As homeownership falls, opportunities for investment in residential real estate rises. But with these opportunities come risks.
The perils of liabilities can seem ever-present to you as a landlord. Protecting your investment is paramount.
This starts with knowing and then with taking appropriate action.
Let’s explore what the risks might be and how you can protect yourself.
#1 On-Premise Injury
As a landlord, you can be held responsible for injuries that occur on your property even if those on your property were not authorized to be there.
Reduce the chance of injury by:
- Keeping your property in proper repair
- Posting signs
- Using fences or barricades as necessary
- Educating tenants regarding hazards
You probably think of the classic “slip and fall” routine when you think of on premise injuries.
But it’s important to go beyond that to be a good landlord by protecting yourself and your tenants against less obvious hazards as we’ll discuss.
#2 Attractive Nuisance
An attractive nuisance is a feature on the property that is likely to attract children who may not be able to read or who may disregard warning signs.
You may think you’re covered by posting those signs. But per this law, you need to take extra precautions to protect children. They may not truly understand the dangers involved.
A great example of this would be a ravine or culvert. Let’s say that there’s 20-foot drop off behind your property for whatever reason. You post several signs warning people.
Is it enough? Could you expect children to gravitate toward this interesting, but also dangerous feature?
In addition to signs, you would potentially need to erect and maintain a fence to keep children away. If you think that the structure may just be too tempting, you might just embrace it by building stairs with sturdy rails down to the bottom.
#3 Secondhand Smoke
It’s not without precedent. Judges have recognized claims of tenants who were exposed to secondhand smoke by either employees or other tenants.
You may not be ready to declare a smoke free policy within a complex. But put rules in place regarding where it’s okay to smoke outside of the tenant’s own unit.
In the state of California, you must also be concerned with “seepage” through the ceiling, doors, fixtures, shared ventilation, etc., so review California laws to make the right choice for your complex.
And make sure that any outside spaces where non-smokers pass or gather are not barraged by smoke from a designated area.
As a landlord, keeping pests away can be a constant battle — especially when you have zero control over tenant cleanliness. But exposing tenants to harmful chemicals can create a liability.
When treating, use a professional that understands what chemicals to use within California laws and how much to use in order to avoid harm to children and pets.
#5 Employees & Contractors
Your employees are an extension of you as a landlord. You could face liabilities in regards to their conduct.
To safeguard yourself:
- Screen all employees thoroughly.
- Limit the number of employees who have access to rented units
- Safeguard the keys to those units to prevent unauthorized access.
- Provide safety training to employees.
If working with sub-contractors, inquire about their hiring and training processes.
#6 Property Inspection Liabilities
Not having a consistent and thorough inspection schedule could open you up to liabilities.
Not only could this be used against you to prove negligence. You’re missing opportunities to fix the problem before it becomes an injury and — in turn — a lawsuit.
- Set a regular inspection schedule.
- Create a checklist for thorough inspection.
- Keep your eyes peeled for hazards that may not be on the list.
- Review all relevant building codes and ensure you stay compliant.
- Encourage tenants to report concerns.
- Respond to complaints quickly.
- Document everything.
If you allow pets on your property, you may become responsible for their actions. If someone is bitten by a dog, the plaintiff could include you in their lawsuit, especially if they think you knew the dog was dangerous.
There are incredible benefits to having a pet-friendly property, so eliminating all dogs isn’t typically the best course of action.
But to protect yourself, you might consider the following:
- Restrict dog size, number and/or breed.
- Enforce leash requirements.
- Respond quickly to reports of an aggressive dog.
- Require renter’s insurance.
As a landlord, you take on the responsibility of keeping tenants safe.
To keep yourself safe from security liabilities:
- Carefully maintain outdoor lighting.
- Reduce dark places where criminals could lie in wait.
- Change/maintain deadbolts.
- Maintain window bars, cameras or other security systems.
#9 Tenant Troubles
You could be liable for the actions of your tenants as well. If one tenant assaults or robs another tenant, the plaintiff could include you in the suit.
To prevent this:
- Screen tenants.
- Be clear on the visitor policy.
- Avoid bringing someone in with a history of violence.
- Educate tenants about safeguarding common areas (e.g., locking the pool gate).
- Respond to nuisance claims quickly, but impartially.
- Evict disruptive tenants when necessary.
- Document everything.
#10 Court Costs
You may also be responsible for court costs and filing fees. In addition, when mounting a defense, you may need to hire legal counsel.
Regardless of whether you’re found to be at fault, you’ll likely have some out-of pocket expenses related to a lawsuit.
It’s not always possible to prevent the filing of lawsuits. But by taking smart steps to reduce liabilities, you can reduce lawsuits.
Because lawsuits can be costly, always approach the situation with a level head from the start. Get the facts. And don’t jump to conclusions. Try to work things out amicably when possible.
As a landlord, you’re faced with many liabilities. Getting informed is the first step to protecting yourself. Taking action is the second. And third is preparing for the eventuality that regardless of how well you maintain your property, things happen.
That’s why landlord insurance is so important. Protect yourself, your properties and your future money-making potential by getting proper coverage.
To learn more about how we can help you protect your investment, contact us today.