Applicant runs a daycare?

[Joe P.]

One of my apartments has an opening, and I have a solid applicant (family). Dad has a job, mom runs a licensed daycare and they were expecting to use the apartment to continue to do so. It obviously adds income to their bottom line and they've provided a State of NJ registration/license to operate that appears good until 2022.

Anyone aware of any laws, issues, concerns with allowing this to operate? I have boilerplate language in my leases that say you cannot operate a business, but frankly this is a business that helps the tenant with their financial situation. I'm also wondering how this might affect my insurance, or increased liability on my part, in the event things are not hunky-dory for any reason.

Would welcome other NJ landlord/owner thoughts, thanks!

[Mike McCarthy]

In most states, your property needs to be zoned for a commercial business to operate a daycare. Plus your liability increases significantly. If a kid gets seriously hurt, I can guarantee you’ll be named in the suit as well... regardless of whether it had anything to do with the premises or not.

[Richard Sherman]

@Joe P. NO way I would accept that.  The possible liability is insane (at least I assume) ask your insurance provider and see if they flip out or not, that is a good indication of risk.  GET IT ADDED AS AN APPROVED USE on your policy if you do it!

[Theresa Harris]

Your insurance company is unlikely to cover you for any tenant who runs a business in your property.

[Joe P.]

Thanks all, appreciate the advice. Also leaning towards a hard no, but checking with my insurance company; I have a feeling its a no from them too. It's a shame, because they seem like great applicants in an otherwise sea of tough ones.

Beyond the insurance ramifications, also seems like a legal and maintenance nightmare.

[Ryan Ingram]

@Joe P.

I’m an insurance agent, I wouldn’t be a huge fan of this set up in a multi family, however, I’d probably be completely ok with it if it was one of my tenants in a single family home.

People run daycares out of their home a good bit, I wouldn’t say this is uncommon. There are a lot of insurance options out there for this both on the admitted and non admitted markets.

If you go through with this, it is imperative that you make sure they have the appropriate business insurance AND you are listed as an additional insured (not additional interest, interested party, or anything else). This will allow you coverage under their policy in the event of a claim.

I’d also require that their insurance agent send you a certificate of liability insurance on a monthly basis. The last thing you want is for the insurance to accidentally lapse for nonpayment and not have any coverage....for either party. This is seemingly excessive, but you can’t be too careful :)

[Account Closed]

@Joe P.

0% chance I would allow this. None. Liability is a concern but also kids are hard on property. Stuff 6 of them in a room and you’ll have 5 years damage before the spring season comes. Noise. Many people up and down the halls. People double parking at 5pm etc etc.

No dice. Take the grubby little booger catchers elsewhere

[Joe P.]

Thanks @Ryan Ingram and @Account Closed - the property is a duplex (the upstairs) so given everything you've said both with insurance and maintenance, its a non-starter. I'm calling to confirm this with my insurance company in the AM (they are fantastic candidates, otherwise I wouldn't even consider it) just to get the lay of the land. If somehow insurance allows it, I'll follow up with a lawyer since I am concerned about liability. In other words...lots of hoops to walk through for this to even become a reality. But, no skin off my back to follow the path wherever it leads. Thanks for your comments!

[Account Closed]

@Joe P. My neighbours sold their house 6 years ago, new ones have an unlicensed daycare... probably 20 times I’ve had my dogs in the backyard (they’re inside dogs mainly) and had to go get them because kids are sticking their fingers through the fence etc. And this is in winter when it’s -30C! 3 year olds unsupervised... instantly my property is worth probably $20k less if I were to list and they show it during the day and the kids are running wild outside.