Why Should You Vet Your Vendors?
Do you really know the vendors you are using on your apartment building? Have you checked out their license? Did you do your due diligence before hiring them? In a time where lawsuits are commonplace, property owners should thoroughly vet vendors who comes on and/or performs work on their properties to avoid legal and/or financial repercussions.
Property owners may not be adequately vetting their vendors. Oftentimes, the screening process is dictated by the price and a quick search on the internet. Property owners try to cut costs and only hire the vendor that would perform the work at the cheapest price without considering their credentials. This is a huge mistake. Property owners may end up paying the higher price in the end due to the quality of the work or accidents that may occur, impacting the owner’s insurance rates and also leading to other legal ramifications.
For instance, unqualified contractors may damage the apartment building during construction or a vendor may have inadequate licenses or even insurance coverage.
In fact, according to industry reports, more than 45% of vendors have had a lapse in general liability coverage, 31% have had a lapse in auto liability coverage, and 11% have relevant derogatory information in their file in the past 2 years.
In order to save money and trouble in the long run, property owners should consider the following screening criteria before hiring a vendor*:
Verification of license status
Verification of insurance coverage. Make sure that there is sufficient insurance coverage to cover the cost of any damages that may incur.
Identification of bankruptcies, liens, collections and judgments
Verification of criminal and sex offender background
Search government watch list for compliance issues (Includes OFAC database, money laundering database, terrorist watch list, and FBI most wanted database)
Go over vendor agreements and terms
*Note: It is important to verify the information of every person who is going to be at your property, not just the vendor itself.
With these screening criteria in place, property owners can avoid future legal and financial trouble that may occur. If property owners cannot thoroughly vet vendors on their own, they should consider using established credentialing firms for a small fee to ensure the legitimacy of the vendors. As always, if you have any questions about any of the above, please contact us by calling 818-915-9118 or email us at firstname.lastname@example.org.