Is a Property Manager Responsible for Lost Rent Due to Failure to Pull Permits

[emery84]

My question involves a consumer law issue in the State of: California

A new electric water heater was installed (converted from gas to electric) by property manager (hired licensed plumber and electrician) without a permit, written estimate and owner authorization. Tenant moved out a few weeks later. At that time, owner asked for a permit for the water heater. Manager said there wasn’t one. But, he will have plumber and electrician pull required city permits.

Manager took 2 months (despite owner emailing multiple times to get the permits asap, lack of communication) to have plumber and electrician pull required city permits, then city inspection passed. Owner did not pull permit themselves in order to have plumber and electrician be liable for any permit work. Owner did not want to place a tenant because of liability, safety, insurance would not cover damage caused by unpermitted water heater or electrical work, etc.

Property manager (RE sales agent) has no broker license (illegal) and gave no management agreement. Manager paid for work and is asking to be reimbursed $2500 (work was overpriced by $500 per estimates). Can owner legally charge manager (deduct from reimbursement) for two months in lost rent?

[budwad]

There is no law that would say the owner can withhold 2 months rent that was lost. You could of course withhold the lost rent and you may get sued by the manager.

But your entire premise to withhold the rent from the reimbursement is flawed. It was your decision (assuming you are the property owner) to not rent the premises for two months when in fact, the work was done by licensed plumber and electrician. You could have pulled the permits yourself and had the inspection so you could rent the premises. You didn't mitigate the damages. You created them. And the manager may have acted on your behalf but the plumber and electrician may have dragged their feet in getting the permits.

In retrospect, the work was done correctly (it passed inspection) by licensed tradespersons.

Did you tell the manager to obtain permits before the work was done or did you assume he would?

[emery84]

There is no law that would say the owner can withhold 2 months rent that was lost. You could of course withhold the lost rent and you may get sued by the manager.

But your entire premise to withhold the rent from the reimbursement is flawed. It was your decision (assuming you are the property owner) to not rent the premises for two months when in fact, the work was done by licensed plumber and electrician. You could have pulled the permits yourself and had the inspection so you could rent the premises. You didn't mitigate the damages. You created them. And the manager may have acted on your behalf but the plumber and electrician may have dragged their feet in getting the permits.

The work was incomplete/illegal as the required permit was not obtained. By law, there is no reasonable time to obtain the permit. Technically, they should have been pulled before it was installed. The CSLB can suspend licensees for installing water heater without a permit. Yes in hindsight, owner could have finished the job by pulling the permit themselves and rent the premises. But, manager said he would have them pull the permits. Owner mitigated damages by sending manager multiple emails to get the permits as he promised (which may not be enough).

In retrospect, the work was done correctly (it passed inspection) by licensed tradespersons.

Did you tell the manager to obtain permits before the work was done or did you assume he would?

Owner was not aware a water heater permit was required (nor asked if they wanted one/given the option) until 3 weeks after it was installed. Manager authorized the work (without owner authorization, legal capacity, no broker's license or agreement) and declined permit from plumber and electrician without owner's knowledge.

Owner was not sure if their arguments are valid. Thanks for the reply.

[budwad]

The work was incomplete/illegal as the required permit was not obtained. By law, there is no reasonable time to obtain the permit. Technically, they should have been pulled before it was installed. The CSLB can suspend licensees for installing water heater without a permit. Yes in hindsight, owner could have finished the job by pulling the permit themselves and rent the premises. But, manager said he would have them pull the permits. Owner mitigated damages by sending manager multiple emails to get the permits as he promised (which may not be enough)..

What was incomplete? Are you saying that because the permits were not obtained that the work was incomplete or was there still work to be done to finish the install?

What the CSLB can do about a licensed tradesperson is not going to help you. You can report the tradespersons for working without permits. But that has no bearing on your desire to not pay for the work and lay it on the hands of the manager.

Sending a few emails to the manager is not mitigating damages. Renting the premises is. The city didn't have any problem issuing the permits and doing the inspection after the install, did they? Technically the permits should have been issued before the work. But in emergency situations, work can be done without obtaining permits first.

Owner was not aware a water heater permit was required (nor asked if they wanted one/given the option) until 3 weeks after it was installed..

Who's fault is that? If someone wants to be a landlord, they should know the laws.

Manager authorized the work (without owner authorization, legal capacity, no broker's license or agreement) and declined permit from plumber and electrician without owner's knowledge..

Who told the manager to install and convert a gas heater to electric? Are you saying that the manager just took upon himself to authorize the work? You spoke of estimates in your post. Who reviewed the estimates?

Owner was not sure if their arguments are valid. Thanks for the reply.

Well, the manager has been working for the landlord with or without a contract. Without a written contract, performance and payments form the contract as to what has been agreed to by performance.

[MaltbyMark]

In California, it will be dependant on the local jurisdiction, but most localities require trades which must have tradesmen licenses (think sparkies, gas fitters, sprinkler fitters and turd chasers) to apply for their permits themselves. A property owner may apply for a building permit themselves because while a GC requires a contractor license, their is no specific trade license (ie: a carpenters journeyman license) required.
http://www.cslb.ca.gov/Consumers/Hir...uirements.aspx

[emery84]

What was incomplete? Are you saying that because the permits were not obtained that the work was incomplete or was there still work to be done to finish the install?

The water heater install. Yes. Prior to the permit being pulled and city inspection, the owner did not know if "there is still work to be done to finish the install." Owner relied on the PM's agreement and electrician's and plumber's legal obligation to follow the law and complete the job by obtaining permit and doing any further necessary work to pass city inspection.

