By: Jeffrey S. Lapin, CPM®, ARM®, DREI®
Rental property owners and managers are required to be aware of and stay in compliance with applicable codes and standards for their properties. But most owners and managers are unfamiliar with these codes and standards and only find out about their property’s non-compliance when they receive a citation from the Authority Having Jurisdiction (AHJ).
A good place to start in learning about this topic is to identify terms, including the definition of a code and a standard and explaining the difference between the two. A code is based on laws or regulations established by governmental bodies such as the Fire Department of the municipality in which the property is located. These codes are law and are mandatory, not voluntary. There are usually legal consequences for a property owner whose property does not comply with an applicable code.
An example of codes that affect a multifamily residential or commercial property would be fire codes. Most cities and counties have fire codes that are enforced by the local fire marshal, such as a requirement for annual inspection and testing of fire/life safety devices like fire alarms. If an owner fails to have his/her/its fire alarms inspected and tested by a duly licensed contractor, or cannot produce a written report issued by the contractor noting the passing or failure of the fire alarm testing when demanded by the fire marshal, it is likely that a citation will be issued to that owner. Failure to resolve the issue in the given time frame can result in fees, imprisonment or both.
There are a multitude of codes that affect every such property and the standard of care requires that the property be and remain in compliance with any that affect that property including fire codes, building codes, zoning codes and others.
A standard on the other hand, per the website www.legalclarity.org “Represents a set of agreed-upon criteria, guidelines or specifications for products, services or processes.” Organizations such as the National Fire Protection Association (NFPA), American Society for Testing and Materials (ASTM) and the American National Standards Institute (ANSI) issue standards for materials, products, systems and services. These standards are usually developed by a panel or board of experts in an industry and are amended from time to time to reflect best practices.
The aforementioned local fire codes, for instance, usually result from the adoption by the local city or county of national NFPA standards such as NFPA 101, to ensure safe and consistent practices and to help local governments regulate safety and efficiency in construction and maintenance. You can imagine the chaos that would ensue if every city or county had to develop and train its AHJ’s on a patchwork of differing codes for inspection and testing of smoke alarms which then had to be followed by every property owner in that city but not the neighboring city. Adopting national standards just makes sense in this context.
The difference then, between a code and a standard is that standards originate from voluntary consensus among experts and others in an industry. Codes are not voluntary and do not require consensus from those who have to actually comply with the codes.
The goal of standards is to define best practices or common specifications. An example is the property management standard of care which is defined by what reasonably trained, qualified and careful property owners and managers do as part of ordinary care. You cannot find that standard in a book or city ordinance – it’s not law.
But as I have written in past articles posted on this website, the property management standard of care is real and it is how property owners and managers actions are often judged in liability cases. One element of that standard is that we are required to follow any applicable codes and standards affecting our properties.
Therefore, standards and codes frequently work together, but they are distinctly different. Codes can incorporate standards (such as local fire codes that are based on the NFPA standard NFPA 101), but standards do not usually incorporate codes. In such cases, the voluntary standards are legally binding because they are part of the law. But the key difference is that standards are largely voluntary and codes are mandatory.
Hopefully, this explanation is useful in determining what the rental property owner and manager need to know about codes and to stay in compliance with and to meet or exceed the property management standard of care. And remember that ignorance of a standard or code that affects our properties does not absolve the owner from having to comply with it.
DISCLAIMER:
I AM NOT AN ATTORNEY. I DO NOT AND AM NOT PROVIDING LEGAL ADVICE OR COMING TO LEGAL CONCLUSIONS. THE OPINIONS I HAVE EXPRESSED HEREIN ARE MINE AND MINE ALONE AND ARE BASED UPON MY KNOWLEDGE AND EXPERIENCE AS A REAL ESTATE PROFESSIONAL AND AS AN EXPERT WITNESS. IF YOU NEED LEGAL ADVICE, PLEASE RETAIN THE SERVICES OF A QUALIFIED AND LICENSED ATTORNEY AT LAW.