5 Ways to Minimize Liability at Your Long Island Rental Property
Becoming a landlord can be lucrative, but a single lawsuit could wipe out all your profits and put you out of business for good. This is true even if you have a great insurance policy. The damages on any one claim can vastly outstrip your coverage limits.
Landlords who don’t take the appropriate steps to minimize liability are playing with fire.
Set up an LLC.
Setting up an LLC to hold your rental properties protects your personal assets from lawsuits. Your company becomes the entity in question when there’s a dispute, rather than you personally.
You will of course have to make every effort to run your rental business as an actual business. Using business funds to pay for personal expenses, for example, can “pierce the corporate veil,” which means you could lose the protection of the LLC.
Put every tenant on a lease.
There are a surprising number of renters on Long Island who never sign a lease. But when you don’t have your tenants sign a lease you could be liable for their bad behavior, or the bad behavior of their guests.
Leases give you a number of legal protections. They also give you the ability to protect your property. For example, if you don’t have a lease and tell a renter he or she may not have a dog, and he or she gets one anyway, that person could always claim you never said that. Leases lay out the rights and responsibilities of each party in plain language and offer a starting point for resolving disputes.
Perform regular maintenance.
Landlords have a duty to keep their properties safe. If you fail to do so, and a tenant injures himself or herself due to a problem you knew about or should have known about, then you are likely to lose the subsequent lawsuit.
Maintenance issues can be expensive, but there isn’t a single fix that will be as expensive as a lawsuit.
Address snow and ice quickly.
You’ve got to remain aware of the weather as a Long Island landlord. Snow and ice present significant slip and fall hazards.
Make sure you have someone out to shovel the walks and to address the issue of slippery interior surfaces early in the morning after a snowfall, preferably before the bulk of your tenants start slipping out to work.
Stay on top of what’s going on.
In some cases, you can be held liable for criminal activity on your property. While you’re not required to take steps to protect against generalized criminal activity, you may be liable for ignoring activity you either knew about or should have known about. If your tenants hold wild parties on a regular basis or conduct criminal activity inside of your unit you could be held accountable.
It’s a good idea to take certain steps which can demonstrate you’ve done your duty. For example, installing security lighting, trimming your landscape, installing security cameras and alarms, adding intercom systems, and hiring a doorman can all show you take tenant security seriously. Having a solid key control policy in place is also extremely helpful.
It’s all about duty of care.
Shielding yourself from liability is about being able to demonstrate that you’ve gone to all reasonable lengths to keep your tenants safe. When in doubt, err on the side of safety.