If you own a rental property, you probably know that not everything will always work in your favor. Many rental property owners are vulnerable to liability risks, such as tenant injuries and damage to property.
To help protect yourself and your assets, here are a few strategies you can use to limit your liability as a rental property owner.
1. Have Solid Documentation
Rental agreements and contracts are key documents that need to be in place for both you and your tenant. These documents should include a clear description of the rental property, the tenant's rights and responsibilities, the lease terms, and any other relevant clauses.
An up-to-date written agreement can help protect your interests and limit potential liability. A contract helps clarify what the tenant is responsible for and ensures that both you and the tenant are accountable for your obligations.
You can even have a written document with a set of rules and regulations for your rental property as a way to limit liability. This document should include topics such as noise levels, pet ownership, smoking policy, and any other rules you want to enforce.
If you inform the tenant of any potential risks and they agree to the terms, they're less likely to come back at a later date and claim that you were negligent.
2. Conduct Thorough Background Checks
Before you rent out a property, you need to conduct background checks on potential tenants. You'll have to run credit and criminal background checks, as well as verify rental histories.
You don't want to deal with the headache of a tenant who skips out on rent or engages in disruptive activity. A good understanding of your tenant's background will give you a better idea of how they may treat your property and how well they'll handle their financial responsibilities.
In addition, you may also have to screen any maintenance and repair contractors you employ to work on your property. Make sure to look into the contractor's licenses and insurance policies, as well as their reputation in the industry. This due diligence is a huge step, especially if you want to ensure a secure living environment for all tenants.
You can hire a property management firm to take care of this for you as you focus on other important tasks.
3. Ensure Your Rental Property Is Safe for Tenants
Another way to avoid potential liability issues is to make sure your rental property is up to code and in compliance with local laws. You should schedule regular property inspections and make sure that everything is in working order.
Inspections help you identify any potential problems before they become bigger issues and prevent accidents or injuries that faulty structures might cause. For example, if you have balconies or decks, inspect them often for any signs of rotting wood or loose railings. These issues can quickly become a major safety hazard for anyone who steps onto the property.
Additionally, make sure that all smoke detectors and carbon monoxide detectors are in perfect condition. The plan is to avoid any liability issues due to an incident that you can prevent with a proper functional safety device.
Finally, always inform tenants of any safety protocols they should follow while they live in your rental property. Inform them about sprinkler systems, fire exits, and any other safety measures available to ensure everyone's well-being.
Contact a property management service for more advice or info.
Searching for a home a hundred miles away from where I was previously living was hard. There was no way for us to take a trip up to see every single house that we found online to see first-hand the condition that it was in and how big it truly was. I had to find a real estate agent that I could trust to help us find several houses to make a trip up to see in a single day. I created this blog after going through the buying process and making the move. It is my hope that if you are buying a new home far from your current one, that the tips here will help to make it an easy transaction for you.