Pets & Liability - Smart or avoid?

Question

We have half a dozen rental units (homes & townhomes). We have generally prohibited allowing pets. However, I see many postings saying that it can be a wise strategy to allow them in rentals.

We were recently weighing our options, and so I started with a conversation with my insurance agent. She strongly cautions against allowing pets because of liability. Obviously we can exclude the prohibited dog list. However, if anything happens, she cautions that our policy likely won't be renewed after the incident.

So, for those of you who allow pets:

-What is your thinking on these issues?

-How do you address liability & increased risk?

-What sort of language do you use in your lease?

Greg M. · Answer

I allow pets in all my units and I price it into the rent. It's stupid not to. If you say no pets, they just show up with an ESA. You can't do anything then.

Lots of landlords think that if they allow an animal on the property and it bites someone they are going to be liable. This is just not true for most locations. Having a pet is a normal and reasonable request of a tenant. The landlord would have to have known that the specific animal had a history of being vicious and they had the ability to remove the animal, but failed to do so.

And BTW, your insurance policy probably won't be renewed after any incident. It's statistics. Statistically speaking, a person with one claim is more likely to have a second claim than a person with no claims. This is true regardless of you being found at fault or not at fault.

Michael Peters · Answer

Allowing pets can be a great boast to your marketing and potential tenant pool since roughly 70% of renters have a cat/dog.  It is definitely a risk but can be offset by an additional deposit, a monthly pet fee, and pet restrictions on size or breed.  Make sure to check on your towns local ordinances which may require the pets be registered or ban certain breeds.  I would caution against allowing them in multi-unit properties since this brings another whole list of complications and possible issues.  If a dog barks while the owner is away at a single family its typically not a big deal.  Not so much in a townhome or apartment.

I currently charge a $350 pet deposit and $35/month pet fee.  I would browse the local PM sites to see what the average rate is for your area.  Years ago I payed $100/month in the same area so it can very based on your tenant.  Disclaimer I was young, dumb, and was flush with recent college graduate money.

I would create a separate a pet addendum to your lease.  We ensure that it is clear that a pet is a privilege, not a right, and failure to maintain the tenants end of the bargain will result in the pet being asked to leave.  The pets presence can't hinder the enjoyment of others in the community "ie barking".  They must keep them leased when outside (if no fence), clean up droppings, immediate notify us of any damages and make restitution on repairs immediately (this is deducted prior to rent), and the tenant agrees to cover any pest mitigation caused as a result of the pets presence.  Finally, the tenant agrees to provide proof of professional carpet cleaning at the end of their tenancy.  If we have to arrange this there is a 20% upcharge on the service.

To help out on the liability side we require current vet records, city licensing, and wear tags at all times.  You could take it a step further and require a Pet Liability Policy as a rider to Pet Insurance.  If you do decide to pursue this route run your rules through your insurance carrier to make sure you don't have any surprises.

Finally as a general rule of thumb I do not allow dogs under 1 year and 2 pet limit per property.  The only pets allowed at the property are those listed on the lease.  If a tenant brings a pet into the property and then asks  or lies at any point the pet is gone.  No exceptions.  In large I find pet owners to be more responsible and take better care of the property then those without.  I had 84 move outs in 2019 with pets and we had to replace carpets in only 4.

Account Closed · Answer

Well said.  I'd just add that I would limit the size of the animal to under 25 pounds.  If a 25 pound dog attacks someone, they aren't likely to do major damage.  Your tenant pool will increase tremendously, so you'll be able to raise your other criteria like credit score, etc. I'd also limit aquarium size.  A reasonable size for someone into fish is 30 gallons.  Anything smaller is too small for an enthusiast and they may just fudge.  And then add requirement for renter's insurance.

Nathan Gesner · Answer

Just to piggy-back on what others have said, pets are a definite YES!

• About 60% of all renters have at least one pet. This opens you up to a bigger market of good renters
• Pet owners will pay more to keep their pet which means more money in your pocket. Typical charge is $25 - $50 per pet, per month. Do some shopping around and see what others are charging/paying in your market
• Pet owners tend to stay longer because it's hard to find good pet-friendly rentals

Pets do increase risk so you have to figure out ways to mitigate the risk.

• Screen the animals. I personally require a recent picture of the animal so the tenant can't swap their toy poodle for a Pit Bull, current vet records, animal must be current on shots, etc. Use a service like petscreening.com to help you (free to Landlords)Limit the number of pets. My limit is one animal in an apartment and two in a single-family. Consider an increasing fee for additional pets ($30 for first pet, $50 for the second)
• Charge more for larger animals. I charge $30 for animals under 40 pounds and $50 for animals over 40 pounds.
• Require Tenant carry pet liability insurance. There are companies that provide pet-specific insurance that will cover bites, pet damage, etc. NOTE: you should require your tenant to add you as "additional insured" or "additional interest" on the liability policy. This will force the insurer to notify you if the policy is ever changed or canceled and make it easier for you to track. It will also ensure you are protected under the Tenant's policy in case of a lawsuit.

Just a few tips. Animals increase risk but there are ways to mitigate that risk and monetize the animal, resulting in greater piece of mind and bigger pockets!

Greg M. · Answer

Additional interest NOT additional insured. They are extremely different. The first allows you to file a claim. The second can prevent you from filing a claim.

Princesa Hansen · Answer

Thank you all for awesome feedback. It's detailed and very helpful.

On the renter's insurance policy, do you require yourself to be named as "additionally insured" or as an "interested party"?

Jonathan Taylor Smith · Answer

@Princesa Hansen - I don't allow pets in all of my properties, but for those I do (like the ones without or having little carpet) - I charge a non-refundable one-time pet fee and a monthly additional pet rent to cover the additional wear & tear on the property, plus the cost of pet liability rider on my insurance policy. But if the tenant gets their own renter's insurance including pet liability, I discount the pet rent. So I'm covered as far as liability goes, I get a little more rental income, and the tenant becomes less likely to move.

Pets & Liability - Smart or avoid?

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