Directors risks for Property Owners
If you are a director of a residential management company or a landlord, then it’s likely you will have numerous legal obligations that must be adhered to when letting your properties, such as:
- Gas Safety
- Fire Safety Order
- Energy Performance Certificates (EPCs)
- Payment of Rent/Administration Fees
- Licensable HMOs
- Electrical Inspections
- Electrical Appliances
- Fire Alarm Systems & Fire Precautions
- Carbon Monoxide and Alarms
- Legionella Assessment
- Illegal Eviction/Harassment
As a director or officer of the company any failure to adhere to and comply with your legal requirements could be catastrophic, allowing you to be personally sued for any resulting death, injuries or financial loss suffered by your tenants due to your negligence.
Unfortunately the buck doesn’t quite stop there; any decisions made or that fail to be made which jeopardises residents’, tenants’, investors’ finances also leave the property owner/landlord liable. You could find yourself being sued personally by any of these parties for the amount of the financial loss they have suffered as a result of an error or omission.
Property owners claims example:A director of a management company was held liable due to the fact a tenant’s flat had fallen in value and was not in line with current market valuations of similar properties in the area. This was shown to be due to the director failing to recognise and subsequently fix external disrepair to the property. Without D&O cover the standard property insurance policy would not protect the director from being personally sued.
So what can you do to protect yourself?
Directors’ & Officers’ (D&O) liability insurance provides cover for property professionals including owners, landlords, flat management companies, estate & letting agents, surveyors, valuers, auctioneers and home-condition inspectors.
As a company director, officer or manager, you have unlimited personal financial liability for any actions or decisions you take. It’s often not just a business which needs protecting in the event of a claim: claims are often brought against individuals for their decisions and actions, even after they retire.
With the breadth of responsibility that a property owner or landlord must undertake to protect their tenants and investors then it’s even more essential to consider how D&O insurance can cover you personally. The cost of settling claims arising from civil or criminal actions, resulting from your own actions while on company business can be extremely high, and not something you’d want to pay out of your own pocket.
Directors' & Officers' Liability insurance covers the cost of compensations claims made against directors and officers for alleged wrongful acts including:
- Breach of trust
- Breach of duty
- Misleading statements
- Wrongful trading
If you don’t already have the cover in place then consider speaking with your broker and finding out if you could benefit.