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Has a tenant or former tenant ever sued you?

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Rob K

Real Estate Investor from Michigan

Nov 10 '12, 01:22 PM
1 vote


There's another thread going on about LLC vs. higher liability insurance.

I'm just wondering if any of you have ever been sued by your tenants? If so, what happened?

Some people are setting up an LLC on each house. I think that's going overboard.

Everyone is always so paranoid about lawsuits. I've had over 100 tenants and have never been sued by anybody (I'm knocking on wood right now). I know many landlords, but I've never heard of any of them being sued either.

I had one disgruntled tenant that I evicted threaten to sue me over an alleged illegal eviction. She wasn’t able to have me served as I keep a low profile and am not easy to find. After a bunch of nasty phone calls, I never heard from her again.

Also, if there's already a thread on this, I apologize. I didn't see one.

Just curious if anyone has any first or second hand stories about this very thing.



Jon Klaus Verified Moderator Donor

Real Estate Investor from Garland, Texas

Nov 10 '12, 01:30 PM
1 vote


Threats only. I also have never heard first hand of a landlord getting sued by a tenant.



Jon Klaus, SellPropertyFast
E-Mail: [email protected]
Telephone: 214-929-6545
Website: http://www.sellpropertyfast.com


Kevin Dickson

SFR Investor from Denver, Colorado

Nov 10 '12, 02:19 PM


I got sued a couple times and lost once.

The sewer line was broken and so they lived with it backing up every few days. I refused to fix it because I was afraid that the tenant's heavy truck is what broke it, and I didn't want to have it get broken again.

The city forced me to fix it, but I evicted them very quickly because the lease was expired. At the eviction hearing the judge advised them to sue me for back rent. They sued me for two months' rent for the time they had to deal with the sewer problem. The judge was quite anti-landlord and ruled in their favor (the same guy). That judge was voted out soon afterwards.

I should have fixed it much quicker, because nowadays with the gravel backfill, it is very unlikely that the pipe would have broken again.

Typically, tenants are very inexperienced at the legal game, so they don't keep an organized case together, even if they have one.

Another time, a tenant sprained his ankle badly on a chunk of concrete the basement. My insurance company provided a lawyer for me, and the insurance company settled for $5,000.

It looks like I have another one coming up. The tenants had three mice in the house right after they moved in. I got right on it (with traps and poison), and I'm sure the mice are gone now. But the mice really soured them on the house and me, so now they are skipping out. I will probably sue them for lost rent, and they have threatened to countersue because of the mice. Stay tuned.

Which reminds me, everyone should rent the movie "Pacific Heights".



Bryan A. Donor

Real Estate Investor from Charlotte, North Carolina

Nov 10 '12, 02:30 PM
1 vote


yes, there's a magistrate in town that points all tenants to free legal aid which is just a few doors down from small claims (it's all in the same courthouse) ..they immediately appeal their lost eviction case and counter sue for some BS..normally they punch holes in the wall, scrap the oven and fridge at the metal yard, etc and then take pics of this "damage"...that's why it's good to have proof of move in photos, signed check in sheet listing damages, etc. once i had to subpeona the code enfocement officer and he came into court and said i had just fixed that exact apartment for that tenant, so he knew for a fact that there was no damamges just a few weeks prior...i lost once..i think it was 200 bucks...it was actually the tenant suing the previous landlord, and i bought the building at a great price to take the risk and liabilitiy for a few evictions gone wrong..they included me on the lawsuit since i was the new owner...the owner let some repairs go way too long, and so we lost...curious @Rob K what you mean by keeping a lowprofiel?? it's easy in my area to look up online, find the owner and their mailing address, and serve court papers..it deosn't matter how many trusts, LLC's, etc. you still have to have a mailing address on file



Bryan A., Carolinas Revitalization, LLC
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Rob K

Real Estate Investor from Michigan

Nov 10 '12, 02:46 PM
4 votes


@Bryan A. Good question. I work in B and C neighborhoods. I tend to dress in jeans and a sweatshirt. Sometimes a hoodie. It's easy to conceal my gun that way. I don't drive a flashy car. My tenants have no clue that I'm a millionaire. I blend in pretty well. I don't want them to smell money on me and think that I'm an easy target. I try to find common interests with people and bond in that way. For example, the plumbing supply place that I go to has the lowest prices in town. The people behind the counter are total D bags. Many customers don't like going there, but like the low prices. I was talking to a counter guy one day and it turns out that we're both kayakers. Now everytime that I come in, he acts like we're best friends. I usually try to find a common interest with inspectors too. Most are into guns and it's a good subject to talk about with them. One guy weighs about 400 pounds. I figured that his passion is food. We had a 20 minute conversation one day about the best Chinese food in town. Most landlords hate this guy, but I get along with him fine.

