Insurance which covers landlords from tenant's lawsuits

[Elad Messing]

Hi all,

Are you familiar with an insurance product which covers landlords against legal threats and lawsuits from tenants, which are _not_ related to injuries and liability?

I recently received a demand letter from a former tenant's lawyer, making claims and requesting payments for rental months during which the tenant wasnt happy.

I then learned that my lender's DP-1 policy doesnt cover such cases and wouldnt cover costs related to it (i.e. legal fees).

It seems, many DP policies cover injuries and property damage, but not matters related to the rental agreement. Umbrella policies (which we have) feed from the primary insurance (the DP) - so wouldnt cover as well.

I wonder if any of you know if there exists an insurance product which cover such cases.

Thanks

Elad

[Account Closed]

Originally posted by @Elad Messing:

@Jason Bott thanks for the reply. The letter mostly focuses on issues related to damages in the house which reduced the quality of life in it (i.e. AC breaking down for a few days) which I am guessing could speak towards breach-of-contract allegations ? 

 Elad, is the property in CA?  I know a lot of law, and specifically CA law regarding landlord-tenant law, and I don't think they have a leg to stand on, if their complaints are related to quality of life that doesn't include habitability issues.  Air conditioning is not required in CA.  At all.  For one thing.  To win a lawsuit, they have to have law to back up what they say they should get paid for.  You don't have to ensure they have great quality of life.  You have to provide a unit that meets habitability in CA.  That means working plumbing, heat, pest-free, working stove, etc.  Here's the law:

http://www.dca.ca.gov/publications/legal_guides/lt...

Plus, I bet your lease has language that says the tenant was required to let you know if there were any maintenance issues.  This is standard language.  So, if they didn't let you know about habitability problems, how would you know about them?

The law also says that a plaintiff can only sue you for their actual out of pocket losses.  So, in a tenant's case, that would mean rent.  If you didn't provide a unit that was habitable, according to the law's definition, then they might be justified in asking for you to reimburse their rent on those days.

BUT, they also have to let you know about any problems, and give you time to fix them that is reasonable.

I'm betting you don't owe them a dime.

This is all assuming that there are no issues regarding their security deposit, which you didn't bring up.

I think it's odd that they didn't just sue you in small claims court.  My guess, is this lawyer is a family friend, and they are trying to appease these people by sending you a letter, on some odd chance you might actually just fork over some money.

But, in the real world, what would happen if you just ignore this letter?

They would have to then pay this attorney a retainer that would be probably at least a couple thousand dollars.  This lawyer would have to advise them of the actual merits of their case and the odds of them winning it.  And let them know that you could counter-sue them, and that they could end up paying your court costs if they lose.

So, what are the odds these guys will actually go through with suing you?  About zero.

I'd ignore them completely.  If they actually file a suit, then you could deal with it.  If the lawyer is calling, I'd just ignore the calls and let them all go to voicemail.  I used to work for lawyers and that's what they'd do - just ignore things until or unless they couldn't.  

As far as legal insurance, it would probably cost more than just dealing with something if/when it ever happened.  As far as I know, unless it's an actual insurance claim where the insurance company would use their own attorneys - like fighting a claim on your behalf against a tenant who deliberately set a fire, that sort of thing - you'd have to have separate legal insurance, which I don't think would be cost-effective to buy for a landlord.