Tips to mitigate landlord liability exposure

[Phil Workman]

In my everyday experience interacting with landlords, I have noticed a few things that are surprising to me. Often times the smaller scale landlord/investor does not take into consideration certain liability exposures that could completely undermine their respective investments. 

One may ask, what do I mean by the above statement- As many or all of you would agree, our society is quick to litigate against each other.  Because of this I believe it is important to mitigate as much liability risk as possible. Below I want to talk about some things one should know about landlord liability and exposure: 

1) Landlords can be held responsible for injuries that occur on rented premises if it is proven that the landlord has been negligent in maintaining he property. Because of this it is important to periodically inspect the premises and document it. Many landlords I know only inspect the premises at the beginning/end of the lease term. 

2) Animals by their nature pose a big concern when it comes to landlord liability exposure. I am sure most of you are aware of this one. This is why many landlords prohibit pets or charge tenants additional money to have them on premise. If there is a lawsuit and the landlord "should have know" that the animal was potentially dangerous, the landlord can be held liable. 

3) Tenant behavior- Landlords also assume some responsibility for their tenants behavior. This obviously creates a huge liability exposure. If the landlord knows of unlawful or other behavior is happening, they have an obligation to take steps to rectify this issue- including evicting if necessary. 

Now that we've discussed some potential ways a landlord can be exposed from a liability standpoint, let's discuss a few simple ways to mitigate that exposure as much as possible.   

The first and foremost method to mitigate these exposures is to carry adequate liability coverage. Going back to my experiences on daily basis= I run into a great deal of landlords who are only carrying 100k of liability coverage on their investment properties. In my opinion, one should carry a minimum of 300k of liability per property. Ideally one should also be carrying an excess liability umbrella over all of their properties as well. 

Hopefully this provides a few helpful insights for landlords out there who may be interested in minimizing their liability exposures.