Have you every been sued as a Landlord?

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Have you every been sued as a Landlord?

Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

So many people ask about setting up an LLC or purchasing umbrella insurance to protect their assets from a lawsuit. I personally think the risk is exaggerated and these protections aren't as necessary as one would think, but I would like to hear what others think.

I know this is anecdotal, but please answer the following and share only your personal experience.

1. Have you ever been sued by a renter or their guest?

2. If so, what was their claim (deposit, injury, etc.)

3. Did you lose?

4. If you lost, was your loss covered by insurance?

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Jason BottPro Member
Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
6y

@Nathan Gesner I think you need to add 2 more qualifying questions to get a true perspective;  

1) What city are the rentals located in

2) What is the grade of property in your portfolio (A, B, C or D)

I have hundreds of clients who have never been sued (B to C areas), but have a larger client with about 900 units in C to D areas and he gets sued 5-10 times per year.  I'd say it breaks out as follows;

50% of the claims go no where

40% of those claims settle for under $10k

1 claim every other year settles for between $25k-$75k

Lastly, over the last 10 years and the 25,000 units I insure nationally, I have yet to see a Liability claim settle for over $1M.  Not saying it isn't possible, but my book of business just hasn't seen it.

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  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y
    I'll go first.

    1. No

    2. N/A

    3. N/A

    4. N/A

    That's it! 400 units under management, ten years experience plus another ten as a Landlord and I've never been sued once. How about you?

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  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    6y
    I have not ever been sued as a landlord.
    3Reply
  • Calvin OzanickBusiness Member
    Property Manager · Janesville, WI · Member since 2017 · 707 posts · 297 votes
    6y

    1. Yes we have been sued. 

    2. This was a dispute over the state of the apartment following her move out. 

    3. We won and it was almost unbelievable she had the nerve to attempt to sue. She let her child color all over the walls of the entire house. Literally covering the walls, and when we chose to paint over it, she said we did not have to because the marker was washable. The judge laughed in her face. 

    4. In an attempt to prepare in case we somehow lost, I reached out through the insurance channels and was told insurance would not cover a loss in court unless it hit a certain premium, which this deal would not have. 

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  • Kevin Manz
    HVAC Tech · Fort Wayne, IN · Member since 2015 · 423 posts · 223 votes
    6y

    I own a duplex that caught fire. Real small kitchen fire, but after the fire department came thru and busted through the wall, the city shut all utilities off, so both tenants had to move out. 5 hours later fire started back up and destroyed the house. Tenants from both apartments, which was a mother in 1, and her son in the other, both sued me for 6000 each, the max u can sue in small claims. The mothers apartment, where fire started was really bad, she did not have rental insurance. The son, whose apartment did not really get effected by the fire, did have rental insurance. They both sued me for, in there words, had fire, lost possessions.

    My lease was iron clad. My insurance provider hired a lawyer, and it disappeared.

    2Reply
  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    6y

    35 years LL never been sued.

    4Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    6y

    Never been sued as a DIY self-managing landlord. Suing someone for anything other than personal injury costs money. Successfully suing any local landlord who obviously makes a real effort is almost impossible, I've heard from local sources near me. I suppose it's a whole other story if you own in the midwest slums but live on the coasts and brag about your arriviste lifestyle and personal growth every day on social media.

    4Reply
  • Mark Gauger
    Member since 2018 · 34 posts · 54 votes
    6y

    Umbrella insurance is really cheap. Why is it so cheap? Because lawsuits are rare. If they were not, an umbrella policy would cost much more.

    Maybe 999 out of 1000 landlords go their entire life without being sued, but who really wants to be the unlucky one who gets wiped out because they were too cheap for inexpensive umbrella insurance coverage? The risk may be small, but the consequences can be huge. This is exactly where insurance works best.

    Any landlord with any sort of assets to speak of should really have an umbrella policy.

    There's many other valid reasons for an LLC, but in regards to asset protection there really isn't much value there until your assets exceed what can be economically covered by an umbrella policy.

    5Reply
  • Kyle J.
    Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    6y

    interesting post and nice job @Nathan Gesner

    Also quite impressive @Bjorn Ahlblad. 

    I’ve also never been sued as a landlord.

    I’ve heard it said before that most landlord-tenant disputes/lawsuits are over security deposits.

