Certified Apartment Manager (CAM) Practice Test

Can a property management company be liable for the actions of a contractor they hire?

1. No, they are completely separate entities

2. Yes, if the contractor acts as an extension of the management team

3. Yes, but only in case of accidents

4. No, liability is strictly on the contractor

The correct answer is: Yes, if the contractor acts as an extension of the management team

A property management company can indeed be liable for the actions of a contractor they hire if the contractor acts as an extension of the management team. This concept is often referred to as "vicarious liability," where an employer or principal can be held liable for the negligent actions of its employees or agents performed within the scope of their employment or duties. When a contractor is engaged in activities that the property management company oversees or instructs them to perform, and these actions result in harm or damage, the management company may share liability. This is particularly applicable in situations where the contractor is performing tasks integral to the management company's operations or where the contractor's actions directly reflect the management's instructions or standards. The relationship between the property management company and the contractor plays a crucial role. If the contractor is viewed as an essential part of the management team rather than an independent entity, the management company may face legal consequences based on their oversight, direction, or approval of the contractor’s actions.