How to protect yourself as a landlord?

Question

Chuck Holland · Answer

First thing I would do is pull this post offline so an attorney trolling BP looking to sue somebody wouldnt see it.  Then I would promptly call an insurance agent and a general contractor thats licensed.  Thats just me....

Bao Nguyen · Answer

Hi Ken,

The best way to protect yourself on this one is to get those issues fixed, and fixed properly by someone that's licensed.  Tenants are real people that are citizens just like any of us, and they deserve a clean, and safe home to live in.

You can charge higher rent once these issues are fixed, and you'll attract better tenants, which in turn makes the neighborhood nicer, which in turn increase real estate prices in your neighborhood and you have the option of selling your property for a premium price.  It's a win-win-win-win for all.  :-)  Don't be a slumlord.

Leslie Sultan · Answer

The best way a Landlord can protect himself from personal liability is to own the property as a Corporation.

While this protects the individual, it might require additional costs to form the Corporation, and if the property is not already in the Corporation's name, then there might be additional costs to transfer the property into the corporation's name and transfer all bills, insurance etc.  Also, financing from a lender might be at a higher interest rate and at less favorable terms for a corporation than an individual.  However, if a tenant is ever injured in a property owned by a corporation, at least the Corporation is the only entity exposed to liability, as opposed to an individual homeowner who may be exposed to personal liability.

If you are an individual homeowner and are aware of dangerous conditions in the property, depending on the laws of your state, it might be considered "negligence" or even "gross negligence" to not repair them.  A hold harmless letter MAY protect you, but the hold harmless might need to state additional "consideration," such as a statement that the price of the rental has been reduced based on X defects and/or that tenant may use said reduction to pay for necessary repairs to the property as his or her sole cost and only through a licensed professional.*

Leslie Sultan, Esq.

*This statement should not be construed as legal advice.  Said statement is offered merely as a hypothetical suggestion to consider.

Jassem A. · Answer

ungrounded outlet:

2 prong outlets don't need a ground. GFCI with no equipment ground sticker is fine too.

possible lead paint:

have them sign lead-based paint addendum just in case

exposing wiring to the backyard garage:

exposed romex is ok is some circumstances if it is not subject to physical damage

no permitted garage to family room conversion:

If the building/codes department cares about this they will inform you. Since the previous owner did the work they might not hold you responsible for any fines. If the property is not condemned, I'd assume everything is fine with the conversion.

If you're worried about getting sued for whatever reason an umbrella policy will help protect you and having the house insured will also help

Christopher Baustert · Answer

Good advise Chuck. Are you doing any out of state investing?

How to protect yourself as a landlord?

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