    Personally, my goal is always to return 100% of a tenant’s security deposit. That doesn’t always happen of course. However, when it does, it means a tenant fulfilled their lease, didn’t owe me any money when they moved out, and left the unit in damage-free condition. I’m more than happy to give someone like that their full deposit back. 

    On the occasions where I do have to make deductions, I do it only for legitimate damage or money owed and I do not nickel and dime them for every little thing.

    Ultimately it just comes down to treating people fairly and how you want to be treated in this business. You can avoid a lot of lawsuits (and problems in general) like that. 

    6Reply
  • Jason BottPro Member
    Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
    6y

    @Nathan Gesner I think you need to add 2 more qualifying questions to get a true perspective;  

    1) What city are the rentals located in

    2) What is the grade of property in your portfolio (A, B, C or D)

    I have hundreds of clients who have never been sued (B to C areas), but have a larger client with about 900 units in C to D areas and he gets sued 5-10 times per year.  I'd say it breaks out as follows;

    50% of the claims go no where

    40% of those claims settle for under $10k

    1 claim every other year settles for between $25k-$75k

    Lastly, over the last 10 years and the 25,000 units I insure nationally, I have yet to see a Liability claim settle for over $1M.  Not saying it isn't possible, but my book of business just hasn't seen it.

    7Reply
  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    6y

    I've never had a tenant sue me..... BUT

    I had a high end rural home that was often left vacant as I travelled a lot with my JOB. My Ins carrier did an inspection & insisted someone be there or I'd lose my coverage, so a couple of Eng., colleagues rented rooms. Then a family friend asked if their daughter, the nurse, could rent a room until the addition they were building was complete. 

    She moved in & was a slob & DID NOT get along with my colleagues. Then while I was away for a couple of weeks they changed the locks & threw all her stuff out in the barn, but told me she had decided to just leave.

    By the time I got back she had collected her possessions & the next thing I knew I was being sued in small claims for the $3,000 max.

    I appeared before the town magistrate & he asked her to tell her story. I was then allowed to offer my 'rebuttal'.

    I explained that I was away on business during the time & I was told she had 'voluntarily packed up & left'. The judge then asked for my travel logs but before I could present them she stood up in court & shouted "he's an f'g liar & planned it all & had his friends kick me out." (I remember it well)!!!

    The judge stopped the proceedings, reprimanded her then immediately reserved judgment for a later date. 

    I got it in the mail a month later..."dismissed with prejudice"!!!

    Several years later her sisters husband worked for me & told me that she had subsequently won $1million for an auto accident & then literally blew through it in a couple of years. The brother-in-law was subsequently abandoned by the sister, with two young children, cleaned out financially & then forced to declared bankruptcy. 

    Sisters from hell !!!

    2Reply
  • Nathan GesnerBusiness Member
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    OP
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y

    Man, you guys are awesome! Thanks for sharing all of this information.

    Top reasons Landlords are sued, according to Landlordology:

    • Unjustly withholding or mishandling a security deposit
    • Illegal clauses in the lease agreement
    • Landlord enters the rental illegally
    • Habitability issues (mold, water leak, lack of heat, etc.)

    I always tell new(er) investors that the best protection is knowing and obeying the law while treating renters honestly and fairly.

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  • Nina Ibrahimbegovic
    Real Estate Professional · Clearwater, FL · Member since 2015 · 72 posts · 14 votes
    6y

    @Kevin Manz

    When you say your lease was iron clad - how did that prevent them from suing ? Did you have on your lease that they must have renters insurance ?

    0Reply
  • John Mocker
    Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes
    6y
    Nathan, Here's a claim that happened to a client. My Insured had a multi family rental. One of the tenants got behind on rent and offered to do some work as an offset. The client said ok and the work was done. Later he receives suit papers from the Tenant for a Workers Compensation claim. The client had no workers comp coverage and had to retain an attorney. Fortunately the tenant's attorney did not know the Workers Comp laws and incorrectly filed the claim. It was dismissed. They refiled it as a Liability suit and we submitted the claim. It went to discovery and when the ER records were secured it showed the tentant said the injury happened from a different reason. That suit was dismissed. I use this as the reason why building owners should only use licensed and insured contractors for the work on their building.
    1Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y

