As a landlord with rental properties, you have responsibilities and risks. It is important for you to provide a safe and habitable home for your tenants and to protect yourself against risks as far as possible. Problems can arise if you’re aware of the risks and yet fail to take action. As long as you take various measures to protect yourself, you won’t have to worry about all the “what ifs.”
Protect Yourself From Lawsuits
Properly screen tenants: As a landlord, you need to properly screen tenants to ensure that only well-qualified tenants stay in your property. You can reject applicants based on poor credit history, negative references etc., but you need to make sure you comply with anti-discrimination laws, or you could find yourself involved in a lawsuit. The Fair Housing Act prohibits you from discriminating against several classes of people when screening tenants.
Have a strong, legal lease agreement in place: A strong legal lease agreement forms the basis of protecting yourself legally as a landlord. It may be worth having a lawyer look over the lease agreement to make sure it complies with federal, state and local laws.
Property Managers at Evernest, Mynd and APM manage rental properties in Denver for you. You may not be aware of all the risks, but they have a good understanding of what’s involved in selecting the right tenants, avoiding fair housing violations etc.
Protect Your Assets From Lawsuits
Create an LLC: If you want to protect your assets from lawsuits, it’s best to create a limited liability company (LLC). This means that if tenants sue you, your personal assets are protected.
Take out landlord insurance: You can add an extension to your home insurance, but this will only give you minimum protection. It is worth taking out a landlord insurance policy, although it is more expensive than the average cost of homeowners insurance. It increases your dwelling coverage so you can pay for repairs if the dwelling is damaged. It also covers other structures like detached garages, sheds and fences. It usually also covers damage to equipment on the property used for maintenance purposes.
Limit Your Liability Exposure
If you know that there is a particular risk involved with the property, you need to do everything you can to lessen it. You may be held liable if you are aware of issues like faulty wiring issues, water damage etc., and you do nothing about them.
The liability portion of your landlord insurance policy can help you to pay if a tenant is injured on your rental property and you are found responsible. For example, a tenant may fall down the stairs because you failed to maintain the railings. You could be held liable for medical, legal and other costs.
Alternative Accommodation Cover
As a landlord, you may state in your lease agreement that you will provide alternative accommodation for tenants if the property becomes uninhabitable. Alternative accommodation may be covered as part of your landlord insurance policy. The policy will cover the costs if it’s for one of the reasons stated in it, such as a fire or a flood. It’s a good idea to check the terms and conditions of the cover and its limits. There is usually a maximum amount you can claim for alternative accommodation costs. The type of alternative accommodation is likely to depend on the nature of the claim.
Emergency Assistance Cover
If you get a call from a tenant that a pipe has burst, it can take time to arrange for an emergency plumber, and it could be costly. In the meantime, your tenants’ possessions and your property are getting damaged. This is why you need emergency assistance coverage.
This type of cover is usually an optional extra on a landlord insurance policy. It will cover various emergencies such as vermin infestations, water mains failure, heating failure, blocked drains and flooding. It doesn’t include general wear and tear or routine maintenance. It usually provides help in emergencies 24/7 all year round, so it can help with fixing an issue quickly and reducing damage.
Loss Of Rent Cover
It is important to find out if loss of rent cover is included in your landlord policy. Some insurers offer it separately. This type of cover will protect you from financial loss related to rental income if your property is uninhabitable for various reasons listed in the policy, such as a natural disaster. It may also include coverage related to the failure of a tenant to pay rent.
As a landlord, you face certain risks that come with renting out properties to tenants. There are various ways you can protect yourself against risks such as lawsuits. You can avoid discrimination when screening tenants, limit your liability exposure and take out landlord insurance.