I am about to rent my first house and I will be using a property manager, I have some question about the contract. The hold harmless part states:
HOLD HARMLESS: OWNER (me) agrees, at OWNER'S expense, to indemnify and save the AGENT FOR OWNER (pm) harmless from any claims or damages, including, but not limited to costs, expenses, and reasonable attorney fees and accounts thereof, that may be made by anyone in the connection with the management of the property and/or injuries suffered by employees or any person whomsoever, and to carry, at OWNER'S expense, Comprehensive General Liability Insurance with limits of $300,000 death or injury, and $100,000 property damage, The AGENT FOR OWNER shall be named as an additional insured under OWNER'S policies at OWNER'S expense unless such naming is contrary to the Insurance Company's established procedure. In the event this insurance is canceled, a thirty (30) day written notice of cancellation will be sent to the AGENT FOR OWNER, and the AGENT FOR OWNER is specifically authorized to place , at OWNER'S expense, liability coverage if a copy of any existing liability policy is not furnished to AGENT FOR OWNER within thirty (30) days after the effective date of this agreement.
Is this normal practice? I know I should have Liability Insurance to cover my house and myself but is it normal to include the PM on my insurance too. Shouldn't the PM have their own insurance to protect them from incident? What if I have a problem with the PM, what protects me from them if they make a mistake.
I will have more question to follow, so I thank you for your time.
Wow! If this home is in your neighborhood, I would self-manage. I do with mine, and 17 are 30 mins away. You can sub out the screening to a professional screening service and obtain a lease via a real estate attorney for a few hundred bucks. I would at least interview a different PM co. Wasn't aware they tried to get that far into your business! Be curious to hear from other PMs. Thanks for posting this question @Alan Clarke !
Sorry, I left out an important detail, I am moving 1000 miles away for reasons not important to this post but I am so close to paying off this house that I want the credit bump and the income if I can find a good PM.
We've had experiences with several different management companies in different states, and it appears to be fairly standard for them to be listed on your policy as additional insured. You'll need to contact your insurance company before deciding, however, as some may charge more to do it. While their outright negligence is another matter, I can see the logic of wanting extra security for blanket lawsuits where the tenant just sues everyone involved.
@Alan Clarke great question!
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing