Professionalism

Agency Disclosure
Community Revitalization
Telecommunications Reform and Deregulation
Real Estate Management Licensing
Community Association Management Certification/Licensing
Security Deposits
Reporting of Security Deposit Interest
Wage/Hour Applications
Workers' Compensation Insurance
Workers' Compensation and Liability Insurance Responsibility
Fair Housing Partnership: Model Affirmative Fair Housing Marketing Plan
Disaster Prevention, Relief and Insurance
Terrorism Readiness
Preparation for an Avian Flu Pandemic
Limits of Liability
Promoting Professional Management in Public Housing
Certification of FmHA Site Managers
Military Lease Clauses
Psychologically Impacted Properties
Drug-Free Workplace
Insurance Redlining
Uniform Standards of Professional Appraisal Practice

Agency Disclosure

Background and Objective:
In the past, the issue of agency was a concern to the real estate industry. The typical practice of the real estate professional acting as the agent or subagent of the seller or owner can no longer be assumed in the real estate transaction process. The expanded practice of buyer or tenant representation created confusion among both the general public and real estate professionals and has created the need for agency clarification among all parties regarding cooperation, compensation, and liability issues.  Much of this confusion has been clarified by agency disclosure state statutes that have been widely adopted for residential brokerage transactions across the United States.

In most instances, agency responsibilities between professional property managers and owners are clearly defined in the written management agreement. However, the expanded practice of tenant representation, especially among commercial property transactions and other less traditional agency practices, had raised questions about agency responsibilities among professional property managers.

In response to industry confusion, the NATIONAL ASSOCIATION OF REALTORS® adopted a Legislative & Public Policy position on agency which states:

The NATIONAL ASSOCIATION OF REALTORS® recognizes seller agency, buyer agency, and disclosed dual agency with informed consent, as appropriate forms of consumer representation in real estate transactions. The Association recognizes the need for all REALTORS® to be able to make individual business decisions about their companies' agency practices. Furthermore, NAR endorses freedom of choice and informed consent for consumers of real estate services when creating agency relationships with real estate licensees.

IREM Position:
The Institute of Real Estate Management recognizes property owner agency, tenant agency and, with full disclosure and informed consent, disclosed dual agency as appropriate forms of representation in residential and commercial rental property transactions. IREM recognizes the need for all CPM® members to be able to make individual business decisions about their companies' agency practices. Furthermore, IREM endorses freedom of choice and informed consent for consumers of real estate services when creating agency relationships with CPM® members and other real estate licensees.

(11/94, updated 11/05, 10/09, 9/12)

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Community Revitalization

One of the nation's most challenging opportunities in housing lies in the recovery and rehabilitation of declining neighborhoods. To that end, we support the continued study of enterprise zones as a potentially viable framework to foster community revitalization and economic growth provided that such an enterprise zone proposal includes a housing component which will receive comparable tax and regulatory benefits as provided to business and industry.

Especially in this day in age, where economic volatility particularly impacts our communities, we urge our membership to actively participate in and promote community revitalization efforts which are designed to maintain and improve the quality of life in the neighborhoods of our cities, towns and communities. We applaud the actions of communities which have implemented community revitalization programs without federal assistance and continue to encourage the involvement of the private sector to take advantage of the present investment possibilities.

(Adopted 6/86, updated 9/12)

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Telecommunications Reform and Deregulation

Background and Objective:
The signing of the Telecommunications Act of 1996 was a major milestone in the continuing development of our nation's communications infrastructure. The Act is very broad in its application, and addresses emerging national issues such as universal service guarantees to all individuals; deregulation of local telephone and cable television service to promote competition; reforms to regulations which inhibit access to the Information Superhighway; and greater access to advanced technologies such as satellite communications.

Though the Act's scope goes far beyond these few examples, the issues of satellite dish placement and telecommunications provider access to inside wiring have become two of the most important issues facing the real estate management industry. It is vital that Congress, the Federal Communications Commission (FCC), and the states be cognizant of the potential problems created by regulations preventing building owners and managers from managing access to  private rights-of-way, and to the outsides of their buildings.

Forced access or access without the property owner’s permission has been proposed by a number of states and passed by several.  IREM members and chapters need to be aware that this issue affects private property rights.

