Help! Tenant suing 4 Million for negligence

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Help! Tenant suing 4 Million for negligence

Account Closed
Investor · Oakland, CA · Member since 2015 · 18 posts · 7 votes

I have a tenant who is suing myself and my property manager for claims of negligence and inhabitability. She has played a clever game of never asking us directly for repairs, bringing in code enforcement to cite me and then denying me access to make the repairs despite agreed upon appointments and written notifications. The suit is pretty ridiculous for 2 Million against me and 2 million against my property manager.

I have personal umbrella policy but that only represents me. I'm assuming my property manager will have to get their own legal representation. Any advice or lessons learned on how to handle the situation to stay on the same page with my property manager. We have a good relationship and I want to stay a united front but I know when things get stressful people panic.

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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
9y

I would worry Zero about this. I would turn it over to my insurance company and let them figure it out from there. If your property manager doesn't have insurance, they're not very smart. Even at that, I imagine the suit goes absolutely nowhere. Anyone can file suit against anyone for anything. Whether or not it goes anywhere is a whole different story. I have been sued once as an agent of my organization and twice individually. My total costs were less than $1,000, and $500 of that was just to settle one of them without admission of anything because that was cheaper than paying my lawyer another $2k to begin preps for trial. 

Your liability insurance should really be kicking in first. Your PUP would only kick in once you are beyond your liability limits. I don't know what kind of limits you carry but I like $1 mil incident/$2 mil total, with a PUP on top of it. 

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  • Rob S.
    Investor · Portland, OR · Member since 2014 · 65 posts · 46 votes
    9y

    @Account Closed No legal advice here but this seems like a nonsense frivolous lawsuit from a professional tenant. As long as you have documented proof that those conditions were not existing when the tenant moved in (move in inspection check list would proof this if you or your management company did the move in inspection) and that tenant denied you access to the property to make repairs, I don't see this going anywhere. But you must present documents to refute the tenant's claims. 

    And never let the tenant or any party involved know that you are afraid of the outcome. In fact, don't even let your defense attorney know that you are afraid. Be positive and strong, gather your documents and insist on this being thrown out of court for lack of merit.

    This is why I advise every Landlord to read and master their local Landlord/Tenant Law. If you don't, tenants like this will have a field day with you. Good luck!!

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  • Dylan VargasPro Member
    Rental Property Investor · Chico, CA · Member since 2016 · 625 posts · 336 votes
    9y

    @Account Closed Man, this is scary and makes me never want to be a land lord. Sheesh! Good luck and hope you win this case.

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  • Andrew Kerr
    Rental Property Investor · Everywhere, USA · Member since 2012 · 689 posts · 525 votes
    9y

    @Account Closed When I first got into real estate, I had a great mentor. A guy that had been buying, holding and selling real estate for 40 years, and at the time he started mentoring me he owned 100+ properties. He gave me a great piece of advice which was "Even if you do everything by the book, 100% right, you will still get sued in this business. So get good insurance, and network with some good lawyers". The point he was making was that there are people who will try to take advantage of you, so get your ducks in a row and be prepared for it, that way when it happens its not that big of an issue.  I have had to deal with a couple appeals to evictions, and been threatened with a few lawsuits from tenants. They all get dropped, thrown out or settled in my favor because I did everything by the book, documented issues well, and had good insurance and legal counsel when needed. I know its stressful, but you have your insurance in place, and what the tenant is claiming seems frivolous. Good luck! 

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  • JD MartinBusiness Member
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    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    9y
    Originally posted by @Dylan Vargas:

    @Account Closed Man, this is scary and makes me never want to be a land lord. Sheesh! Good luck and hope you win this case.

     Not scary at all. Anyone can sue you for anything, any time. All it takes is to walk down to the court house and file. You don't even need a lawyer. If you walked around worrying about being sued, you'd never do anything! That's why you keep good insurance, obey the law to the best of your ability, and use common sense. It's worked pretty well for me so far after almost 50 trip around the sun :)

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    9y

    My question is: How did this tenant get placed into this rental unit in the first place? Was it an inherited tenant already there when the property was purchased? Was it you the owner who screened and placed this tenant? Or was it the PM who screened and placed this tenant?

    The lawsuit you have now is what it is and will be decided on the merits of each party's case. But you have to determine how to better identify this sort of tenant before approving their application to rent from you. I suspect that somewhere in the tenant screening process, there was a failure to contact former landlords or a failure to research court records for that tenant's name (to see if they are litigious). You want to close whatever "loophole" found in the screening process that allowed for such a tenant to be approved.

    If the PM placed this tenant, you might seriously consider interviewing other PM companies to hopefully identify one that has a handle on better screening procedures. Just the fact that your post mentioned the PM for this might not have insurance should be a matter of concern - because they did not take measures to protect themselves in that way; where else might they be deficient?