I try to do the same with my tenants. Instead of argueing with them about little stuff, try to find common interests and talk about them. They're way less likely to sue you if they like you and even less interested if you're a regular working guy like them.

As far as my mailing address, it's a post office box. It's in the same city as monst of my rentals and not where I live. You can't serve papers at a PO box. I have an unlisted phone number as well.

I try to handle problems early and that's why I've never been sued.

I'm just curious why everyone is so paranoid about lawsuits. Even the ones that @Kevin Dickson mentioned wouldn't have made any difference to the outcome if it was an LLC or sole proprietor.



David Niles

Real Estate Investor from Buffalo, New York

Nov 10 '12, 02:50 PM


One thing about the real estate rental business that ALWAYS makes me go wtf??? is how many stories I hear of judges and courts always siding with the dirt bag tenant and against the landlord, most times its just plain BS!
Its all about living off of or scamming the system now a days.



Jon Klaus Verified Moderator Donor

Real Estate Investor from Garland, Texas

Nov 10 '12, 03:19 PM


Originally posted by David Niles:
One thing about the real estate rental business that ALWAYS makes me go wtf??? is how many stories I hear of judges and courts always siding with the dirt bag tenant and against the landlord, most times its just plain BS!
Its all about living off of or scamming the system now a days.

Move to Texas.



Jon Klaus, SellPropertyFast
E-Mail: [email protected]
Telephone: 214-929-6545
Website: http://www.sellpropertyfast.com


Ben Stout

Real Estate Investor from Pensacola, Florida

Nov 10 '12, 04:26 PM
3 votes


A few years after I bought my very first rental we had a big storm and the sump overflowed. The tenant had a screaming fit about it and I spent a lot of money fixing it as quickly as possible. Of course she used the situation to her full advantage and skipped paying rent, yet I felt at the time I couldn't evict her due to the state of the house and I was paranoid about a lawsuit. There was many thousands of dollars in damage.

So, eventually she left, with a huge unpaid rent. Before leaving she said if I forgave the rent she wouldn't sue me for the mold damage that had caused her child to suffer asthma. I said I would split the balance with her. She ended up trashing the place and ghosting in December after the first major snow while I was waiting for half. I won a nice $5200 judgment that will hang on my wall for the next 20 years.

Funnily enough, after she moved out, the property manager said "Hey, they installed a work bench in the garage with a light overhead. I was wondering how they rigged it up, then I realized that they had disconnected the sump and wired it in there."



Kyle Hipp

Residential Landlord from Appleton, Wisconsin

Nov 10 '12, 05:13 PM


I think people need to take the proper and prudent precautions but I also share your experience in that lawsuits are rare.

I know of a lawyer that owns a decent amount of real estate and has been sued once. From what I understand there was a child that got sick and the tenants must have been on assistence of some sort and got connected with a lawyer to sure the property owner. At the court case the tenant apparently said their child got sick and they thought it was because they drank some of the laundry detergent that she had left out but it was actually lead paint issues as the child was chewing on the windowsill. I think they won like $10,000 but the whole issue seemed pretty sad.

I have current tenants that sued their previous landlord and won. They lived in a ranch home and nothing was taken care of. Major plumbing problems and I guess once the roof was damaged or shot and the owner had shingles and materials delievered to the house and expected the tenant to do the roof for free since he was in construction. Anyway on to the lawsuit. The tenants had sent pictures of the front brick facade that was coming off the house. They notified in writing and would send pictures via text and along with rent. Well the landlord never did anything with it and one day it fell while the tenants wife was doing some gardening. I believe she actually needed surgery from the injury. The owner evicted them because they didn't pay after that but they continued with the lawsuit. A couple months later they won the the lawsuit. I'm not sure how much they got but I would guess around $5,000 - $10,000. There old property is still vacant 8 months later and nothing has been done to improve or repair it either.



Ben Stout

Real Estate Investor from Pensacola, Florida

Nov 10 '12, 05:30 PM
1 vote


Kyle,
The point you bring up is a good one. Slumlords are most often the targets for lawsuits in my experience. If you do not provide what a "reasonable person" would consider a safe environment conducive to living.... what do you really expect? If a pipe was leaking in my house, I'd fix it. Likewise, you should treat your tenants as you'd wish to be treated.



James H.

SFR Investor from Texas

Nov 10 '12, 05:31 PM


I've never heard of it first hand. Most people that complain about the woes of landlording have never even done it. I think it's good that so many people think its so scary. More for those who aren't afraid.



Steve M.

Landlord from Hendersonville, Tennessee

Nov 10 '12, 06:29 PM


Yes ...