IREM Position: 
IREM believes that owners and managers of residential and commercial buildings should have the right to choose and control the telecommunications systems serving their tenants and facilities. For all forms of telecommunications system installation, maintenance and service, entry into private property should be provided pursuant to a negotiated agreement between the property owner/manager and the service provider--not by legislative fiat. Negotiation on a competitive basis will allow for consideration of the level of expertise, professionalism and reputation of the potential service provider. Owners should have the right to negotiate mutually accepted terms and conditions for granting access to building space and the valuable tenant markets contained within. This position of choice applies to first time installations as well as situations where subsequent communication firms service a given area or municipality. There should be no question in allowing the owner/manager to review the planned installation as a representative of the property's interest.

Unrestricted access to buildings by service providers could adversely affect real estate managers in properly operating properties. It would undermine their ability to responsibly manage complex building systems and ensure service reliability and tenant safety. It could also require building owners and managers to guarantee building access to a potentially unlimited number of service providers and assume much, if not all, of the costs and liabilities associated with such access. Existing buildings have limited space available for installation and maintenance of telecommunications systems. Unlimited access could force owners to incur exorbitant costs for expansion and renovation of riser cable space.

We feel that owners/managers should be compensated for granting access to their investment properties  and for any actual damage incurred while the investment property is being wired for cable and/or any other similar system. The compensation for granting access could be in the form of one payment or multiple payments over time.

We are concerned that the existing communication system be kept intact when an existing licensee is terminated from servicing a given investment property in order to avoid additional property damage and work. The terminated licensee should negotiate with the new licensee as to the use of the existing equipment while keeping the owner/real estate manager informed of the negotiations.

The federal government should not interfere in the relationship between building owners and managers, tenants and telecommunications service providers regarding the complex process of accessing valuable building infrastructure space. Private competition and free enterprise are the best means by which to provide a level playing field for all telecommunications service providers and to ensure that the telecommunications needs of tenants are being met.

(Updated: 11/98, 4/07, 3/11)

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Real Estate Management Licensing

(NOTE: This Statement of Policy is to be accompanied by IREM's recommendation, "Suggested Property Management Licensing Language." See Appendix I.)

Background and Objective:
The Institute wishes to communicate the importance of proper licensure as a means to ensure real estate managers are qualified, accountable, and competent individuals. The Institute also wishes to communicate its concern regarding the creation of any separate class of real estate management licensing, including, but not limited to, separate condominium manager licensing.  The Institute also requests the National Association of REALTORS® include IREM leadership in deliberations on real estate management licensing with the Association of Real Estate License Law Officials (ARELLO).

IREM Position:
While the Institute of Real Estate Management acknowledges that the issue of separate real estate management licensing is a state's rights issue and should be left to the discretion of each individual state, IREM, as a national organization, believes that management of residential apartments; condominiums, cooperative and homeowner's associations; office buildings; shopping centers; and all other commercial property by independent contractors involves real estate activities and should require a license.

IREM National is opposed to separate licensing for these real estate management activities and urges all forms of real estate management, including community association management, to be under the jurisdiction of existing state real estate broker and agent (salesman) licensing laws. Specifically exempted from this are on-site managers and other on-site personnel.

Further, the Institute encourages state real estate commissions, or appropriate governmental agencies, to take a stronger interest in professional real estate management as a real estate function in order to protect the public. This should be accomplished by adding real estate management curriculum to the broker and sales courses and real estate management questions to the testing process.

(11/91, updated 4/06, 4/10, 4/13)

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Community Association Management Certification/Licensing

Background and Objective:
In recent years, there has been interest in creating separate state mandated certification or licensing for community association managers.  Florida was the first state to pass such legislation in 1988 and Nevada has enacted a similar statute in July 1999. Illinois was the most recent state to pass similar legislation in 2010. The Community Association Institute (CAI) and the National Board of Certification for Community Association Managers (NBC/CAM), along with local support, have been an instrumental component in efforts to advance state mandated community association manager certification or licensing in other states.

In general, supporters of state mandated community association manager certification or licensing believe that managing community associations is different than real estate management of other properties and states should recognize this by requiring separate certification or licensing for those engaged in community association management.  Although specific regulations can vary from state to state, generally the certification or licensing requires an exam, finger print test, certification or licensing fee, renewal fee, and some form of continuing educational requirements.