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  • Alice K.
    Investor · San Francisco, CA · Member since 2015 · 306 posts · 211 votes
    9y
    Originally posted by @Account Closed:

    @Steve B. Oh it would be hilarious if it wasn't an actual lawsuit. They are suing for lose toilet, no screen on a window, non-working outlet in bathroom, pests, hall light not working (light bulb needed to be replaced) and non-functioning smoke alarm (they never replaced the batteries). The numbers are silly but living in CA with very tenant friendly courts I might still have to pay money.

    @JD Martin Thanks JD. I figured as much but is good to hear someone else second that it is in the insurance's best interest so I can trust the lawyers to take care of it.

    @Bettina F. All good points Bettina. I have all my documentation and I doubt they have any. I'm just making sure I havent missed anything that could trip me up. Remembering to breathe is prob best advice of all!!

    The screen on the window thing got me-- In my rental contract, it's written in the agreement that we aren't replacing screens yet my property managers have had this complaint as well. 

    I'm a tenant in the Bay myself and sometimes am appalled at what others demand. This tenant sounds like they have a real axe to grind. Wishing you the best on this ridiculous case. I don't care what sort of "pests" this home has, it ain't worth $4M. 

    Were there original warning signs when you screened them / at the beginning?

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  • Alice K.
    Investor · San Francisco, CA · Member since 2015 · 306 posts · 211 votes
    9y
    Originally posted by @Steve Babiak:

    My question is: How did this tenant get placed into this rental unit in the first place? Was it an inherited tenant already there when the property was purchased? Was it you the owner who screened and placed this tenant? Or was it the PM who screened and placed this tenant?

    The lawsuit you have now is what it is and will be decided on the merits of each party's case. But you have to determine how to better identify this sort of tenant before approving their application to rent from you. I suspect that somewhere in the tenant screening process, there was a failure to contact former landlords or a failure to research court records for that tenant's name (to see if they are litigious). You want to close whatever "loophole" found in the screening process that allowed for such a tenant to be approved.

    If the PM placed this tenant, you might seriously consider interviewing other PM companies to hopefully identify one that has a handle on better screening procedures. Just the fact that your post mentioned the PM for this might not have insurance should be a matter of concern - because they did not take measures to protect themselves in that way; where else might they be deficient?

     There are a lot of under-the-counter Property Managers around here as you have to jump through the whole broker hoop (in CA you have to be an agent first, then get a broker's license / hang with a broker that is fine with you being a Property Manager) to be legit. 

    I've heard of audit cases from the California Dept of RE to ensure PM's, but yeah, the insurance seems steep so I wouldn't be surprised if they didn't have insurance.

    All that aside, ridiculous that they're suing both. Typical California. 

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  • Johann Jells
    Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
    9y

    I've not had this scale of bullcrap, but I had a legacy tenant's new boyfriend move in and immediately file a slip and fall after a snowstorm. First I heard about it was six weeks later. I asked the other tenants if they knew anything about him falling, nope. Turned it over to the insurance, couple of months later I am notified it's been withdrawn. Glad I didn't obsess about it. Got worse with them calling every city agency on me for chuckles, culminating in this psycho saying in front of a uniformed FD inspector " I don't care if I'm parole I'm going to beat you down!!" 

    Their big mistake was giving me notice that they were moving and then it falling through. Surprisingly for NJ, there's no notice backsies. Get out or pay double the rent. The nasty part was that in eviction court his social worker begged me to rescind the eviction because it was making it impossible for them to get a new place. So I actually had to do the immoral thing and give them a good referral to get rid of them!!!

    Sometimes this business sucks.

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  • Justin R.
    Developer · San Diego, CA · Member since 2015 · 1k+ posts · 1k+ votes
    8y

    @Account Closed Be aware that the lawsuit can easily be used as a smokescreen while free rent (for as long as possible) is the actual goal.

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  • Jen L.
    Realtor · San Francisco Bay Area, CA · Member since 2016 · 123 posts · 48 votes
    8y
    Please give us an update! I'm very curious on whether the court will do the right thing in CA.
    0Reply
  • Rick T.
    Investor · Columbia, SC · Member since 2017 · 36 posts · 7 votes
    7y

    Any updates on the case?

    0Reply
  • Tom S.
    Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
    7y

    @Account Closed  Merced - any update on this?

    Thanks,

    Tom

    1Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    6y
    Originally posted by @Tom S.:

    @Account Closed  Merced - any update on this?

    Thanks,

    Tom

    Merced - Inquiring minds want to know ... 

    1Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Steve Babiak:
    Originally posted by @Tom S.:

    @Account Closed  Merced - any update on this?

    Thanks,

    Tom

    Merced - Inquiring minds want to know ... 

    They haven't posted on the forums in five years. I suspect they came here for help, then disappeared once things settled down.
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