Municipalities often find themselves on the receiving end of donated property. Councils are often eager to accept these "free" gifts; however, looking through a risk management lens may show these freebies could cost big dollars.
Municipal officials must perform their due diligence to determine the condition of any property it owns or may receive. To protect itself against premises liability claims, a municipality must be able to demonstrate that reasonable care was exercised to protect individuals from harm from conditions of which the city had knowledge or should have had knowledge.
Keeping complete documentation of all inspections and maintenance records is as important as doing the inspections and maintenance. The South Carolina Municipal Insurance and Risk Financing Fund, the Municipal Association's property and casualty insurance pool, provides its members with guidelines for conducting regular property inspections. The guidelines include simple checklists focused on key areas such as housekeeping, fire alarm/detection systems, means of egress, hazard identification, and general property condition.
"Municipal officials should establish a property donation acceptance procedure which includes criteria regarding accepting the donation," suggested Heather Ricard, director of the Association's Risk Management Services. "This will ensure consistency, determine immediate and ongoing costs, and evaluate the suitability of the property for city use."
Include the city's risk coordinator and attorney in the process from the outset to help identify and address liability concerns early. Contact the city's insurance provider to discuss how the property may impact coverage or premiums before deciding whether to accept the donation.
Many donated buildings are vacant or partially occupied. This poses increased risks of damage caused by fire, natural elements or vandalism due to lack of maintenance, utilities and security.
Though cities may want to accept a donation with plans to redevelop the property, renovating or demolishing most properties are subject to state and federal asbestos regulations as well as OSHA standard 1926.1101.
Even though Environmental Protection Agency and Consumer Product Safety Commission regulations have banned many uses of asbestos, some materials remain legal for sale and use. The materials that were not banned included materials where asbestos fibers are generally well bound in the material. Many flooring, insulation and roofing products containing asbestos have not been banned. Do not assume that a donated property, regardless of age or condition, is free of asbestos. Contact the South Carolina Department of Health and Environmental Control for its list of certified property inspectors.
"Considering the safety and risk management issues before accepting a donated building can help a municipality get a better picture of the true costs associated with the building," concluded Ricard.