federal civil rights violations and fair housing law violations. If your agent cannot write you a letter telling you that you have such coverage, find an agent that can. All too often, we see situations where a Housing Provider is sued for alleged discrimination against a prospective tenant - applicant and the insurance company takes the position that there is no coverage to protect the Housing Provider. This becomes a disaster for the HP because the HP must then pay out of his/her pocket for an attorney to defend the lawsuit. Such attorney’s fees easily can run over $50,000. Much better (cheaper) to get the correct coverage now.

Fifth: Review the ownership title of your property.
How do you hold title, individually in your own name, a limited partnership, trust? The potential liability problems associated with an apartment building require that you spend time with your attorney discussing the best possible way to hold title. Too many owners think holding title in the name of a trust gives asset protection. This is not true. The best asset protection would be either a limited partnership or limited liability company. Don’t assume that because you have good insurance you don’t need to worry about asset protection and related title issues.

Sixth: Written Rental Agreements
Be sure that each of your tenants has a written rental agreement. Be sure also that your rental agreements do not contain dangerous provisions. Remember, under state law you can remove certain paragraphs (such as the attorney’s fees clause) upon 30 day written notice to the tenant. If you have a tenant who does not have a written rental agreement, then you should send them one (ACTION has a wonderful form) with a cover letter telling them that in 30 days the enclosed rental agreement will be effective. There are some positive and neutral things about doing this. It is always better to get the tenant’s signature on the new lease, so try and negotiating to get the tenant’s signature (offer him/her a credit against the next month’s rent). If you do strike a deal with the tenant to get his signature, be sure to document it in the lease. When preparing a new rental agreement for a potential tenant, be sure that all the applicable blanks in various paragraphs are filled out. If you are striking out printed language in an agreement, be sure to line out completely all the language you wish to remove. Use a bold black marker to do this, and give the tenant the copy of the corrected lease. Do not allow a potential tenant to take possession without first signing the lease.

Seventh: Smoking and marijuana
Well, the big issue for 2010 is what you are going to do about smokers on your property. Are you going to outlaw all smoking anywhere on your property (even inside tenant’s units), or only in the common areas? The City of Santa Monica now requires that all Housing Providers outlaw smoking in the common areas of the property. If a HP is intending to outlaw smoking inside tenant’s units, the HP must take the position that smoking is a nuisance (health) to adults and children. Currently the City of SM’s no smoking law includes marijuana. If you decided to outlaw smoking within the tenants’ units will that include marijuana? You might want to explain that in your notice to the tenants.

Eighth: Reduce Rents.
You might be in situation where the tenant has asked you for a temporary rent reduction, and you have decided that a reduction is better than a vacancy. Fine, be sure to document this reduction in writing and have the writing signed by the tenant. The writing should state that based on the request of the tenant, you have agreed to a stated amount of rent reduction for a stated amount of time. Be sure to also recite that the rent is only temporary and will be raised to its current amount on a fixed time in the future. This will avoid your having to give a new 60-day notice of rent increase. Here is the trade off for reduced rents. The current tenant is paying a high rent. The current MAR is this higher amount. If the tenant vacates, and you re-rent at a lower amount, your MAR will be reduced to the new lower rent. However, if the current tenant stays in the apartment and gets a temporary rent decrease (no matter how long a period of time) the current high MAR remains. If the market comes back, rents go back up, your higher MAR is in place, and you can raise your rent to the higher MAR to receive the benefit of the higher rents.

Ninth: Keep in Touch.
The law changes quickly, and you need to know what’s happening ASAP. So stay in touch with ACTION, come to the meetings, read the magazine, and send financial support. Rent control without ACTION would become unbearable.