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12 Ways to Reduce Liability on a Multifamily Property

shutterstock_215430139The risks of lawsuit are great on a multifamily property.  There are a lot of ways that you can be held liable for other people’s mistakes.  It’s time to protect yourself.  There are a lot of easy ways to significantly reduce your liability when owning and managing an investment property.  Here are just some suggestions below:

shutterstock_2108890541. Don’t Allow Pets on the Premises

For some landlords, allowing pets on the premises is a risk worth taking to have happy tenants.  That said, injury and death has been known to occur due to pets being on the premises.  Although the pet is under the responsibility of the tenant, the landlord’s decision to allow the pets on the premises is considered part of the fault for the injury or death that occurs from an attack on another resident.

2. Require Renters Insurance of Tenants

If a tenant’s guest injures themselves in the tenant’s unit, the tenant is held liable, but only as long as they are able to pay.  Let’s say that you have a tenant that can barely afford rent as it is, let alone a lawsuit.  Then somebody else is going to have to take up part of that bill.  That sometimes can be the landlord’s insurance.  If you require that your tenants have renters insurance, then they will be more likely to afford any accidental damages that happen to their guest.

3. Require that Vendors Have Insurance too

There is high potential that a vendor working on your property may injure themselves and others due to the nature of their work.  Making sure that vendors are insured before working on your property will help to reduce your own liability for accidents that happen on their job.

4. Form a Limited Liability Company

LLCs are easy to form and they can help to protect your personal liability because it helps to delineate your personal assets from your corporate assets.  The idea behind this is if there is a large lawsuit, your company takes the litigation and you personally are safe.  As it is in the name, the LLC also protects the company, greatly minimizing your overall liability throughout.

5. Be Mindful of What you say

Don’t say anything to your tenants that can be used against you.  Try to stay away from small talk and don’t gossip about residents to other residents.  Show to your residents that you are intent on running your business and running it well through your professional manner and prompt responsiveness.

shutterstock_2598986216. Salting Public Walkways During Winter

Ice can be a big problem in the winter.  If somebody slips on property grounds due to ice and breaks a tailbone, they can sue you.  Salting stairs and walkways on the premises outdoors is a cheap way to protect yourself from a nasty lawsuit.

7. Post Warning Signs Next to Problem Areas

If you’re cleaning the floors, put up a prop up sign warning that you could slip and fall there.  When performing a significant repair on the premises, warning tenants ahead of time and blocking the problem area off is also beneficial.

8. Lock/Fence off Restricted Areas

If there are areas that only employees should be in, even a janitor’s closet, you should restrict access to this with a lock.  Don’t make it easy for children to get into a dangerous place.  Make it clear that residents are not supposed to go in places you don’t want them to.

9. Screen Tenants for Criminal and Terrorist Activity

Did you know that it’s against the law to harbor terrorists even when you don’t know that they are terrorists?  If damage, theft, vandalism, or violence occurs on the premises, you can still be held liable for letting them into the neighborhood.   Screening for this in your prospective tenants will make a safer neighborhood and a safer company budget.

10. Inspect, Repair, and Document Units

In between each resident that lives in your units, you should closely inspect the unit for mold, broken or damaged areas, etc.  Fix everything big or small.  You don’t want a tenant injuring themselves because you didn’t fix something.  You should take pictures before and after occupancy as proof that you took the necessary precautions to make the unit safe.

shutterstock_26131968811. Install a Fire Protection System

Install a fire alarm to warn residents of fire and a sprinkler system for when tenants illegally deactivate their fire alarms.  This way you have taken every precaution to protect tenants from the risk of fire.  Even if tenants are responsible for the fire, you’re still held liable based on the precautions you have taken to reduce the risk of fire.

12. Beef up Security

Provide adequate locks to protect residents from criminal activity.  More than one lock is not a bad thing!  For larger properties, it may be prudent to have a security guard and security system installed to give your tenants extra protection from outside threats.

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  • Anne Sadovsky

    Hi Joe. Quick comment regarding 'security'. We have long tried to avoid that word. Years ago in the Dallas area, a woman was robbed and beaten in her apartment. She won a lawsuit based on leasing consultants remark that she would be 'safe and secure on the 3rd floor." I teach these words: After Hours Patrol. Limited Access Gates, Intrusion Alarm. I would love to change "Security" deposit to damage deposit; that likely is a little extreme. I enjoy your posts.

  • Joe Killinger

    Anne Sadovsky

    thank you for this...great information

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