IREM Position:
The Institute of Real Estate Management believes that the management of residential apartments, condominiums, cooperatives and homeowner's associations involves real estate activities and should require a license under existing state license laws. IREM National supports professional community association management, but is opposed to a separate state mandated license or certification for community association management and urges all forms of real estate management to be under the jurisdiction of existing state real estate broker and agent licensing laws.

In states where state mandated community association manager certification or licensing already exists, IREM supports placing the ongoing regulation and management of the certification or licensing process under the jurisdiction of the state real estate commission. IREM believes that the state real estate commissions provide the most appropriate means to regulate and monitor the real estate industry and protect the consumer.

The Institute of Real Estate Management, the recognized leader in education and certification of real estate managers, provides educational courses on real estate management, which lead to specific designations awarded to real estate managers, specifically the Certified Property Manager (CPM®) and Accredited Residential Manager (ARM®). IREM encourages state legislators presently, and in the future, contemplating state mandated separate certification or licensure requirements for community association managers to consider the educational courses and designations awarded by IREM as valid criteria worthy of inclusion in the adoption of standards for potential certification or licensure.

(11/99, updated 4/06, 4/10, 4/13)

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Security Deposits

Most states codify the issue of whether interest on security deposits held by landlords in residential (and/or commercial) lease transactions is to benefit the landlord or tenant.  In those states where the landlord is allowed to retain the interest, some of those statutes allow the landlord by written agreement to assign the interest earnings to the third party property management agency as part of the agent’s compensation.  The cost of administering the payment of interest earned on security deposits should be reimbursed to the managing agent to cover his or her overhead, required paperwork, and additional record keeping. Further, we feel that when the tenant is legally entitled to the interest earnings the interest should only be paid to those tenants who have been in occupancy for 12 months or more and complied with all lease requirements because of the small amount of interest that will be earned.

This will hold true in all cases, except in those instances where the state laws make it possible for banking institutions to administer these funds, in lieu of the managing agent.

 (6/86, updated 11/05, 4/10)

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Reporting of Security Deposit Interest

Background and Objective:
Many states and localities are required by law to pay interest of security deposits held on behalf of a tenant. When interest earned is over ten (10) dollars, the real estate company is required to distribute a 1099 form. According to the Internal Revenue Service (IRS), a copy of the 1099 form must be sent to the tenant no later than January 31 and to the IRS no later than February 28 of the following year. Obviously, this is a very burdensome and costly activity, even for the Internal Revenue Service who collects the tax.

Given the high administrative and computer costs associated with generating these forms and with obtaining and verifying the social security numbers, it would seem that the cost to the federal government and private enterprise greatly outweigh the revenue obtained by taxing such small interest amounts.  Additionally, this policy seems discriminatory in light of the fact that a 1099 form provided for services is required only when the amount exceeds $600.

IREM Position:
The Institute believes that the ten (10) dollar limit for reporting interest on security deposits with a 1099 form is unnecessarily burdensome and is discriminatory to real estate businesses. The Institute strongly recommends to Congress and the IRS that the minimum limit for reporting interest on security deposits be raised to $150 dollars.
(6/91, updated 11/05, 4/10)

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Wage/Hour Applications

In our capacity as employers running the gamut from large diversified corporations to small one- or two-person operations, this industry provides jobs for a significant percentage of the nation's minimum wage and part-time employees.

Migrant, seasonal and temporary workers comprise a large portion of the labor force that works for minimum wage. However, at the same time this group does not necessarily represent the most stable labor market either from an employee or employer standpoint. We are fully aware of and sympathetic to the need to provide reasonable and equitable compensation to the nation's work force.

While the members of the Institute recognize the need to periodically review and adjust the minimum wage, we support a one-time-only increase rather than a three to five year phase-in.  Additionally, we recommend that there be an exemption from such increase of certain classes of wage-earners (most notable, students or unskilled temporary part-time workers like those described above).

We respectfully urge Congress to consider this method of increasing the national minimum wage level so as not to place a projected burden on the employers/businesses along with an unknown general economic projection.

