I am writing this month about an issue that has plagued many of our clients – municipalities bringing misdemeanor charges against property managers, members of the management company, etc., for alleged violations of local property management and building codes. This has been a problematic issue for Texas management companies and property owners and it only seems to be getting worse.
To illustrate the problem, I will use the City of Austin as an example of how this process works. Many other cities in Texas operate in the same manner.
With some amendments, the City of Austin has adopted the 2012 International Property Maintenance Code. Austin Property Maintenance Code § 25-12-211. This code lists a number of potential violations for property owners and managers – i.e., failure to maintain proper plumbing, handrails, exterior lighting, etc. If a property has violated a provision of the code, Austin’s Code Department issues a Notice of Violation that provides the property a set number of days to make repairs. If the property fails to comply with the Notice of Violation – and fails to make the necessary repairs – a code enforcement officer may file an affidavit with the City Attorney who, based on that affidavit, may file misdemeanor charges against the owner, an agent of the owner, or other person at the premises. That person can be found liable for a misdemeanor on a strict liability basis. See 2012 International Property Maintenance Code, §106.3.
The problem with this approach, of course, is that most multifamily and commercial properties are owned by entities. And the entity is the party that controls and is responsible for what happens at the property.
By ticketing an individual member of the on-site property staff, the cities are penalizing the wrong party. An on-site employee is not typically calling the shots and is not ultimately responsible for the property’s operations. He or she is just following the plan set out by the ownership entity. The responsibility, therefore, lies solely with the entity that owns the property – and in the case of a single purpose entity, which is the preferred ownership structure, the general partner or managing member of the ownership entity. The proper way for a City to penalize the owner – and responsible party – for code violations should be to ticket and fine the ownership entity.
Whether a city has the power to ticket an on-site employee who is not ultimately responsible for causing the violation is unsettled law. As a result, in the future, we would like to have the opportunity to challenge the City’s actions in doing so. We recognize, however, the very real risk in doing so. Not only may the City Attorney overcharge employees, thus effectively forcing them to settle, but they may also send out Code inspectors to a property on a daily basis to try to find additional violations. As a result, we realize this is a risky strategy – but one that could be beneficial in the long run.
In addition, we are asking the Texas Apartment Association and local Apartment Associations to take up this fight. We therefore ask that they spend significant time and energy working with the local municipalities to change the way these codes are enforced. In the long run, this change will benefit everyone involved.
If you have any questions, please do not hesitate to contact Sean Bukowski at 512-614-0335 or firstname.lastname@example.org.