    I've been sued 3 times as a citizen and a couple of times as a public official. But never as a landlord. Out of 5 times total, it cost me a grand sum of about $1000, and that was on one where I settled the case for $500 after paying my attorney about the same, with no admission of wrongdoing (because I didn't do anything wrong) but preferable to paying my attorney another $5k or so to prepare for trial. And that one galled me to pay it but at the end of the day I'm nothing if not prudent. The other two were vehicle accidents (kids), and the 2 as official was an EEOC case and a wrongful death case (one of our employees was in a fatal car accident). None of those cost me any money (2 were dismissed) but they taught me a lot of lessons about having really good insurance and really high limits. That's worth far more IMO than an LLC, which can be pierced.

    Insurance companies don't like to lose large sums of money. The higher your insurance limits, the better you are going to be defended. When you consider the marginal cost of maxing out insurance is so small, I'm frankly surprised more people don't do it. I carry $2 mil liability on each property and an additional $2 mil PUP beyond that. 

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  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    6y

    I have never been sued as a landlord.

    I, as a tenant, did sue my landlord right out of college.  I rented a downstairs apartment.  One of the upstairs folks were pigs.  Threw the baby diapers off the balcony right in front of my apartment.  Their lifestyle attracted roaches.  The PM could not control them.  I complained about them a lot.  The upstairs neighbors did not care, but all us downstairs folks, maybe a dozen complained constantly.  Then the upstairs neighbor started filling up their tub and left their house.  I came home from work to water flooding down the wall and everything soaked in the bedroom and bathroom, and wet in the rest of the house.  The PM went into the upstairs apartment and declared it all ok, just had to turn the overflowing tub water off.  He moped my apartment bathroom and kitchen  with a filthy mop and called it good.  I said that the walls were soaked, closet soaked, floor oozing out water, carpet soaked in bedroom.  Roaches standing on any dry surface.  Totally gross.  I had been there only a month.

    I moved to an motel, washed everything clothing wise before moving it.  Fumigated my apartment before removing reusable items.  Put the mattress, couch etc. in the dump.

    PM said the owner never returns deposits.  Said you can not sue him either because he is not servable.  He was not servable by the police, would not come to the door.  But I used a private server who stalked him and served him at his holiday party.

    I won in small claims court.  He tried to argue roaches and water damage--jerk.  Judge gave me full deposit back, plus replacement cost for tossed/damaged furniture, plus hotel cost until I could fund another place to live, plus even laundry and roach control costs.  

    Even better, on his way out of the courthouse he was served with about 200 more cases.  See, the court had saved all the ones they could not serve and when he was there, they got him.  I think the judge also went hard on him in my case to get him to settle with everyone else.  He had NEVER returned a deposit!  Still remember his name-Gene Martin from Newport Beach CA and this was in the 1980's!

    ------------

    Another lawsuit, but not with a rental, just similar type of a situation,  is that as a child in JR High we had a party for a school club at my house.  We were playing hot potato with the plastic potato with a timer.  One kid caught it and flipped it into his mouth.  It chipped a tooth.  His parents sued my parents.  The insurance paid.  His parents sued for fixing his tooth, plus re-fixing it for his lifetime every 15 years.  But my parent's insurance put the money into a trust that his parents could not access.  The Trust could only be used it for dental services.  At school he said his parents were mad--not enough $ plus they did not get it and they have to take him to the dentist for the rest of his life.  I said, "really when you are 40 years old your parents will drive you to the dentist for a tiny chip to be repaired?"  So his parents saw a payday, but got much less.

    1Reply
  • Account Closed
    Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
    6y

    Myself, no but I have only had 12 or so rentals at one time. So not too statistically significant. My PM on the other hand manages several hundred doors for 10 years and even he says he has never had an owner sued with the exception of the odd small claim on deposit. So Ive always thought LLC for lawsuit protection is not really necessary as long has you have some umbrella insurance which is cheap.

    0Reply
  • Kevin Manz
    HVAC Tech · Fort Wayne, IN · Member since 2015 · 423 posts · 223 votes
    6y

    @Nina Ibrahimbegovic Hello, they did sue me, they just did not win. In my lease, it does state that they are required to carry renters insurance, but it also states, that tenants cannot hold the landlord responsible for fires, and a few other disasters also.

    0Reply
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