(6/88, updated 11/05, 4/10, 4/13)

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Workers' Compensation Insurance

Background and Objective:
Previously the National Council on Compensation Insurance (NCCI) had advised insurance carriers to apply the definition of building maintenance and repair to real estate management personnel who, as part of their office duties, collect rent and show vacant apartments.
IREM worked in a coalition focusing on workers’ compensation reclassification of real estate management personnel for a more suitable rate-to-risk classification in the mid-1990s.

IREM Position:
IREM members are concerned about adequately providing workers' compensation coverage to real estate employees but IREM also believes that the level of insurance should appropriately reflect the inherent risk of individual occupations. For this to be possible, occupational definitions used by workers' compensation insurance carriers must correctly reflect the true nature and job responsibilities of the individuals to whom they are applied.

The Institute believes that for purposes of workers' compensation insurance, real estate management personnel who perform office duties and, as part of their job, collect rents, and show vacant apartments, should be classified as real estate agents or collectors.

Some carriers have classified these individuals as building maintenance and repair personnel, which carries a much higher rate because the definition is ordinarily applied to individuals with much more hazardous occupations.

(6/91; updated 6/98, 4/08)

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Workers' Compensation and Liability Insurance Responsibility

Background and Objective:
Owners of income producing property are increasing pressure to have property managers assume responsibility for liability insurance by becoming a primary carrier instead of a secondary carrier. This action would shift the risk that has traditionally belonged to owners to property managers. Additionally, owners are also shifting the burden of workers' compensation to property managers. These actions have created very negative situations for some property management operations.

IREM Position:
IREM believes that shifting the burdens and risks associated with workers' compensation and liability coverage from property owners to property managers is both unrealistic and unfair. Workers' compensation and liability coverage has traditionally been the responsibilities of property owners and, unless the management company agrees to assume these responsibilities with the complete understanding of the burdens and risks associated with them, they should remain the responsibility of property owners.

(Updated 4/08)

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Fair Housing Partnership: Model Affirmative Fair Housing Marketing Plan

For participation in FHA subsidized and unsubsidized housing programs for the development or rehabilitation of subdivisions, multifamily projects and manufactured home parks of five or more lots or units, federal regulations require an Affirmative Fair Housing Marketing Plan (AFHMP). The Voluntary Affirmative Marketing Agreement (VAMA), a substitute for individual AFHMPs, was eliminated to allow more creative approaches to fair housing in different firms and markets through the Fair Housing Partnership Agreement between NAR and HUD. This partnership replaces the current activities of VAMA whereby NAR and HUD would mark certain fair housing issues and concerns which need to be addressed. Strategies would be developed to positively influence these problems, followed by a subsequent evaluation to determine if implementation of such strategies was successful.

The model plan would enable Realtors® to easily comply with affirmative marketing regulations rather than through individual outlines of specific affirmative marketing activities for each project. HUD will accept the model plan in lieu of individual AFHMPs for each project.
NAR and HUD envision this type of partnership to extend to the state or local level of the Association of REALTORS® and HUD offices. While voluntary compliance through the collection of signatures may no longer be relevant, members are encouraged to continue to fulfill their fair housing commitment.

(11/97, Updated 4/06)

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Disaster Prevention, Relief and Insurance

Background and Objective:
IREM recognizes the fact that every piece of property is vulnerable to man-made and natural disaster. We also understand the serious human and economic hardships that can result from such disasters. Experience has proven that while some disasters are unavoidable, others are preventable. Furthermore, experience also shows that being prepared for a disaster can minimize its damage. We also recognize the importance of swift and efficient relief and restoration after a disaster strikes.

IREM Position:
IREM urges all real estate managers to be prepared for disasters and emergencies by developing emergency procedure manuals, emergency procedure management teams and by understanding how their property's location, design, use, and occupancy will affect emergency procedure actions. Real estate managers should also establish cooperative relationships with the emergency management authorities in their communities. We urge all real estate managers and their management staff to take part in continuing education of emergency procedure techniques. Devising and distributing tenant and resident emergency information is one way in which to prepare properties for emergencies.

IREM also encourages real estate managers who have experienced a disaster to move quickly to prevent the immediate effects of the disaster from causing or allowing further damage. Managers should then return the property to its normal condition as soon as possible.