What the CSLB can do about a licensed tradesperson is not going to help you. You can report the tradespersons for working without permits. But that has no bearing on your desire to not pay for the work and lay it on the hands of the manager.

The desire is to pay the fair market price (on work that was not authorized) and deduct any rightful damages.

Sending a few emails to the manager is not mitigating damages. Renting the premises is. The city didn't have any problem issuing the permits and doing the inspection after the install, did they? Technically the permits should have been issued before the work. But in emergency situations, work can be done without obtaining permits first.

During the "emergency," owner immediately emailed PM multiple times requesting the scope of work needed and a written estimate. Ignoring owner's requests for a written estimate, four days later, the PM manager emailed: he has authorized plumber and electrician to start work the next day. Immediately that day, the owner emailed, texted and phoned PM to stop—that they did not authorize any work to be done and never received any written estimate as requested multiple times. When owner called the PM for a written estimate, the PM said the water heater has already been installed. PM did not send a written estimate until after the water heater was installed.

Who's fault is that? If someone wants to be a landlord, they should know the laws.

Owner hired/relied on PM's claim of professional management experience and knowledge.

Who told the manager to install and convert a gas heater to electric? Are you saying that the manager just took upon himself to authorize the work? You spoke of estimates in your post. Who reviewed the estimates?

Plumber gave options to PM. Yes. PM authorized the work to be done, ignoring owner's request for a written estimate. PM ignored owner's demands to stop, not install and convert and provide a written estimate. PM denied the right of owner to review and authorize written estimates for the water heater work.

Well, the manager has been working for the landlord with or without a contract. Without a written contract, performance and payments form the contract as to what has been agreed to by performance.

The PM has been working illegally without a brokers license (without owner's knowledge) required by CA law and a written agreement (which was requested by owner multiple times). PM forged a PM agreement to cover the said period based on a valid previous PM agreement that had expired a couple years prior. Existing emails prove PM's breach of oral instructions by the owner.

Are you in California? It will be dependant on the local jurisdiction, but most localities require trades which must have tradesmen licenses (think sparkies, gas fitters, sprinkler fitters and turd chasers) to apply for their permits themselves.

Yes. Owner is allowed by the city to pull their own permits. However, the city permit center advised owner to have the plumber and electrician pull the permits. So, that they would be liable and the city would follow up with them on any repairs or corrections needed to pass inspection.

Yes. Owner is allowed by the city to pull their own permits. However, the city permit center advised owner to have the plumber and electrician pull the permits. So, that they would be liable and the city would follow up with them on any repairs or corrections needed to pass inspection.

Following is what the city permit center told owner which is also on another city's building inspection website:

Who Should Get the Permit?

The property owner or a contractor licensed by the State of California can obtain permits. Tenants may obtain a permit if they have the written permission of the property owner and the property owner signs the permit documents.

It is always best if a licensed contractor obtains the permit. The contractor must provide a bond to ensure that the work will be started and completed in a timely manner, constructed in accordance with the various codes and performed with an acceptable degree of workmanship. If the work is not completed or if the work is not completed according to code, the bond could be used to pay someone else to finish or redo the work.

If the owners obtain the permit they act as the contractor and are responsible for completing the work and to assure that it meets code requirements. Interaction then takes place between Building Division inspectors and the owner. If the owner has hired a contractor or other person to do some of the work and it is not done in accordance with the approved plans and code requirements, the inspector will ask the owner, not the contractor, to have the work redone. In other words, if the owner obtains the permit it is the owner's responsibility to make sure the work is being done in accordance with the approved plans and codes.

Again, plumber asked but, PM declined to get a permit. Plumber told owner, he was surprised PM later requested the permit. Once the PM asked, the plumber applied for the permit the next day. So, he said he is not to blame him for any loss rent. He said he experienced lack of communication and followup with the PM. If there is anyone to blame, it would be the PM.

PM was the one to drag his feet in coordinating pulling the permits. Given the PM promised to have the permits pulled and what the permit center advised, owner waited for the PM. However, eventually the owner would have pulled the permits themselves to mitigate damages.

Can't find edit button for last post. But, the post should start at the bottom, "Quoting emery84." The text prior to that is a duplicate of the prior post.

[budwad]

Owner hired/relied on PM's claim of professional management experience and knowledge..

The PM has been working illegally without a brokers license (without owner's knowledge) required by CA law and a written agreement (which was requested by owner multiple times). PM forged a PM agreement to cover the said period based on a valid previous PM agreement that had expired a couple years prior. Existing emails prove PM's breach of oral instructions by the owner...

Whether or not the PM had a brokers license is an issue between the State and the broker. Just like reporting the plumber and electrician for working without permits will not help you recover the 2 months rent because you acted in a way that kept the premises vacant for 2 months. You are free to report the PM to the State.

You apparently have been using the PM for some time with satisfaction. If you had a written agreement that expired and kept using PM and paying PM then it would be viewed that the same terms of the written agreement would continue. You didn't do your do diligence when you first hired him to find out if he was licensed or not. Now that you have to pony up to pay for the installed water heater it has become an issue. He handled the emergency and got the heater installed in five days.

Do you think the price would have been more or less if PM insisted that plumber and electrician get the permits before the work? Do you think the job would have been completed in more or less time waiting for the permits to be issued? Your premises were rentable in 5 days. You chose to wait 2 months.

Plumber gave options to PM. Yes. PM authorized the work to be done, ignoring owner's request for a written estimate. PM ignored owner's demands to stop, not install and convert and provide a written estimate. PM denied the right of owner to review and authorize written estimates for the water heater work.

The PM was working as your agent and since we don't know what your written or oral contract says we can't say if he breached it by authorizing the work. I suggest you find a new PM .