question about liability protection for landlord

[jgold]

Joe from Florida

I have rented my town home in FL, since selling it for a fair price is nearly impossible these days.

Let's say the tenant slips and falls in the stairs or burns down the place or someone gets injured inside my apartment.

how can I protect myself from any liability or lawsuits if this happens?

Would landlord insurance do the trick? Can anyone recommend some sort of coverage I should get?

Thank You!!!

 

[tranquility]

Talk to an insurance agent who will sell you the appropriate insurance policy. Also, get umbrella coverage, it's cheap for millions in protection. You could also consider putting the property in an LLC, but changing the business structure is a big deal so you should consult with your CPA.

 

[OHlandlord]

In addition to consulting your accountant before putting property in an LLC, you should also consult an attorney. In some states, this has unintended consequences. In my state, if I place my properties in an LLC, I could no longer do any evictions myself. I would have to hire that attorney to do any evictions for me. (I would not be the owner, the LLC would own the property.) Also, in some states, if the LLC has no assets as of yet (mortgaged for near the value of the house) it falls back on you to be liable. In essence, you become the guarantor of the LLC. Check these issues out with your accountant (for tax purposes) and your attorney (for legal liability purposes) before doing this. In my case, it was a better choice to get that large umbrella policy.

 

[tranquility]

I don't disagree with OHlandlord, but advise a person renting out a single family residence as his sole income property has no business doing his own evictions in the first place. Also, even if the LLC was not adequately capitalized, it would still be an additional step/cost/difficulty to pierce the corporate veil and would be worth the relatively minor cost. Of more importance would be if the note were to come due on the transfer.

 

[Cvillecpm]

BEFORE you rented it, you should have had a discussion with your insurance agent and added a landlord liability coverage to your package. While the HOA maintains a fire policy, you need coverage for upgrades, contents AND liability.

Your RENTER'S need to have renter's insurance.

 

[ecmst12]

You should require your tenants, via your lease, to carry renters insurance and provide you with the company name and policy number. That way if THEY burn down the place, you have something to collect from.

 

[Cvillecpm]

EC - renter's insurance can't cover the landlord's property. It covers the TENANT'S property in case of a fire, theft, etc; however, the landlord's insurance would pay for any fire damage to the property and THEN go after the tenant under subrogation in the policy depending on the cause of the fire.

For LIABILITY purposes, the landlord needs a landlord liability policy/rider of at min $1,000,000.

 

[Just Blue]

Memorize your states Landlord/Tenant laws!!!!

 

[ecmst12]

Renters insurance covers the LLs property when the renter is responsible for damaging it. His own liability is not the ONLY thing he should be worried about in this situation!

 

[OHlandlord]

advise a person renting out a single family residence as his sole income property has no business doing his own evictions in the first place

Tranquility, I am confused by this comment. Is it because you might think they would not know the law? I would agree that a person who is not knowledgable on the laws and procedures would be best served by hiring an attorney. But if the person is knowledgable on and educated about the rules, procedures, and laws of his state's evictions and has researched the pecularities of his local court, why wouldn't it be a good idea to do their own evictions? An attorney costs me over $1000 to do an eviction here, it costs me only $136 to do my own. Most evictions (especially for non-payment) are quick and straight forward and can be completed by most people. Non-payment evictions typically last all of 10 minutes, even when the tenants show up. (Judge: Did you pay your rent? Tenant: No, but... Judge: Order of Possession granted.) If the owner screens well and has only a single property, he should rarely ever need to file eviction (hopefully). With a difference of over $850 per eviction, this was an important factor in choosing LLCs or not for me.

But I digress. This post was on LLCs and liability. Another reason LLCs were unnecessary for me was because local law only makes me responsible for liability when I knew or should have known of an dangerous condition, if the danger was obvious, or if the tenant has previous informed me of a hazard. (We still use common sense! ;-) We don't even have to shovel snow or ice! And we rarely have huge multi-million dollar awards here. An umbrella policy covers me nicely.) So knowing your law is a another issue when deciding on an LLC or not. Just my thoughts.

 

[tranquility]

Tranquility, I am confused by this comment. Is it because you might think they would not know the law?

Yes. There is no way a person with a single rental property will go through the training or obtain the experience necessary to make it worth their while to go pro per on landlord tenant law. I'm sure someone will pip in and tell me *they* are different, but I've seen large numbers of doctors, attorneys, airline pilots, teachers and engineers screw things up beyond recognition when they think they're smart enough.

An attorney costs me over $1000 to do an eviction here, it costs me only $136 to do my own.

It is far less in CA for uncomplicated evictions. By the by, how many evictions have you done with the single property you own? Unless, you have more than one property. At some point of property ownership, it could be worth a person's while to do their own evictions. But, while I don't state the case as strongly as at first, I've found that those who own enough property to make it worth their while get professional help anyway. There are some who have the knowledge from their job and who now own property of their own who can do such things, but they don't ask the type of questions the OP did.

Another reason LLCs were unnecessary for me was because local law only makes me responsible for liability when I knew or should have known of an dangerous condition, if the danger was obvious, or if the tenant has previous informed me of a hazard.

Darn that "should have known" in reference to land owners. Black letter law (even in pure negligence states like CA) still puts a higher duty on landlords regarding should have known. Often this means a reasonable inspection process. How many times is it reasonable to inspect a single family residence? What inspection is required?