Adequate insurance is essential to a property's recovery after a disaster. Managers should encourage owners to carry sufficient coverage. In addition to maintaining private insurance, managers should be aware of any governmental insurance, relief, or aid available to them after a disaster.

IREM encourages the federal government to establish uniform rules for administering national disaster relief programs. We also encourage Congress and state legislative bodies to see that they maintain a healthy reserve of funds to administer disaster relief.

(11/90, updated 4/06, 4/10)

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Terrorism Readiness

Background and Objective:
Terrorist attacks, bomb threats, and chemical warfare have reinforced the need for property managers to prepare and educate their staff on how to properly respond if a bomb or other type of terrorist emergency occurs on the premises. With the World Trade Center Bombing in 1993, the Murrah Federal Building bombing in Oklahoma City in 1995, the terrorist attacks in New York City and Washington, D.C. on September 11, 2001, and various terrorist threats since 2001,  the need for effective emergency procedures is immediate. Every property, whether an apartment building, shopping center, large office tower, or industrial park is vulnerable and a potential target for terrorist activity.

IREM Position:
The Institute is concerned with the increase in terrorist attacks on innocent public both here in the United States and abroad. Although most terrorist incidents cannot be prevented by actions of property managers, the Institute believes that there are measures the real estate industry can take to help in possibly reducing the number of casualties and injuries caused as a result of terrorist acts. The Institute encourages all property owners and managers to work with law enforcement agencies to develop special emergency procedures in case of a terrorist act. It is then the responsibility of the property owner or manager to communicate these emergency procedures to all tenants and property management staff. The Institute has various publications on this topic.

Furthermore, the Institute encourages staff and legal counsel to review standard management agreements for modifications dealing with terrorism. We also encourage federal, state and local entities as well as property management owners and managers to review standard leases for similar modifications.

(11/99; updated 11/02, 4/08, 4/13)

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Preparation for an Avian Flu Pandemic

Background and Objective:
Avian influenza, also known as the “bird flu,” is a contagious animal disease that infects birds and some mammals. It usually does not spread to people; however, several instances of human infections have been reported since 1997. The H5N1 strain was isolated for the first time in a human patient in Hong Kong in May 1997. As of August 2010, 299 humans worldwide have died as the result of the H5N1 bird flu virus. The virus is currently in several Asian countries, including China, Indonesia, Thailand, and Vietnam. It has now spread to Europe and parts of Africa (most prevalent in Egypt).

The World Health Organization (WHO) warned in late 2004 that the H5N1 bird flu could spark a flu pandemic that would likely kill millions of people. The United Nations health agency expressed its concern much of the world is unprepared for such a pandemic and countries need to increase their emergency preparedness in order to reduce the virus' potential impact.  Recently, WHO has reported human cases of avian influenza A (H5N1) in Asia, Africa, the Pacific, Europe and the Near East.   Indonesia and Vietnam have reported the highest number of H5N1 cases to date.  The United States has not experienced a high number of human cases to date; however, the bird flu is still a real threat.

President Bush signed into law $3.8 billion in funding for bird flu preparedness on December 30, 2005. Federal officials warned they could restrict travel or take other necessary steps to block a pandemic caused by the bird flu or any other super-influenza strain.

The global economy is being threatened by a pandemic. A human outbreak of the bird flu could cost the U.S. economy $675 billion, according to the U.S. Congressional Budget Office (CBO). The general slowdown in economic activity would reduce gross domestic product (GDP). Business confidence would be injured, the supply of labor would be restricted (owing to illness, mortality, and absenteeism spurred by fear of contracting the disease), supply chains would be strained as transportation systems are disrupted, and arrears and default rates on consumer and business debt would probably rise modestly.

Economic activity would slow, but it would not halt completely. The CBO reminds us experiences with such catastrophes as natural disasters and terrorist attacks have demonstrated the ability of people to cope with and adapt to extremely difficult circumstances. Moreover, the advances in technology of recent years would allow many companies to conduct business via electronic communications, permitting their employees to work from home.

