Over the past several years, I have reviewed dozens of expert witness cases involving commercial real estate  - slip and falls, life safety failures, water damage, equipment failures, security incidents, and other operational breakdowns.

A troubling pattern appears in far too many of these cases.

Unfortunately, in most of the cases I review, the property management company had no defined operational infrastructure to support their teams.

In many cases, there are:

• No formal Standard Practices or operating procedures
• No structured training program for property managers or engineers
• No expectation that managers obtain professional education such as the Building Owners and Managers Association RPA (Real Property Administrator) or the Institute of Real Estate Management CPM (Certified Property Manager) designatio
• No performance measurement program confirming that employees are actually following established practices
• No documentation demonstrating training on specific policies
• No audit or accountability systems to ensure compliance

Instead, many operations rely on a simple assumption:

"Hire experienced people and trust them to do the right thing."

Unfortunately, that assumption does not hold up under legal scrutiny.

What Happens When There Are No Systems

In litigation, opposing counsel almost always asks the same foundational questions:

• What policies governed this activity?
• What training did the employee receive?
• How did the company verify the policy was followed?
• Where is the documentation showing compliance?

When those answers do not exist, the discussion shifts quickly from “Was the incident unavoidable?” to “Was the management company negligent in its operations?”

Without defined systems, it becomes extremely difficult to demonstrate that the company met the industry standard of care.

 Four Safeguards Every Property Management Company Needs

From an expert witness perspective, well-run organizations consistently have four structural safeguards in place.
 
1. Systems (Defined Standard Practices

Professional property management companies operate with clear, written operational standards, including:

• Routine property inspections
• Life safety system testing
• Contractor oversight
• Incident response procedures
• Snow and ice management
• Water intrusion response
• Security protocols
• Vendor management and insurance verification

These systems reduce operational variability and ensure that critical tasks are not dependent on individual memory or experience.

2. Training (Competence and Professional Development)

Policies alone do nothing if employees are not trained. Best-in-class organizations:

• Train managers on company standard practices
• Encourage professional education such as RPA or CPM designations
• Provide engineering and life safety training
• Conduct incident-response drills
• Provide risk management education

Training transforms policies from documents into operational behavior.

3. Leadership (Setting Expectations)

Leadership defines whether standards matter. Strong organizations make it clear that:

• Following standard practices is non-negotiable
• Safety and risk management are leadership priorities
• Documentation is expected and reviewed
• Managers are supported with resources and training

Without leadership reinforcement, even well-written policies quickly become shelf documents.

4. Accountability (Verification and Measurement)

The final safeguard is accountability. Organizations must verify that systems are actually being followed. Examples include:

• Property inspection audits
• Maintenance documentation reviews
• Vendor compliance checks
• Safety program verification
• Incident reporting systems
• Portfolio-level performance metrics

In litigation, these accountability systems often become the strongest evidence that a company exercised reasonable care.

The Moment the Lights Turn On

What I often see in expert witness work is that a major incident becomes the first real audit of a company’s operational systems.

A serious insurance claim or lawsuit exposes questions like:

• Who was responsible for this task?
• What policy governed the activity?
• How was compliance verified?
• Where is the training record?

When the answers are unclear, the legal and financial consequences can escalate quickly.

 Risk Management in Property Management Is Operational Discipline

Property management is not simply about leasing space or responding to work orders.It is a risk management profession.Buildings contain:

• Complex mechanical systems
• Life safety infrastructure
• Thousands of occupants and visitors
• Significant financial exposure

Managing that risk requires structured operational discipline.

• Systems
• Training
• Leadership
• Accountability

Those four pillars separate defensible operations from avoidable liability.

A Question for Property Management Leaders

If an attorney asked your organization tomorrow:

• Show me your operating standards.
• Show me how you train your employees.
• Show me how you verify compliance.

Would you be comfortable with the answer?

Attention commercial real estate (CRE) tenants and occupiers - your landlord should send you operating expense pass-through statements in the first quarter of 2026. This mechanism allows the landlord to recoup operating expenses at your property - and it can be a critical moment for your bottom line!

What are Operating Expense Pass-Throughs?

Operating expense pass-throughs are a standard component of most commercial leases. They allow the landlord to recover their costs of operating the building, including property taxes, insurance, utilities, maintenance, and property management fees. This mechanism transfers the risk of rising operational costs from the landlord to the tenants. Tenants pay a pro-rata share based on the space they occupy.

The Costly Truth: Errors are Common

The simple fact is that these pass-throughs can be complex calculations - involving base years, expense caps, gross-up provisions, and multiple line-item exclusions - and are prone to errors. We frequently see:

• ❌ Capital Expenses (major, long-term improvements) incorrectly billed as routine operating costs.
• ❌ Incorrect Square Footage calculations leading to an inflated pro-rata share.
• ❌ Violations of negotiated lease caps or inclusion of specifically excluded items.
• ❌ Accounting mistakes that fail to adhere to lease language and industry standards.

These oversights can compound year after year, resulting in significant overcharges.

Partner with INSPIRE for Validation

Don't just pay the bill. As Ronald Reagan famously stated, it is imperative that you "Trust but Verify" the documents provided by the landlord.

INSPIRE offers specialized advisory services to help CRE occupiers meticulously review and validate every line item in your reconciliation statement.

Our team ensures you're billed the right amount by confirming that:

• The charges are strictly consistent with your lease language, including all negotiated exclusions and caps.
• The operating expense calculations adhere to industry accounting standards.
• You are only paying your accurate and fair proportionate share of recoverable expenses.

Prepare now to engage an expert! 

By partnering with INSPIRE in Q1 2026, you can secure cost certainty, recover past overcharges, and protect your company's long-term financial health.

Click this link to schedule a free initial consultation: https://outlook.office365.com/book/[email protected]/?ismsaljsauthenabled=true