January 2021 - Colorado Property Management Agreements Should

January 2021

Colorado Property Management Agreements Should Contain an Indemnification

Provision

✔ If you are serving as a property manager for a landlord in Colorado, you need to make

sure that your property management agreements contain an indemnification provision

that protects you against liability arising from the management and use of the property.

✔ An indemnification provision in a contract transfers risk from one contracting party to the

other in the event that a defined act or injury occurs. In the context of a property

management agreement, an indemnification provision would shift liability from the

property manager to the property owner in the event that an issue arises out of the

management or use of the property not caused by an intentional act of the property

manager. Generally, these issues will arise as claims of negligence not intentional

conduct.

✔ If a claim of negligence is asserted against you for acting in your role as property

manager, an indemnification provision in the property management contract would

require the property owner to defend you against that allegation, such as by paying your

attorney’s fees or providing counsel, and also pay any money damages that might arise

from a related injury. Without such a provision, you would be required to defend yourself

against such a claim, which could result in costly legal fees and even a potential

judgment against you personally.

✔ There is no “magic” language that is required for an indemnification provision to shift

liability from a property manager to a property owner. However, broader language in the

agreement will provide better protection to a property manager.

✔ Be aware of language that might limit the protections you are receiving and consider

whether those limitations are acceptable and, if not, how that language can be changed.

If in doubt, contact any attorney to help you assist in this determination.

✔ If you are currently serving as a property manager, review your management agreement

to see whether it has an indemnification provision.

✔ A property management agreement may include an indemnification provision that is not

clearly labeled as an “Indemnification” or “Hold Harmless” provision. Another label or

title might be used or it may not be labeled at all. It is the language of the provision

shifting liability for the property manager’s negligence while acting in the professional

capacity as a property manager that matters.

✔ If the property management agreement does not contain an indemnification provision,

make a plan to include such a provision before renewing your contract. If the property

management contract contains an expiration date or is subject to renewal at a certain

time in the future, make sure to request that an indemnification provision be included in

the next version of the contract.

✔ If you are presented with a contract to manage a new property, review the contract

carefully to ensure there is a broad indemnification provision that protects your interests.

Do not agree to serve as the property manager until the contract includes an

indemnification provision.

✔ If you are having an attorney prepare a property management contract, as required by

Commission Position Statement 27, make sure that attorney includes a broad

indemnification provision in the agreement. Broad language might include protection

from a claim arising out of an injury occurring on the property or any alleged negligent

acts you might be accused of in your management of the property.

✔ Having a broad indemnification in your property management agreements will protect

you from the cost and hassle of dealing with a dispute or lawsuit arising from a claim so

that you can focus on providing quality, property management services to your clients.

✔ An indemnification provision is not the same as being named as an additional insured on

the landlord’s liability policy; make sure you have both.

White and Steele, P.C.

James M. Meseck

Rachel E. Ryckman

E. Catlynne Shadakofsky

John C. Matthews

NOTE that the information contained in this document is for general education and knowledge. It is not designed to

be, and should not be used as, the sole source of information when analyzing and resolving a legal problem or claim.

Additionally, the situation surrounding COVID-19 is evolving and the subject matter discussed herein may change on

a daily basis. Please contact an attorney for timely advice as to any specific issue that may arise.