Ten Steps to Better Manage Crime Risk in Apartment Portfolios

With planning, owners can implement safety programs that reduce risk substantially

• Screening residents and employees
• Educating residents about their responsibilities
• Understanding an area’s criminal history
• Understanding the state’s legal standard
• Implementing a design audit
• Reviewing emergency response and community relations programs
• Rights and responsibilities of property managers in dealing with sex offenders
• Consider crime-free multi-housing programs
• Evicting problematic residents
• Understanding new property owner protections from asset forfeiture

Criminal behavior on one of your apartment properties can harm community livability, reduce your property’s value, or worse yet, leave you liable for damages. But with a little planning, you can implement a crime safety program that will reduce your risk substantially and make your residents much safer at the same time.

New and effective crime reduction programs that apartment owners nationwide are implementing include physical security, landscaping and design, resident and employee screening, effective partnerships with law enforcement, and resident safety awareness programming. The results are beneficial to properties, even those without a history of crime on the property.

The rules are also changing. Changes in statute have made new screening tools available, new case law has made it easier to evict some residents who house criminals, and business developments offer crime-free programs that can reduce liability risk.

To help put your options in perspective against this background, here are 10 points apartment owners may want to consider as they review their existing property portfolio and procedures manual.

Screening residents and employees

Managers/owners are finding benefits in screening residents and employees for prior criminal history, although resident screening is probably still practiced by a minority of owners. Though courts generally do not require resident screening, some owners/managers promote criminal background checks as a benefit of living in a particular community, while making clear that the checks are not a guarantee of security. Some apartment companies that do not do resident background checks do screen prospective employees, especially employees given access to residences. Employers have been sued successfully for “negligent hiring” and “negligent retention” where no background check was done before an employee was hired and that employee subsequently committed a crime.

The quality and speed of availability of criminal history information is rapidly increasing. Private companies are upgrading the technology that delivers criminal history information, and soon they expect to deliver a product that will permit real-time availability of crime history data. Already, in-state criminal history information is available in two days or less in many states. However, many owners and managers find searches for out-of-area criminal history information to be prohibitively expensive, and thus, where they are done, background checks often consist of a search of local area or state records only. Though we’re not there yet, we are perhaps a year or so away from having a searchable, national database for cost-effective, national criminal background checks.

Thanks to the Quality Housing and Work Responsibility Act (QHWRA), owners of Sec. 8-assisted properties and those with Sec. 8 residents can now go through their local public housing authority to access the National Crime Information Center (the federal law enforcement crime history database) in order to screen prospective residents.

Educating residents about their responsibilities

Resident education programs are an increasingly popular way to communicate to residents how to avoid higher-risk situations. Often taught in conjunction with local law enforcement officers, these education programs address how to think about personal safety, how to use safety features on doors and windows, and community safety policies. In some cases, defendants’ resident education programs are an effective defense against plaintiffs’ arguments that a crime victim who was a resident believed that the apartment owner had the sole responsibility to provide security on the property. As a result, owners/managers should check with their liability insurance provider to see if resident education programs lower liability insurance costs. “Safety Begins With You,” a pamphlet available from the National Multi Housing Council (NMHC) and the National Apartment Association, has been distributed by apartment firms to make thousands of residents more aware of their safety responsibilities.

Understanding an area’s criminal history

Monitoring criminal activity in and around properties by gathering information from law enforcement officers, news reports and the Internet can have multiple benefits. Courts in some states, such as Texas, consider the prevalence of crime in an area and the publicity it receives as key factors in assessing whether an owner’s crime prevention tactics were adequate.

Where a company decides to perform criminal background checks on some but not all properties in its portfolio, well-researched criminal history information can be a complete defense to allegations that screening was based on race or ethnic group rather than the actual risk of crime. Site managers can find local crime information by contacting local law enforcement and asking for a criminal activity report that summarizes crimes by type and frequency in the last few years. In addition, one Internet site to use when measuring how crime rates in a particular zip code compare to the national average is www.realtor.com/FindNeigh.

Understanding the state’s legal standard

Traditionally, an owner/manager owes the duty to his residents to exercise ordinary care to maintain areas over which he has control in a reasonably safe condition, rather than the duty to act as a policeman or an insurer. In other words, as a general rule, an owner/manager does not have a duty to protect a resident from a criminal act by a third person. Courts have generally not found apartment managers liable for failing to undertake a background check of residents. But the scope and nature of security precautions that a court expects an owner to take vary significantly from state to state. Companies should remain informed about the legal standard for premises security that applies in the states in which they operate.

