All Forum Posts by: Phillip S.

Question for anyone who may know the ins and outs of this. I'm in the process of doing a blanket refi on two of my properties that are owned by my LLC. The bank is setting it up as a commercial loan where the LLC is the borrower and I am the guarantor. My loan officer suggested that I can avoid the county recordation tax (approx. $1200) by doing what's called an "Indemnity Deed of Trust" (IDOT), where I basically become the legal borrower IF the entity defaults. Since the debt has not yet been incurred there is no recordation tax due. Apparently this is a loophole in Maryland law that allows people to avoid the tax. The question I have is what are the drawbacks of this, if any? One question I already asked is whether the debt can stay off my personal credit report if I go this route. Still waiting on the bank for an answer.

 If what you said is correct, then this argues for requiring tenants to have renters insurance, for situations exactly like this one where the landlord's policy might exclude it but it could be covered by the liability portion of the tenant's policy.

Thanks, I need to investigate.  Either the upstairs tub doesn't have that, or it's not working properly. 

Sorry for the dumb question, but does the chrome cover have to be off in order for the overflow drain to work?  I'm starting to wonder if the tub upstairs even has an overflow.

 Afraid so :-(

Yes that's a good point.  Deductible is $500, so wouldn't make much sense to file a claim for $700 when only $200 would be covered.  However this could have been much worse had a tenant been living downstairs.

Thanks for the comments.  I should mention that this tenant was already there when I purchased the property, and apparently the lease she signed with the previous owner didn't require her to get insurance.  Even so, something tells me the insurance agent I spoke with is flat out wrong.  Wouldn't overflow from a tub, sink, toilet, etc. be considered "sudden and accidental" which according to the language in my policy should be covered?  Should I start looking for another insurance company?

This has happened twice now in a span of less than 6 months.  The property is a duplex with a tenant living in the upstairs unit and the downstairs unit is presently vacant.  The upstairs tenant overflowed the tub (again) causing water damage to the downstairs unit.  It wasn't serious, but it still cost me nearly $700 to clean up with water and have the ceiling in the downstairs unit repaired / repainted.  Luckily there was nobody living in the downstairs unit at the time or else their contents could have been damaged.

After contacting my insurance company I was basically told that damages caused by the tenant's actions are not covered, and my only recourse would be against the tenant or the tenant's renter's insurance.  Problem is the tenant has no renter's insurance and is on a fixed income with little or no ability to pay for the damages (she's elderly and Section 8).  So what in the world do I do here?  

I suspect the tenant has gotten by with it in the past and there are other landlords in the area willing to do it just to get a paying tenant in there.

How I wish that was the case - didn't do anywhere near enough due diligence on the property or the neighborhood.  Definitely won't make that mistake again.