What liabilities does a landlord have and how can the landlord protect themself?

By
Real Estate Services with HomePointe Property Management, CRMC

As the owner of a rental property you could be held liable for known and unknown conditions at the property. In most cases your fire/liability insurance policy will cover you adequately. You should discuss with your insurance company the amount of recommended limits for your situation. 

                             

If you use a professional property manager,most have an indemnity clause in their management agreement that places basic liability for all acts on the owner. Insurance companies know this and most will willingly name the property manager as either additional insured or name the manager as an interested party to the policy at no extra cost. This is important to do as you want the insurance company to protect both the owner and the property manager in the unlikely event of a lawsuit.  Some insurance companies refuse to name or cover the property manager.  This is unfortunate.  The property owner can obtain insurance for the liabilities at the property, but a property manager may not be able to obtain insurance on a property they do not own.  Even if they could, most property managers base their management rates on fact that the owner provides the insurance. 

It makes sense for the owner to provide insurance, after all, the owner owns the property and has to have the coverage whether they have a professional property manager or not.  Having a property manager actually reduces the owners risk, so insurance companies are being short sighted by not covering the property manager.  Again, most do provide this coverage.

In most cases, just acting with common sense and acting quickly will lessen the likelihood of a lawsuit.

 

Posted by

Robert A. Machado, CPM, MPM

HomePointe Property Management

Sacramento, Yolo, El Dorado, and Placer Counties

We manage residential and commercial property.

916-429-1205 x 105

rmachado@HomePointe.com

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Tags:
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Rainer
60,740
David W. Bolick
Network Real Estate, Inc.
My management contracts alway had an indemnity / hold harmless clause, so either my owner/investor or their insurance one was going to be liable.  The key is to "keep from being sued"...the attornies Always win.
May 04, 2008 07:45 PM
Rainmaker
67,820
Denise Allen
Realtor@ Chesapeake, Hampton Roads
Resh Realty Group
I agree with David.  Keep the landlord from getting sued.  He needs to make sure he goes by the book.
May 04, 2008 07:56 PM
Rainmaker
251,166
Robert Machado
CPM MPM - Property Manager and Property Management - Sacramento Area
HomePointe Property Management, CRMC

David,  The Indemnity Clause is the key to preserving a property management business.  Keeping from being sued is out of anyone's control, that is the key to the legal profession.

Dennis, Even those that perform by the book get sued, there are lots of people trying to hit lottery on the backs of property managers.

May 05, 2008 12:09 AM
Rainer
60,740
David W. Bolick
Network Real Estate, Inc.
Robert, it's an "art" not being sued. I've been a Broker for 34 years and was a CPM for 20+ years and managed some 7,000 units of multifamily in about 5 states for those 20 years and never once had a lawsuit.  Came close...had only 1 discrimination complaint that was dropped and had one attempt at a suit that was never brought.  "Negotiating" at the source level of the problem and coming to an understanding and heading off trouble saves a lot of money in the longrun. I learned early on "Discretion is the better part of Valor".
May 05, 2008 05:16 AM
Rainmaker
251,166
Robert Machado
CPM MPM - Property Manager and Property Management - Sacramento Area
HomePointe Property Management, CRMC

David,  I have been in the business over 25 years and have had a handful of lawsuits.  I don't know how lawsuits  can be avoided with all the attorneys around chasing mold claims, trip and fall injuries, asbestos, fires, etc. 

We do  our best, but "It" happens.

May 07, 2008 01:17 AM
Anonymous
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Rainmaker
251,166

Robert Machado

CPM MPM - Property Manager and Property Management - Sacramento Area
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