Are you keeping up with risk management at your vacation rental?

Question

I sure hope so.  Lawyers are lurking.

https://www.carolinaaccidentat...

A small nugget from the website:

"In North Carolina, vacation property owners and rental management companies have a duty to keep their rental homes, condos, decks, and properties in a safe and habitable condition to avoid injury to their renters."

While we all hopefully have insurance on our properties, if the court determines that the owner was guilty of "gross negligence", all bets are off on the insurance company paying the claim.  This, of course, depends on the specific state.

Let's talk about gross negligence:

Gross negligence is a lack of care that demonstrates reckless disregard for the safety or lives of others. It is extreme indifference to or reckless disregard for the safety of others. Gross negligence is more than simple carelessness or failure to act. It is willful behavior done with extreme disregard for the health and safety of others. It is conduct likely to cause foreseeable harm.

Not consistently monitoring your property for risk management issues could easily rise to the level of gross negligence in court. Furthermore, a rental agreement that waives all of your responsibility to provide safe lodging will not hold up in court.

Some areas that we should be continuously monitoring at our properties include:

1.  Stair and rail condition

2.  Proximity of cooking grills to combustible materials (wood railings, etc.)

3.  Hot tub clean-up procedures and documentation thereof.

4.  Uneven walking surfaces.

5.  Showers without grab bars.

6.  Insect infestations/nests (wasps, bees, yellow jackets, ants)

7.  Rainwater control (guttering)

8.  Lighting for arriving and departing guests

9.  Loose carpeting.

10. Inadequate height of loft rail/too much spacing between railing

11.  Checking operations of smoke alarms/carbon monoxide alarms, and fire extinguisher.

Managing your risk is the most important aspect of vacation rental ownership, because the potential financial risks to you are almost unlimited.

John Underwood · Answer

Great info.

Waiting till a tenant tells you there is a big problem at your vacation rental is not a great way to run your business. You should be proactive about keeping up your property.

Collin Hays · Answer

Typically, topics like this aren't viewed, nor commented on, much.  The most popular topic is "how much money I can make airbnb'ing."

Everyone wants the Range Rover.  No one wants the maintenance.

Michael Baum · Answer

I sure do! The only mention of something creaky was a loose step on the stairs up to the main deck. Went over and rescrewed them all with fresh weight bearing screws. So far that is it. I am very proactive.

Collin Hays · Answer

Good thoughts.  We had a slip-and-fall claim (broken leg) three years ago at one of our homeowner's properties on some "wet, slippery steps".  Yes, we routinely checked the property, yes, the homeowner followed our instructions, and yes, our insurance company paid $250K on the claim anyway.

But the fact that we could demonstrate our own due diligence very likely shielded us from a significantly larger payout.

Jerry W. · Answer

A couple of other things to worry about if you don't have enough.  Violations of code, like not having GFCI outlets on plug ins near the sinks, tubs or showers, not having licensed professionals do work on electrical, plumbing or heating.  There was a horrible case awhile back where improper venting of the furnace killed a doctor and injured the wife pretty badly.  I think damages came to about $12 million.  Way over even my umbrella policy.  Had a licensed plumber done the work it would have probably been able to be defended against and the plumber's insurance would have taken the brunt of it.  How about not having a licensed contractor and having workers not on workman's comp working on your property and getting injured.  Now you have a guy with a $50k hospital bill out of work a few months, and they sue everyone, the land owner, the guy who hired them, etc.  Finally just plain slip and fall litigation.  Many times your insurance will pick those costs up, but having documentation of having your property reviewed and maintenance done can be incredibly helpful.  How many of you have records showing how you respond to and fix problems you hear about.  A colleague of mine was sued recently because a guest of his tenant fell when a railing was broken and the guy fell off the porch.  Turns out they claimed they had told him for months about the bad railing but the LL ignored it.  However the LL showed a list of every complaint the tenant had made and how quickly it was fixed.  There was never a complaint about the railing, and he had proof.  He made them put any complaint in writing and kept a record of the complaint and the repair.  Later evidence from the hospital eventually showed that guest was quite intoxicated, and some injuries were not consistent with a fall but of a fight.

Just some random thoughts from actual cases I have read about or heard about from first parties.

Paul Sandhu · Answer

I keep defensive weapons by the front door of some of my STRs for use by the tenants.  I live in a rough town.  My tenants are rough too.

Scott E. · Answer

Great topic. This list should be reviewed by anybody thinking about becoming an airbnb host!

I've owned several airbnbs over the years and I've stayed at dozens of airbnbs. Not enough people are thinking about these risks.

Are you keeping up with risk management at your vacation rental?

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