This case involves a large wooden pavilion at a camping ground that collapsed. On the day in question, the camp was being used by an elementary school for an educational field trip. At the time of collapse, there were 52 students, 5 teachers, 11 parents, and 3 campground employees underneath the pavillion. The collapse caused 5 deaths and many serious injuries. An expert in real estate asset management for major property owners was sought to discuss the obligation of the asset manager to understand the design and construction of the asset as well as the responsibility of an asset manager to hire qualified property managers that they check in on regularly to ensure safety standards are being met.
Question(s) For Expert Witness
1. Does an asset manager have a responsibility to make sure the property managers are doing their jobs and are qualified for the role?
2. If the property managers are not adequately reporting, is it the asset managers job to then take action to make sure that third parties, consultants or contractors are called in to make appropriate and timely inspections/investigations?
3. From an operations standpoint, do property managers report to you to discuss budgeting, which vendors to use, etc?
Expert Witness Response E-164539
Typically, an asset manager has a fiduciary responsibility to their investors to hire and manage a qualified property manager. While the asset manager assigns some of the responsibility of making sure third parties are called in when necessary to a property manager, the asset manager is directly responsible for their investors. They are typically responsible for obtaining and analyzing accurate financial reporting, working with third party consultants to verify that the properties meet all regulatory and life safety standards, and visually inspecting the asset. As an asset manager, I have been the owners' representative in charge of the deal. I work with property management to establish a budget and the guidelines they can operate within on a day-to-day basis. The annual budget would be submitted by the property management, but I would have final approval of what was set. In regards to vendors, the property management agreement typically outlines thresholds or criteria required within the operating contracts the property manager could enter into. For example, it must be terminable in 30 days, or any expense more than (i.e. $5,000 over budget would require owner approval, etc.). Most agreements provide for a life/safety clause which provides the property manager latitude to expend money if it were an emergency repair.
About the author
John Lomicky
John Lomicky is a J.D. candidate at FSU Law with a multidisciplinary background. He earned his Bachelor's degree in Neurobiology and Near Eastern Studies from Georgetown University and has graduate degrees in International Business and Eurasian Studies. John's professional experience includes working in private equity as an Associate at Kingfish Group and in legal business development and research roles at the Expert Institute. His expertise spans managing sales teams, company expansion, and providing consultative services to legal practices in various fields.
