Basement Egress Liability

[Fred Jury]

Hello All! Looking at a single family home rental property in Columbus, OH. The property already has a long term tenant. However, they are using the basement rooms as bedrooms with out egress windows. I have found plenty on BP about turning basement well windows into egress windows, but my question is really more of a liability question. How do I either prevent the tenant from using the house in this way? Or make sure I'm covered from a liability standpoint if they do continue to use it this way? Is it as simple as having them sign something as part of the mangement contract? Looking for a solution to this specific issue, as I already have general asset protection using both LLC and insurance strategies. Thanks in advance!

[Thomas S.]

You will be held liable if someone is killed or injured in a fire so your only options are to either make the basement legal or lock it off so the tenants can not use it.

[Jeff Keller]

You should talk to an attorney to get specific advice about the likely consequences of anything you do. In general you can not get someone to sign an agreement to remove you from liability for an unsafe home. Trying to do that would probably create instant problems and liability.

If you have them sign an agreement stating that the basement is not to, and will not be used for sleeping quarters, it is possible that you wouldn't be held liable for them misusing your property. However you likely would be held responsible for allowing open and flagrant misuse leading to unsafe conditions.

[Thomas S.]

The reality is that if you have bedrooms in the basement without legal egress windows you will be held liable regardless of any agreement due to the simple fact that they are present and illegal.

You will not find a way around liability outside of physically preventing their use. If they are there, they could be used, you will be liable. 

[Fred Jury]

There are a ton of SFH rentals out there that would potentially have this same issue. Just curious how other investors are handling this concern?

[Deanna McCormick]

We owned a 5 plex had nice basement and we were planning on adding washer / dryer,, city said we needed a egress for additional exit,, so we just plain locked up the basement and tenants could not use it. No Storage no nothing.. 

Maybe time to contact your agent and see what your choices are for that area of the building. It may be that if it is unfinished,,

Limit your occupancy.. number of people per bedroom. NOT TO EXCEED. 

[Thomas S.]

If your insurance carrier finds out you have illegal bedrooms in the basement that tenants have access to they will likely cancel your coverage.

Other investors cross their fingers and hope nothing bad happens.

[Mike Cumbie]

Hi @Fred Jury,

My recommendation is to pay $1500-$2500 to have one permitted and added. Then add the basement bedroom to the total rent price. So if it was listed as a 3 bedroom make it a 4 and pull in the extra money. When it comes to rentals I recommend doing it right. It will save you a ton later, even if nothing bad happens a report will cause you unneeded trouble.

[Ed W.]

@Fred Jury You've gotten pretty good advice from the contributors to this thread. You're fooling yourself if you believe an LCC and insurance are going to help in this matter. I seriously doubt the insurer will pay the claim because this is illegal and probably specifically excluded from the contract. The LLC may help a little if it is and has been properly created and properly administered but if someone dies or gets a serious injury, one way or another the LLC won't keep you completely out of harm's way.

I've been in this situation numerous times but had the luxury of having the property be local to me.  You're hours away.  It's simple for me - I sit down and talk to the tenants prior to closing (this is with the seller's permission via my contract) and work it out (or not) that the problem will be gone before I close.  The tenants can clean up their act prior to close or the seller can evict them (though it might take 2 or 3 months) or work through code enforcement (slight danger but better than the current circumstance) to effect the change.  In all cases, consultation with a knowledgeable landlord-tenant attorney is highly advisable before doing anything.  Bottom line, I don't close till that major liability is gone.  Far too much risk.  Any liability that can kill people and or land you on the 6 o'clock news, in jail (whether you are guilty or not), and penniless is simply not worth the risk.

[Fred Jury]

Thank you all for your advice. I am working through this liability issue with the seller and am asking them to add an egress window as part of the request to remedy. I have some decent reasoning for this request, as the property was advertised as 3 bedroom and legally it is only a 2 bedroom. We'll see where it goes. Thanks again.