All Forum Posts by: John D.

Hi!

My partners and I are looking for some assistance with liability protection in the Lehigh Valley in PA. We manage around 30 units through our PM company which is also located in the Lehigh Valley. 

Does anyone have recommendations for a PA based attorney that can help us with contract language for our PM company? Additionally, we have questions about liability between the PM company and the home owner policies that we hold. 

Any recommendations are appreciated! 

Hi all,

We are looking to invest in a few SFRs in PA and we will be doing this through a multi member LLC. We need help from an attorney to create an operating agreement between 3 friends as members. Two members will be the managing members and also providing capital, and one member will strictly be providing capital.

We would like to put a waterfall structure in place for any money distributions, including preferential return on cash yield, and an IRR hurdle for liquidity events, etc. and we would like all this to be clearly spelled out in the operating agreement.

Which type of lawyer should we work with to create this operating agreement and does anybody have any good referrals for attorneys who are good with this type of work in the PA area?

Thanks for the help!

@Victor Lee Yes that is exactly it. We want to know how best to identify those problems with the property which insurance companies are going to take issue with. We want to find these items before closing so that we can ask for a credit.

Standard property inspections tend to call out all sorts of items, but do not highlight insurance issues very well. We are wondering what strategies other investors ustoat identify insurer specific problems with a property prior to closing on the property.

Hi everyone!

I have a question about insurance inspectors. 

We recently had a case where we purchased a new SFR property and we had a clear CO from the local authority. We conducted a home inspection as part of our due diligence process, and the home inspectors turned up a few items that would need attention on the property, but nothing alarming and nothing that demanded an immediate renovation.

However, shortly after we insured the property, the insurer sent an inspector to the property who identified a variety of issues that they were not happy to insure us on without having these issues remediated and they issued a notice to cancel insurance. 

We are working through this as we speak, but my question is how do we address issues like this moving forward with new property acquisition?

How do other investors successfully identify issues with a property prior to closing, which insurance companies specifically, are likely to have a problem with?

Thanks!

@Drew Sygit and @David Gotsill

Thank you! This is all great information and an interesting discussion!

I think the tricky part of this whole thing is that the "agent" is a third party sub contractor and so as far as I can tell, will likely not be included in the PM company E&O insurance.

Therefore we wanted our contract with our third party agent to require them to carry insurance (to protect them) while also indemnifying the PM company in the case that there is some gross negligence on the agents part (such as harassment) because PM company insurance wouldn’t cover it.

Ultimately we are trying to create a situation where everyone is protected.

Thank you @Nino G.! This is the first contract of this type that we are putting together, so this helps a lot! We definitely want a fair contract while ensuring that we have correct protections in place. We are also going to obtain insurance for the PM company as well, which should be another link in the chain of protection. Thank you for the help!

@Victor Lee Yes that is exactly correct! We have contracted a third party person to perform some PM duties such as interfacing with tenants and coordinating repair work on our units. 

@Vidit S. Yes we are using the PM company to manage only our own properties. We do not manage properties for other investors. So the contractors that we will hire through our PM company will only be doing work on properties that we also own.

Hi everyone! 

I am drafting a contract agreement between my property management company and a new contractor who will be responsible for some of the day to day runnings of the company such as working with tenants who have questions and ensuring rent is paid on time, etc. The agreement requires the contractor to have adequate liability insurance. 

However, I am curious about how liability is shifted around (if at all) in a situation with a lawsuit against my PM company, if the lawsuit is regarding something that the contractor did or said. 

For example, let's say this contractor is dealing with tenants and starts to harass a particular tenant for not paying rent. The tenant then takes a lawsuit against my PM company for harassment. Now, the contract agreement between my PM company and the contractor specifically says that the contractor will hold adequate liability insurance for their duties as a contractor and that they will indemnify and hold my PM company harmless in the case of a lawsuit resulting from work performed as part of their duties outlined in the agreement. 

But how does this hold up in court?  The tenant doesn't know about this contract agreement and may not even know that this person was a contractor and not a direct employee of my PM company. 

Does the signed agreement I have with this contractor shift the liability to them in the court room, and are they now responsible to pay damages (if the judgement is in favor of the tenant) even though they were not named in the lawsuit directly? Or does my PM company have to pay out first and then we have to go after the contractor separately to recoup the money?

Thanks for the help!