Real Estate Investor · Orange Park, FL · Member since 2009 · 14 posts · 1 vote
I am looking at renting out my current primary residence, nice house in a nice neighborhood, and one of the issues on landlords minds is always the liability aspect.
I was wondering if anyone has inserted a liability waiver or hold harmless agreement into their rental contracts? Do tenants usually agree to these?
If not, can I obtain a general liability insurance policy or do they make them for landlords?
Flipper · Phoenix, AZ · Member since 2009 · 973 posts · 679 votes
15y
I think it's pretty standard in most rental contracts. You'll never be able to sign away your liability in the case of negligence though.
You can obtain umbrella liability coverage that is pretty reasonable. I don't remember what we pay for our $1MM policy, but it's less than $1000 a year.
Flipper · Phoenix, AZ · Member since 2009 · 973 posts · 679 votes
15y
I think it's pretty standard in most rental contracts. You'll never be able to sign away your liability in the case of negligence though.
You can obtain umbrella liability coverage that is pretty reasonable. I don't remember what we pay for our $1MM policy, but it's less than $1000 a year.
Real Estate Investor · Orange Park, FL · Member since 2009 · 14 posts · 1 vote
15y
Thanks for the info Marc. As I understand it, the negligence comes into play if, let's say the over the stove microwave goes out, and instead of hiring someone to put one in, I swap it out with a new one and then a week later it falls down and hits the tenant. That would be negligence?
I just want to make sure I don't have a tenant that spills something and then slips and falls in the kitchen and decides to sue or steps on a rake they have in the garage and tries to sue.
And that price doesn't sound too bad for a $1MM policy.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
15y
Anyone can sue anyone else for anything. Nothing in your lease will prevent the two lawsuits you mention in your second post.
Waivers like that are typically used in a potentially risky situation where the customer should be aware of the risk. Any ski pass or ski rental here has such waivers. The customer is about to willingly engage in something that's known to be risky. If they get hurt in the normal course of skiing, unlikely a judge will allow a damage claim. OTOH, if the lift messes up and dumps them out 100' in the air, then that waiver's going to be useless. I can't see where a clause like this would apply to rental property.
As always for questions like this, best if you speak with your attorney.
Real Estate Investor · Orange Park, FL · Member since 2009 · 14 posts · 1 vote
15y
I don't understand. I know nothing can "prevent" lawsuits, but having a liability waiver signed by the tenant, should mean a judge would not allow a damage claim for something like a slip and fall or stepping on a rake. Your skiing example contradicts your statement I think. Because the skier signs the waiver and if they get hurt in the normal course of skiing then the judge wont allow a damage claim, but if the ski lift malfunctions then they would probably get some sort of judgement. Same thing Im talking about with the property. I would think I'd be off the hook for a slip and fall on the property by the tenant but not if the microwave falls on them.
Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
15y
in this country, anyone can sue anyone else for anything...it doesn't mean they'll win, but it's gonna cost you, especially when the tenants qualify for the free legal aid....you wouldn't believe some of the ridiculous law suits or threats of lawsuits i've dealt with this year...insurance is very cheap...i think i pay around 500-600 for a 2 or 3 million umbrella, can't remember right now...that covers all my llc's, and all my rentals....just so you know, you could end up with a perfect tenant, or the tenant from hell....either way, it's best to be prepared bc when you're in the rental business, you will be sued at some point...i think i read somewhere that the number one category that gets sued are landlords and property managers, fyi
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
15y
Best way to avoid liability is first operate professionally, second transfer risk to an insurance company and address issues quickly and fairly, IMO.
Back to the indemnification agreements.
Using them is common, the first line of defense is that the other guy will think he has no claim, that even if he wins a judgment, you'll counter and make him pay for any loss, cost, damage, expense or judgment, including reasonable attorney fees with interest at the highest lawful rate until fully paid... arising from or out of your agreement. It has worked well
Drilling deeper, as Jon pointed out there are other issues. fairness. Generally, a hold harmless and indemnification agreement that is one sided, that only benefits the landlord, will usually be viewed as unfair unless additional consideration can be shown given by the landlord for the tenant to agree to such terms. It will likely be squashed as being unfair under the circumstances. However, as to damages, like a whole through the wall, that will likely be upheld, so it depends on the nature of the damage.
Now, if the agreement is mutual, where you agree to hold him harless for certain acts or ommissions and agrees to hold you ahrmles for maybe other acts then there is a balance and the likleyhood of enforcement is much better.
As Jon pointed out, it's the old slip and fall and denying liability...I've even seen these at garage sales, LOL! Matters of negligence will not likely be avoided with a sign or an agreement.
I use a hold harmless and indemnification clause or agreement in everything almost, and I always agree to indemnify the other guy for basically what I would probably be held respobsible for anyway, like a fraudulent act, on the other hand, in consideration for my agreement, I require that they protect me for other matters that I might be concerned with. It's a tic for tac thing.
As for landlords, state law is pretty clear and presedence is set for what a landlord is deemed to be responsible for, like saftey and security, so asking a tenant to cover you and not sue you arising out of your failure to provide good key control or locks on the windows will not fly if he has a break in.