The threat of a potential mutated bird flu pandemic represents a dilemma for investors, highlighted in the March 2006 Citigroup report A Global Update for Investors: Avian Flu. There is extreme uncertainty over the likelihood, timing, and virulence of a pandemic. Front-line industry ―winners‖ would include drug companies, healthcare providers, cleaning product manufacturers, and home entertainment providers, in addition to telecommunications and internet technology companies on the second-line. Insurers, airlines, hotels, shopping malls, and the travel and hospitality industry could suffer profit losses.

The Institute of Real Estate Management recognizes the very real possibility of the avian flu spreading to the U.S. We are aware of the potential economic and social disruption an influenza pandemic may cause. Recent experience in preparing for, and recovering from, terrorist acts and natural disasters has emphasized the importance of emergency preparedness. Both the public and private sectors have seen how important preparation is in reducing damages.

An excellent resource for businesses is the Business Pandemic Influenza Planning Checklist created by the U.S. Department of Health and Human Services and made accessible on their web site. For informational resources and news updates, real estate managers are urged to visit the Public Policy portion of the IREM web site or IREMFirst.

IREM position:
The Institute of Real Estate Management urges all real estate managers to familiarize themselves with the dangers associated with a possible pandemic and assess the impact one could have on their businesses, properties, employees, and clients. Real estate managers should prepare their businesses and properties for a pandemic by establishing policies to be implemented during a pandemic and determining what resources would need to be allocated to employees and clients at such time. Communication is key before and during any disaster. Consideration should be given to communicating with public health officials and other businesses in the community. Prior to and during the potential pandemic, proposed federal and state legislation may affect investment property. IREM legislative staff will monitor and communicate this legislation to its membership.

(4/06, updated 10/10)

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Limits of Liability

Background and Objective
Generally a fee manager and an owner of the property each carry their own insurance. Depending upon the wording of the insurance policies, which party is liable for a claim can be ambiguous. An example of such a case follows: "OTHER INSURANCE. If there is other insurance collectible for a loss covered under Coverage B, we will pay the amount of loss that is left after the full amount available under the other policy has been paid. We will not, however, pay more than the applicable Limits of Liability under this policy. However, if there is other insurance that specifically applies only in excess of this policy, this policy will be primary to that excess insurance."

IREM Position:
The Institute of Real Estate Management firmly believes that insurance carried by a fee manager should cover his or her firm's possible negligence and should not be the primary coverage for properties managed. The Institute encourages its members to carefully scrutinize their insurance policies and those of the property for clauses that could place them in a situation of becoming the primary provider of coverage. The Institute also wishes to communicate to the insurance industry that fee managers should be recognized as agents of the owner and should be named as additional insured at no additional cost.

(11/89, updated 10/10)

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Promoting Professional Management in Public Housing

Background and Objective:
HUD's Department of Public Housing has expressed its desire to have professional property managers more involved in administration of public housing. They recognize the benefits that a property manager with experience in the private market can bring to public housing. HUD encourages IREM members to seek out opportunities to serve as commissioners on public housing authorities' boards. HUD is pursuing the idea of appointing a property manager to each local housing authority board where it is not a conflict of interest.

IREM Position:
IREM supports the Department of Public Housing's efforts to increase participation of property managers in the administration of public housing. IREM sees this as a potential growth area and joins HUD in encouraging IREM members to serve on public housing boards.

(11/89, updated 11/05, 4/13)

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Certification of FmHA Site Managers

Background and Objective:
The Farmers Home Administration (FmHA) is presently considering the possibility of a nationwide certification program for their site managers. They recognize the need for qualified management staff and realize its effect on tenant relations and business decisions. They have been approached by associations, including IREM, that are interested in providing educational programs. FmHA will not endorse any one program but welcomes input from qualified groups. At present, training and certification of onsite managers is implemented at the discretion of each state's director.

In September 1989, California initiated a certification program for FmHA site managers with the expectation that all site managers would achieve certification within one year from that date. The program is being offered primarily through the Rural Builders Council (RBC) although other qualified entities are invited to submit programs for approval. The California certification requirement also includes annual recertification.

