All Forum Posts by: Michael Norris

There are some news stories about that street that I have no clue how to factor into an investment property value. Maybe it doesn't factor at all.

If it's a particularly infamous house on Seymour you may be able to set up an Airbnb for people who want to play out their kidnapping kinks.

Additional insured is more about extending liability coverage to a third party like a property manager. The manager by action or inaction could be sued directly or in addition to the property owner for a tenant or guest being injured.

There is an additional liability extension called personal injury or landlord personal injury that picks up the liability for a situation such as being sued for wrongful eviction or violating fair housing in some way. Not many carriers offer this but the one we use that has it extends that coverage to a 3rd party (property manager) as they are probably the one who did the thing getting you (property owner) sued for the fair housing or wrongful eviction. Having the personal injury coverage + additional insured naming the property manager extends that over to the PM.

Example - say the tenant calls in to the PM and says the front step or handrail on the house is broken. The message to the PM gets lost in the mix or isn't follow up on for repair and the tenant or guest gets injured by the broken step.

A plaintiff's attorney is going to name both the property owner and property manager to the suit because that's just what they do. Having the property manager named as additional insured extends coverage to the PM. However (I'm an insurance agent not an attorney) the legal wrangling of the PM not taking a necessary action could set up a situation where the insurance carrier pays then subrogates back against the PM company for their inaction so the property manager should also have appropriate general liability coverage for their business.

This next part can change by state and insurance carrier...

Being named as lienholder or mortgagee can set up the lender being involved on the payout of any damages - say there is a fire the checks cut for damage could name the insured and lender so both parties have to agree how those funds will be used.

Some carriers have a rule that if the loss amount is under a certain dollar amount the check is only cut in the owners name / if the loss exceeds a threshold (say $25k) the check is cut in both the owner and mortgagee names.

Being named as loss payee is literally that - the check is cut in your name or both the insured and your name. 

Being listed as mortgagee / lienholder on the policy will also set up a situation where the insurance carrier will send you notifications if the policy is canceled or non-renewed. They typically mail out a small post card notifying you if the policy cancels or is non-renewed.  

I hope that helps.

Contact Neal Wolf at NCCG (North Coast Consulting Group) they own this market when it comes to hard money lending and have a lot of options as well as source deals if needed

Tell them it's mandatory.

Make sure you are named as additional insured to protect your interests but also if they let the policy lapse you will get a little post card in the mail from Lexus Nexus or a similar company saying the policy is lapsed or canceled.

For those that allow pets - have them get a renters policy that does not have a dog bite or dog breed exclusion. This has saved a few of my landlords from having to claim the dog bite liability on the landlord policy EVEN IF THE DOG BITE OCCURS OFF PREMISES.

I would not recommend having your tenants get their renters policy from the same agent/company you have your landlord policy from. In a disputed claim situation your agent, who you may need to advocate on your behalf, may be stuck in between two clients - the tenant and you the landlord. 

You can say that's not fair, why would you be held liable for the dog bite etc and most people would agree with you. It doesn't matter - You as the big bad rich landlord have a target on your back and will be named to the lawsuit and your insurance carrier will rush to settle it quickly and then you'll be dealing with the long term challenges of having that claim in your insurance history. 

In the past 24 months two of my landlord clients have been saved from having to make a dog bite claim on their policy because the tenants had a renters policy that did not have the dog bite/breed exclusion. It's a real pain to enforce but it's worth it.

The majority of carriers right now have a loss rule on new business that varies but goes something like this... they will not accept your new policy if you have a loss in the last 3 or 5 years. Some of them have said the rule only applies to specific types of loss others are saying it's any paid loss. 

 We are very much in hard insurance market with most carriers having a no loss rule going back 3 to 5 years depending on the carrier. If you have any claims or some list particular claims in that time frame they will not accept new business from you.

In speaking with the product managers I've given the example of a client with 50+ locations paying over 45k per year in premium having a claim for $10,000 and would they take the total account into consideration when this client buys another property... the answer was a hard no. 

That is how tight the market has become in the last 24 months. Many carriers have ceased offering new policies or will only accept properties in very nice condition with verifiable updates to the roof, electric, hvac, and plumbing. Some carriers have up and pulled out of certain states. The ones that are in the headlines for this are Cali and Florida but it's happening everywhere. Berkshire Guard was the most competitive for 5+ unit properties in my state (Ohio) until they weren't and now just sent out letters to all their clients saying they are no longer offering coverage here at all - 100% non-renewal of the book of business. 