In due part to the fire at a property of mine several months back. They had renters insurance, but we're just at the beginning stages. We'll have to see how this plays out :)



Brian Burke Verified

Real Estate Investor from Santa Rosa, California

Nov 10 '12, 06:57 PM
3 votes


I've had well over 1,000 tenants by now, and I've only been sued by a tenant once. After eviction for non payment, she sued in small claims court for her deposit back plus damages because she had rats in her apartment. Her chief piece of evidence was a home video. That was a mistake, because after the judge saw her housekeeping practices he ruled against her.

I have another suit right now from a former owner of a house I bought at auction. She claims that after a sheriff's eviction, we stole $1.6 million dollars worth of personal property. This was after she attempted to defraud her insurance company with the same false claim. She subsequently fled the country, and refused to return to the US so we could take her deposition. Our attorney now overseas taking the depo. Thank god for insurance, they must have paid over $30K in attorney fees so far defending this frivolous suit. For all of the LLC fans out there, this property was bought in an entity. Entity or not, the sequence of events would have been exactly the same.

I've learned over the years that the whole lawsuit scare is overblown, entities are overrated (from an asset protection prospective) and you always want to have excellent liability insurance coverage. The big exposure is not judgments, it is attorney's fees defending yourself against false claims from broke wackos trying to hustle for money.



Medium_praxisBrian Burke, Praxis Capital, LLC
E-Mail: [email protected]
Website: http://www.PraxCap.com
Have you heard my BP Podcasts? biggerpockets.com/show3 & biggerpockets.com/show76


Steve M.

Landlord from Hendersonville, Tennessee

Nov 10 '12, 07:03 PM


Originally posted by Brian Burke:

I've learned over the years that the whole lawsuit scare is overblown, entities are overrated (from an asset protection prospective) and you always want to have excellent liability insurance coverage.

In real estate, maybe, but not in business (serving the public)

I'd rather be over insured & overprotected, than under insured and under protected :)



David Niles

Real Estate Investor from Buffalo, New York

Nov 10 '12, 08:45 PM


I should have clarified on my rant comment, I have no personal knowledge of any lawsuits either, but do know of MANY landlords burned for rent money all the time by these types and the legal system that likes to protect them.



Brian Burke Verified

Real Estate Investor from Santa Rosa, California

Nov 10 '12, 08:57 PM


Originally posted by Steve M.:

In real estate, maybe, but not in business (serving the public)

Very true, Steve. My comments were specific to the OPs question of tenants and real estate ownership. Having employees, on the other hand, makes an entity essential. Your liability exposure multiplies, and having a layer of separation (entity), and a lot of insurance, is the best practice, in my opinion.



Medium_praxisBrian Burke, Praxis Capital, LLC
E-Mail: [email protected]
Website: http://www.PraxCap.com
Have you heard my BP Podcasts? biggerpockets.com/show3 & biggerpockets.com/show76


John Jackson

Real Estate Investor from North Richland Hills, Texas

Nov 11 '12, 05:42 AM


Regarding this topic, has anyone had to utilize or file a claim with their Professional liability insurance? I guess I could just call Risk Pro that I've always used, but I always wondered if the policy only kicked in AFTER the judgement, if you lost, and if most policies cover your attorney fees, or just the judgement, should you lose? I wonder if there's anyone on BP that sells PL/GL ins that could chime in.



Bill G.

Real Estate Investor from Springfield, Missouri

Nov 11 '12, 06:48 AM


Threats by tenants, lower income tenants tend to have less knowledge but some are wise to attempting to set you up, you need to be on top of such indicators, so threats have been made, zero tenant suits, never has a tenant sued me.

I have never filed any claim for any aspect of coverage under E&O or any bond. The issues I have had were all taken care of through negoiation, never reached court with me as a defendant.
:)



Bienes Raices

Orlando, Florida

Nov 11 '12, 06:59 AM


Ben Siegelbaum

Wow, what a story...it's amazing the nerve some people have...

Overall I agree with Rob K, I think fears of a lawsuit that completely wipes you out are overblown...I know someone who was an LL for 30 years (granted, he only had 4 or 5 units) and was never sued by a tenant. Petty or nuisance lawsuits for smaller amounts of money seem a more real possibility.



Bienes Raices

Orlando, Florida

Nov 11 '12, 07:06 AM
1 vote


Originally posted by Brian Hoyt:
I've never heard of it first hand. Most people that complain about the woes of landlording have never even done it. I think it's good that so many people think its so scary. More for those who aren't afraid.

@Brian Hoyt

I know, some people I speak to think this is SOOOO hard...I think this may be because there are a lot of "accidental landlords" out there who had a bad experience with tenants because they didn't know how to screen, or they were in a rush because they were moving to another area. Then they tell their friends about how awful landlording is, and the misconceptions spread.



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