IREM Position:
IREM supports FmHA's emphasis on professional management and its efforts to organize a nationwide certification program. The "Successful Site Management" course has been adapted in the past for HUD managers and could be adapted for FmHA as well, either for use nationally or on a state-by-state basis through IREM Chapters. The Chapter Federal Housing Liaison Committee encourages the Education Division to modify the "Successful Site Management" course after IREM's Research Department conducts appropriate research to determine the market. The Chapter Federal Housing Liaison Committee also encourages the FmHA staff to take this proposed course.

(11/89, updated 11/05, 4/13)

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Military Lease Clauses (Servicemembers Civil Relief Act of 2003)

Background and Objective:
In response to situations that have arisen due to U.S. troops committed to war, legislation has been enacted which essentially amends the Soldiers and Sailors Relief Act of 1940. The Servicemembers Civil Relief Act of 2003 allows military personnel to break a lease if they are permanently transferred. It would apply only in cases where deployment was unexpected, as it was with recent military actions. The legislation would apply to both reserve and enlisted military families.

IREM Position:
It is with great respect to our servicemen and their families that IREM endorses special treatment of military families called to active duty. IREM members understand the emotional and financial hardship that can befall military families during times of war and military crisis. To allow real estate managers to do their utmost to ease these hardships, we would like to endorse fair and equitable handling of early lease termination for activated military personnel.

We feel that in times of war and unexpected deployment of U.S. military forces for national defense, a thirty day minimum written notice to vacate is a privilege that should be offered to military personnel. Legislation mandating this privilege should specifically state that this minimum notice can only be invoked by military personnel who are called to serve or are transferred in times of war or unexpected military deployment and who then present the landlord with military documents so ordering the assignment or transfer.

This privilege should only be exercised when the military personnel activated or transferred has met all the terms, covenants and conditions of his or her lease and is current on his or her payment of rent and other monies due the landlord. Under these circumstances, activated military personnel should be released from all further liability to the landlord.

We also believe that this privilege should be fully extended to individuals serving in the reserve branches of the armed forces who are called to serve during times of war. However, we do not feel that a mere offer of local on-base military housing is an adequate cause for the early release from a rental agreement.

IREM understands that the need for this legislation has emerged from widespread transfer, activation and reassignment of military personnel resulting from unexpected deployment of military forces.

While IREM endorses this legislation, the Institute encourages its members, even in the absence of a legislative mandate, to include special termination clauses for unexpected transfer or reassignment of military personnel which respect the military individual's circumstance in a manner that does not jeopardize a property's viability. By doing so, real estate managers can avoid detrimental effects of legislative mandates and unfavorable public relations.

(2/91, updated 4/06, 10/10)

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Psychologically Impacted Properties

Background and Objective:
Disclosure of psychological impacts (stigmas) remains an important issue for real estate practitioners. The issue involves disclosure of facts about the owner or occupants of the property and not the facts solely associated with the real estate itself.
A real estate practitioner may be placed in the difficult position between protecting the prior owner or occupant's privacy and civil rights and fulfilling the potential purchaser or lessee's desire to know about an owner or occupant of the property in question. Psychological impacts include: previous tenants with AIDS or criminal activity including murders and suicides that have, or allegedly have, occurred on the property. 
           
IREM Position:
IREM believes that all psychological impacts or stigmas which are associated with past owners or occupants of real property are not material facts and need not be disclosed to a potential purchaser or lessee.

(6/92, updated 4/07, 3/11) 

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Drug-Free Workplace

Background and Objective:
Under the Drug-Free Workplace Act of 1988, contractors who work with the federal government must certify that they maintain a drug free workplace. Contractors must also certify that they have a published statement notifying employees that unlawful manufacturing, distributing, dispensing, possessing or using controlled substances is prohibited in the contractors’ workplace. The published notice must also specify the actions that will be taken against employees who violate the prohibition.

Contractors must also establish an on-going drug-free awareness program to inform employees about the dangers of drug abuse, the policy about drug abuse, available drug counseling and rehabilitation programs and the penalties about drug abuse violations that occur in the workplace. Employees engaged in the performance of the contract are to be furnished with the published statement and must be notified in writing that the condition of employment shall require the employee to abide by the terms of the statement. All employees convicted under a criminal drug statute must notify their employer who in turn must notify the contract officer.

The employer must also take appropriate personnel action with respect to the employee, including requiring the employee to participate satisfactorily in an approved drug abuse assistance or rehabilitation program. Employers must also make a good faith effort to continue to maintain a drug-free workplace.

