Riding down a sunlit street lined with palm trees, a passerby waves at a new neighbor enjoying coffee on the porch of a house that sat vacant for years. No one suspects that the new "neighbor" broke into the home and lives there as if it were his own. Unfortunately, this scenario is not uncommon when managing vacant real estate. Trustees responsible for vacant houses, commercial buildings, farms, and ranches face various challenges that require vigilance, coordination, and due diligence to protect the property and its value.
For trustees, managing vacant real estate is far more than just holding onto an asset until it sells or is repurposed. It requires proactive management to prevent deterioration, unauthorized use, and legal liabilities. A Managed Services team is critical in ensuring these properties remain secure, adequately maintained, and compliant with local regulations.
Here, we explore six key responsibilities of managing vacant real estate and why ongoing oversight is essential.
- Preventing Unauthorized Occupancy and Trespassing
Vacant properties often attract trespassers, from squatters in residential homes to unauthorized grazing on vacant farmland. Without regular inspections, these intrusions can go unnoticed for months or even years, leading to costly legal disputes and property damage.Take, for example, a closed-down supermarket left unattended for an extended period. It becomes an attractive refuge for homeless individuals, who may use the space for shelter, cooking, and other activities that pose fire hazards and structural risks. Similarly, abandoned farmland may be used for illegal dumping – from tires and broken appliances to hazardous waste littering the property. Some parcels even become clandestine sites for drug production, such as meth labs, which introduce significant health and safety risks.
Regular inspections and security measures, such as fencing, signage, and alarm systems, can deter unauthorized use and alert trustees to potential problems before they escalate. Additionally, working with local law enforcement or property management services can help monitor these properties more effectively.
- The Importance of Insurance Coverage
A common oversight in managing vacant properties is inadequate insurance coverage. Many assume that because a property is not in use, there is little risk associated with it. However, vacant properties can present even more significant risks than occupied ones.Hunters, ATV riders, or adventure-seekers may enter vacant land, leading to accidents that could result in liability claims against the trustee. Similarly, an unoccupied house or commercial building can become a hotspot for vandalism, arson, or structural deterioration. Without sufficient liability coverage, the financial impact of these incidents could be substantial.
To mitigate these risks, trustees must ensure that all real property within a trust has liability insurance, at minimum. Regular reviews can suggest specialized vacant property insurance policies that cover specific risks, such as vandalism, fire, and weather-related damage.
- Property Taxes: A Critical Obligation
Another key responsibility in managing vacant real estate is staying current on property taxes. Trustees who neglect this duty may face tax liens or even foreclosure. Many municipalities have strict policies regarding delinquent property taxes, and in some cases, a property can be sold at auction if taxes remain unpaid for an extended period. Ensuring that property taxes are reviewed and paid on time is essential to preventing unnecessary losses.
- Routine Inspections and Appraisals
One of the most effective ways to preserve the value of vacant properties is through routine inspections and periodic appraisals. Annual property inspections help identify maintenance needs, security concerns, and developing issues before they become costly problems. In some cases, inspections may reveal conditions that could significantly impact a property’s marketability, such as foundation issues, water damage, or pest infestations.Tri-annual appraisals also play a crucial role in asset management. Over time, property values fluctuate due to market conditions, neighborhood developments, and economic factors. Keeping appraisals up to date helps trustees make informed decisions about whether to hold, sell, or repurpose a property. It also ensures that beneficiaries accurately understand the asset’s worth.
- Proactive Maintenance and Asset Preservation
Just because a property is vacant does not mean it should be neglected. Regular maintenance is key to preventing costly repairs, including basic upkeep such as landscaping, roof inspections, pest control, and structural maintenance. It may also involve maintaining fencing, monitoring soil conditions, and ensuring that irrigation systems remain functional for agricultural properties. Neglecting maintenance can lead to severe deterioration. Even small leaks or a lack of climate control can lead to major financial burdens.
- Partnering with Experts to Protect and Maximize Asset Value
Managing vacant real estate requires a collaborative approach. Trustees attempting to oversee these properties alone may be overwhelmed by tasks’ complexity. That is where a Managed Services team proves invaluable. With expertise in property management, security, insurance, and regulatory compliance, these professionals help trustees navigate the challenges of vacant property ownership with confidence.By implementing structured asset management plans, a Managed Services team ensures that trustees fulfill their fiduciary responsibilities while maximizing the value of each property. Whether preventing unauthorized access, securing appropriate insurance, staying on top of taxes, or scheduling routine inspections, their role is essential to preserving and protecting trust-owned real estate assets.
Trustees must remain diligent in safeguarding assets to prevent financial losses, legal liabilities, and depreciation. The Managed Services team at SS&C Innovest can play a pivotal role in supporting trustees by providing expertise, oversight, and strategic planning to ensure these properties are well-maintained and properly protected.
By addressing trespassing, insurance coverage, tax obligations, and routine maintenance, trustees can mitigate risks and maintain the integrity of their real estate assets. With the right approach and professional guidance, managing vacant properties becomes a streamlined process that preserves value and upholds fiduciary responsibilities.
To learn more about how SS&C Innovest can help your trust company or wealth management firm navigate the challenges of managing vacant real estate, call (800) 727-0605 or email info@advent.com.