It's wild

The first three rules of RE - location, location...

Is there some undesirable situation near your property that is causing the issue?

You could be below market to the "average" unit in the zip code but if you're in the glide path of the airport with jets are taking off every 5 minutes, the Taco Bell parking lot lights shine right in the windows, freeway exit is two houses away, a busy fire station is nearby with sirens all night long, etc then the price may still be too high.

Are there any safety issues that could be helped with lights, cameras, etc?

Are you charging a high application fee that is turning people off?

Can you do a light survey of the people who have looked and did not submit an application to see why? No one answer is the concrete cause but if you get a few people saying it's dirty, smelly, or whatever negative feedback you may need to do some rehab.

Call the bank(s) and demand you are re-added to the bank accounts, document everything your partner has done with funds from the business account that are unrelated to the business such as buying vehicles. 

Lawyer up, talk to your accountant, and what is your realtor saying?

If this has gone on for a long time how has your accountant been able to create a K1?

You do have an accountant right?

Nothing sits on the market for a year that isn't wildly over priced, poorly marketed and/or made difficult to show.

Potential buyers have probably tried to see the place and are being denied or some sort of nonsense to make them not want to make an offer.

I bet the realtor will have some interesting info to share - or if they won't say anything to you bc their agreement is with your partner kindly share with them that the houses are in your name and the listing's need canceled immediately unless they start cooperating.

Have you laywerd up yet?

This is so ugly I can't even imagine the wild stuff that is going to come up when you start peeling back the layers.

If it was me I would aggressively trying to exit the situation like it's my full time job.

 I don't have a specific suggestion as there are so many options. I typically tell my landlords to have the tenant start with whomever does their auto insurance. You have every right to ask if the policy has dog bite / dog breed exclusions and need to spend time (unfortunately) reading the policy exclusions.

I will say that a certain insurance company that may or may not have a lizard as the mascot brokers out their renters and home policies with other companies and some of those companies have a dog breed exclusion and some of the companies they broker it to do not have a dog breed exclusion. One of the policies we saw had the breed exclusion that said something like... the breed exclusion applies if the dog breed is declared a dangerous breed in that city, state, etc or any surrounding municipality.

Literally the city next to the one in question has a dog breed ban that they don't really enforce but as far as I'm concerned would open the door to a dog bite liability claim being denied. A sales rep from that company was saying not to worry about it they won't enforce it and they have seen claims paid out... all well and good but what is in writing is what matters when the lawsuit gets filed.

>>I am NOT an attorney and am NOT giving legal advice 

>>Consult your own legal counsel for specific advice

I have to say that

Danny did a good job on what it is and why - one other thing all landlords and PM's need to consider.

Do you allow pets? 

Even if you don't does the tenant have one anyway?

Do you require the tenants to have renters insurance AND do you make sure the renters policy does not have a dog bite / dog breed exclusion?

Situation: Tenant is at the local park (not on site at the rental property) and the dog bites someone... are you aware the property owner will be named in the lawsuit?

The tenant having renters insurance (that does not have a dog bite / dog breed exclusion) is your first line of defense against this situation.

Having the property manager named as additional insured on the renters policy brings that layer of protection from the renters policy over to the property manager.

BUT... if you as property manager do not enforce the tenant having a renters policy (without dog bite / dog breed exclusions) it opens the property owner up to a lawsuit from a dog bite as well as your property management company. 

It's all fun and games until fido takes a bite out of someone.

Any company insuring your properties without an inspection most likely has a clause buried deep in their policy allowing them to deny claims for conditions found on the property that do not meet their UW standards and they will deny you claim based on "the house should have not been insured with them anyway".

Although the inspections can be annoying look at it from the other side.

You pay them 1000 to 3000 a year to insure a rental property where they agree to pay out possibly hundreds of thousands of dollars if it burns down or up to 1 million if a tenant slips on a bananna peel and falls down the steps or the tenants dog bites someone and since you didn't enforce the tenant having their own renters policy to cover the dog bite the landlord's policy is paying out.

The insurance company is very much like your rich uncle backing your business venture - you run the business, he takes on the financial risk from disasters, and doesn't even get a say in who lives in the property.

Your rich uncle asking you to fix the steps, put up a handrail, etc which is in your and his best interest long term.

Do you really want to rent out a property with a busted front step and a bad roof that is going to leak sooner than later?