The Drug-Free Workplace Act applies to all property managers who contracts with the federal government. This includes, but is not limited to, property managers who manage property for the General Services Administration (GSA), the Department of Housing and Urban Development (HUD), the Resolution Trust Corporation (RTC), the Farmers Home Administration (FmHA), and the Veterans Administration (VA).

IREM Position:
Drug abuse is a problem which affects all employers. While the Drug-Free Workplace Act applies only to employers who contract with the federal government, IREM believes that the goals and intent of the program are beneficial to all private sector employers. Therefore, IREM encourages its members to voluntarily subscribe to the provisions of the Drug-Free Workplace Act as they can be applied to nongovernmental contractors.

(11/92, updated 4/07, 10/11)

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Insurance Redlining

Background and Objective:
Redlining, though technically illegal, is practiced by some commercial insurers across the United States. Redlining is, as it pertains to property insurance and insurance for property management companies, the discrimination in intent or in effect by an insurer or insurance representative against an applicant or property on the basis of age, geographic location, religion, race, national origin, ethnicity, or income of the applicant.

Many in the property management industry see an insurance company's refusal to offer property insurance to properties located in higher-risk, crime-ridden areas as unjust discrimination. Such properties experiencing location-premised redlining are often left to exist either uninsured, under-insured by substandard insurance carriers, or forced to pay unusually high insurance premiums based on their "risk factor" regardless of extensive security measures possibly enforced on the property.

IREM Position:
The Institute is opposed to insurance marketing and underwriting practices which result from discriminatory redlining.

(12/95, updated 10/07, 10/11)

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Uniform Standards of Professional Appraisal Practice

Background and Objective:
The Uniform Standards of Professional Appraisal Practice (USPAP) was created in an effort to create a set of uniform standards for appraisers by the Appraisal Standards Board (ASB), a unit of the Appraisal Foundation.  The document has been revised over the years with the most recent version released in 2012 and covers the years 2012 through 2013. .

The most relevant sections in the USPAP, to IREM members, are Standards 4 and 5. These two sections deal primarily with those appraisers who do consulting work. CPMs complete such activities as market analyses, financial analyses, and/or feasibility studies which are listed in these standards. As defined in USPAP, ““Appraisal practice” is defined as valuation services performed by an individual acting as an appraiser. Only appraisers may offer services that are considered appraisal practice. Examples include appraisal, appraisal consulting, and collecting market data (acting as an appraiser).” In the past, the USPAP document went beyond the scope of appraisal and created new standards for the consulting, in which a large number of our membership is active. The current documents say that when required by law, regulation, or agreement, an individual must comply with USPAP. The current 2012-2013 version states:

Within appraisal practice, there are some assignments that are addressed by Standards (i.e., STANDARDS 1 through 10). The Standards describe the requirements for appraisal, appraisal review, or appraisal assignments.

However, STANDARDS 1 through 10 do not apply in the performance of all appraisal practice services. Examples include assignments (performed as an appraiser) to teach appraisal courses, provide sales data, collect market data, analyze specific elements of value (e.g., reproduction cost or functional utility), and develop educational texts. (As defined in USPAP, assignments are performed by an individual acting as an appraiser. Therefore, all assignments fall within appraisal practice.)
IREM's concern is that because the final standards are published by the Appraisal Standards Board, states may decide that either (1) to have any real estate practitioner who does consulting activities (like those outlined in the standard) be subject to an "appraisers license"; or (2) that a separate license be developed which covers the activities identified in the standard as "consulting." The potential for either or both ideas may be fueled by recognition of increased license fee revenues, and/or a general belief that such actions would benefit the real estate industry as a whole.

IREM Position:
The Institute of Real Estate Management is opposed to any language, such as Standards 4 and 5, found in the Uniform Standards of Professional Appraisal Practice (USPAP) and state license laws that would negatively affect the typical business activities of property managers and commercial real estate professionals (either directly or indirectly) and may require them to pursue another license or certification. IREM further supports any other clarifications that would protect the day-to-day operations of a property manager or commercial real estate professional.

(6/98, updated 6/99, 4/08, 9/12)

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