Landlord Liability : ezLandlordForms

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John C

started a topic over 11 years ago

I have a mulit-unit building in Chicago, Il. Recently a pipe broke in the ceiling of a 1st floor unit and caused major water damage. I have had the repairs completed but the tenant is expecting me to pay for his stereo and furniture that were damaged. Am I liable?

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Dawn A

said over 11 years ago

What was the cause of the pipe breaking? What does the insurance say?

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Bob R

said over 11 years ago

I would say yes. The tenant had nothing to due with the problem. Your insurance should cover the damages, depending on the type of coverage you purchased. ? -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” However, it is up to you to become familiar with Fed/State/Local laws. I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download with data.

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John C

said over 11 years ago

A coupling pipe above the ceiling on the first floor feeding a steam radiator to the second floor unit broke. The 1st floor tenant who incurred the damage was out of town for 5 to 6 days and came home to the damage. Since my post, I examined his lease which we created here on ezlandlordforms and found a clause we had included in section18 titled "Insurance" which clearly holds me not liable as it reads "Tenant agrees to be solely responaible for any damage to or loss of the Tenant's personal property. Accordingly, the Tenant is strongly encouraged to obtain personal property insurance with an Insurance company licensed to do business in the state. This policy must become effective on or before the beginning date of the lease". EXACT WORDING This particular situation is further mitigated by section 13 A which states "It is the responsibility of the Tenant to Promptly notify the Landlord of the need of any such repair of which the Tenant becomes aware". I will therefore try to reason with my tenant that while I realize that he was out of town, substantial damages which otherwise would have been minimized occurred and I have incurred the incremental additional costs in effecting the repairs (I haven't received the invoice yest but I expect it will be somewhere between $400.00 and $600.00). So all Landlords, PLEASE TAKE NOTE: the lease builder, at least for IL includes these provisions with which we can protect our interests but we found them in the check box options of the setup. Please remember to check this list thouroughly when you create your leases and subsequent renewals. We have 25 rental units and are on our third subscription with EZLF. We almost cancelled at one point but fortunately the upgrades they implemented which were much needed made this a program worth keeping. It just paid for itself.

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Bob R

said over 11 years ago

In reference to 13a. I don’t feel that the tenant should be held responsible for the amount of damage caused just because tenant was not around to report the leak immediately. You can’t expect a tenant to stay at home waiting for a problem to occur. However, if tenant saw water leaking and didn’t report it, that’s a different story. Also, I find it interesting that no one had notice water leaking from the unit. -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” However, it is up to you to become familiar with Fed/State/Local laws. I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download with data.

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John C

said over 11 years ago

I agree he is relieved of that provision. I seek only his empathy in the context that we have both have suffered a loss. I am taking care of my end and he, per section 18 can seek no relief from me as he is responsible for insuring his belongings. I have fire, casualty and liability insurance with Cambridge Mass Mutual. I will confirm but I believe Tenants personal property is not covered and liability for such is placed upon them. This property has been in my family since October, 1962 at which time I was nine years old and had some serious chores; shoveling coal, hauling and incinerating garbage (for 25 units, mostly families), snow removal & lawn care for the property which sprawls 5 city lots and much more than I care to remember let alone mention. I came back to help my mother as she aged and grew stage by stage into managing it over the last 20 - 25 years, first talking over the leasing, than day to day tenant complaints, finding contractors and holding them accountable to me and finally the financials and accounting. Mom is 89 and now resides in a nice, nearby assisted living facility where she's been since January 2010. I take her out to dinner every week and this property provides well for us both. I will say this: Property management has definately become more challenging. Changing demographics (welcome the entitled generation) fueled by Tenant rights advocancy groups and a less neighborly culture as well as a slew of ever changing rules and regs require more than gametime decisions in dealing with them. This site has become a good resource. Thanks to all who contribute. In spite of the difficulties, rental property in a good neighborhood is probably the safest investment you can have in these tumultous financial times. It provides a good hedge against inflation as rents go up with it. It is a staple, people will always need a place to live and you'll never be homeless as long as you manage it properly ... which once again continues to be ever more challenging but well worth it.