Implementing a design audit

By evaluating a property for potential areas of crime, a company ensures that outdated design features and overgrown landscaping do not needlessly create opportunities for crime. Even newer properties built in the late 1980s and early 1990s can benefit from design audits that suggest improved security features. Depending on the circumstances of the individual property, the local crime rate and business competition in that market, some combination of perimeter gating, revised entrance/exit points, video security monitoring, electronic key entry systems, and parking and exterior lighting security features may enhance property values and lower insurance costs.

Reviewing emergency response and community relations programs

Good portfolio risk management programs address the property in the context of the community around it. First, what emergency response program – including resident relations, media interaction and employee protection – is in place today to respond to various crime scenarios on or around the property? Has this emergency response program been applied in hypothetical scenarios that might impact the property, such as cases of employee violence, eviction-related violence, domestic relations/restraining order situations, and well-publicized, near-the-property violence? Finally, what proactive community outreach steps are being taken now to build relationships with law enforcement in case they are needed later?

Rights and responsibilities of property managers in dealing with sex offenders

As a result of the federal Megan’s Law and the state statutes they encouraged, more public information is widely available about convicted sex crime offenders. Often, however, this information is not updated or accurate, creating the risk that residents of a property could be harassed because they have been confused with a sex offender who is a prior resident of the same address and whose old address is still listed on the sex offender registry. This wide availability of information creates complicated situations for leasing agents and property managers who must balance between a convicted offender’s right to privacy and surrounding residents’ rights to know and take steps to protect themselves.

Unfortunately, the hybrid state/federal nature of Megan’s Law tips this balance differently from state to state. As a general rule, site professionals should consult with local law enforcement to determine what community notification or disclosure, if any, the police will provide and to whom. Also, management should verify with the police what the site manager can or cannot disclose to residents and resident prospects about sex offenders living on the property or visiting the property, if the manager learns about an individual’s status.

In states with Web sites or 900 numbers providing sex offender information, the site manager can publicize the URL address or phone number and encourage residents to monitor for their own safety. A Web site offering a state-by-state summary of Megan’s Law notification and other requirements can be found at www.wa.gov/wsipp/pages/cprot.html.

Consider crime-free multi-housing programs

Voluntary industry/law enforcement programs such as the Crime-Free Multihousing Program can help large-scale apartment operations effectively manage the risk of crime across their portfolios. The program combines criminal history screening, aggressive lease enforcement of crime violations, outreach to law enforcement and the community, property audits, security vendor discounts, and marketing and recognition benefits. For more information on the Crime-Free Multi-Housing Program, including a copy of the CrimeFree Lease Addendum, go to www.ci.mesa.az.us/police/crimefre.htm.

Evicting problematic residents

Some federal courts have recently upheld the right of a housing authority to evict public housing residents whose guests or family members have committed crimes on the property, even if the evicted resident was unaware of the criminal activity or was unable to prevent the guest/family member from committing the crime. This result may be useful to conventional-market apartment managers who are seeking to evict residents whose guests and family members may be committing crimes.

Understanding new property owner protections from asset forfeiture

Recent legislation clarifies the “innocent owner” defense for property owners in defending civil asset forfeiture claims against the federal government. For the first time, the government must carry the burden of proof in an action to recover, say, an apartment home or property that has been the locus of drug activity.

Property owners who notify law enforcement of illegal activities on the property and take steps to revoke permission for illegal actors to use the property will qualify for the innocent owner defense. The owner/manager is not obliged to take any steps, however, that would subject him or her to harm. Under existing law, law enforcement officials use an owner’s notification to law enforcement of the illegal activity as grounds for forfeiture, on the argument that the owner was aware of the criminal activity but had not taken adequate steps to end it. This new law will clarify the steps an apartment owner can take to manage crime risks in the portfolio and may improve communication between owner and law enforcement about drug and other illegal activity.

These 10 checkpoints are meant to be a useful introduction to crime risk management in multiregion apartment portfolios. As the visibility of crime increases, owner/managers would do well to review their existing site designs, management policies, and policy implementation. Such a review could reduce insurance and ultimate liability costs and perhaps create an opportunity to reposition a property for improved profitability. Additional information is available to NMHC members at www.nmhc.org.

A contributing editor to Apartment Finance Today, Jay Harris is vice president of property management for the National Multi Housing Council/National Apartment Association Joint Legislative Staff. He can be reached at jharris@nmhc.org.

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