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Bob R

said over 11 years ago

Word of caution. Make sure Mom doesn’t place you on the Deed. Tax liability. Also, consider adding “loss of income” should something happen and you can’t rent the unit. . -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” However, it is up to you to become familiar with Fed/State/Local laws. I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download with data.

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John C

said over 11 years ago

Loss of income is included in the policy. I own a portion of it already that I inherited when my father passed in 2005. My mother's estate is in order. Thanks for your input.

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Bob R

said over 11 years ago

You may want to Quit Claim your interest to your Mom. Check it out with your tax expert. How you get the property effects the basis for taxes. -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” However, it is up to you to become familiar with Fed/State/Local laws. I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download with data.

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John C

said over 11 years ago

I can't see how that would make any sense. Take an asset that I own free and clear, give it to my mother so I can go through the inheritance loop once again? I appreciate your posts but may I suggest that we return to the thread of this forum; Property Management as my financials are in order and that is not what we are here to discuss. You peaked my interest with your 40- years of experience as I grew up and into it 50 years ago. Today's challenges are far more a mine field than even a decade or two ago, let alone when my parents bought it in 1962. We as rental property owners are in for a lot of unexpected and unwanted surprises this year. Obamacare kicks in like a mule beginning this year and will tax our net rental income 3.8% in 2013. Have you, or anyone else figured out how to recover that? Best I can do is double it but 7.6% is a prohibitive increase to impose on any tenant and I'm not even sure that would do the trick. The government will take 3.8% of the net no matter what we do. Increase the rent and they win. Increase the rent more and they get more. So what do we do to recover from that? Nothing long term comes to mind. Short term I would say re-invest as much as you can to posture your property at the high end of the market to maximize rents and grin and bear it when the amortization runs out. The tax will not go away. But I guess since "you didn't build that" its fair ... ? Where was Obama when I was shoveling coal?

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Bob R

said over 11 years ago

The information provided here is not just for your eyes, but for those that are interested in what the forum has to offers……Let me start by stating that “Your financial status was not questioned.” However, one can assume that since you’re here, you don’t have all the answers (13A statement) or you were looking for support. Therefore, I was offering additional information by suggesting you contact a tax expert regarding financial planning. Given your statement “inheritance loop”, I assume that there was no Living Trust in place…In closing, I’m happy to see that the conversation was returned to the original thread – Obama-Care! -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” However, it is up to you to become familiar with Fed/State/Local laws. I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download with data.

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John C

said over 11 years ago

Sorry. Guess I did get off point. You are correct in saying that none of know all of the answers and that is why we come her. Thanks for your help.

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Bob R

said over 11 years ago

My pleasure, John. Welcome to the Forum. Hope you hang around and help those in need. :-)

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Dawn A

said over 11 years ago

The "you didn't build that" is the most mis-understood comment ever. That does NOT talk about a person not building a business. It's talking about a business not building roads, bridges, etc. -- the government built those, and business owners like everyone else (non-business owners), contributed taxes to the government to make that happen.

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John C

said about 11 years ago

Dawn, I believe I do understand that statement and that you do as well. As you point out in your closing, "and business owners like everyone else (non-business owners), contributed taxes to the government to make that happen." We did and continue to pay tolls and taxes for those roads and bridges, just like everyone else so what was his point? We owe government? This is the part I don't understand. I presume that you have income producing property. Were you aware of and are you OK with this 3.8% tax on your net rental income? Is this fair? Is this what was promised us? I don't make $250,000 net let alone the $400,000 threshold that was legislated; yet, my net income will take a 3.8% hit this year and so will yours. I am curious. What are your thoughts? Any and all are welcome to comment on this. If anyone more familiar with these forums think we should move this thread to another topic forum, please feel free to direct us accordingly.