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Vol. 2006-06 June, 2006

Landlord Liability, Property Maintenance and Insurance Coverage
(Part 2 of 2. Concluding from previous issue.)

How can landlords minimize financial losses related to repairs and maintenance?

Landlords may avoid many problems by maintaining the property in good condition, and implementing building and zoning code compliance with the following:
  1. Retain an experienced property manager, to maintain a written checklist, and to inspect the premises regularly, and repair any defects and correct problems before any new tenants move in.

  2. Encourage tenants to immediately report safety or security problems such as plumbing, leaks, heating, broken doors or steps -- whether in the tenant's unit or in common areas such as hallways and parking garages and exterior areas.

  3. Maintain a written log of all tenant requests, complaints and repair requests with details as to how and when problems were attended and repaired.

  4. Handle urgent repairs as soon as possible - correct all safety issues within 24 hours. Keep tenants informed as to when and how the repairs will be made.

  5. At least twice a year, issue tenants a checklist, with information on which to immediately report potential safety hazards or maintenance problems that might have been overlooked. Include all emergency response telephone and other contact numbers. Use the same checklist to personally inspect all rental units at least once each year. The responsibilities for repair and maintenance should be clearly set out in each lease or rental agreement.

  6. Regularly or inspect thoroughly all architectural, structural, mechanical and electrical elements of the property, or have it done by professionals. Also include: elevators, conveyors, chutes, and site improvements, including: walks, exterior stairs, ladders, scuttles, paving, parking, curbs, lighting, fire and security alarm systems, and security. Where additional test are indicated, have them completed to implement corrections required.
How can insurance help protect a rental property business?
A properly designated insurance policy can protect a landlord's rental property from losses caused by many perils. These must, at least include: fire, storms, burglary, and vandalism. (Earthquake and flood insurance are typically separate.) Mold insurance coverage is not generally available.

A comprehensive general liability ("CGL") policy provides liability insurance, covering injuries or losses suffered by others as the result of defective conditions on the property. Equally important, liability insurance should also include the cost of defending personal injury lawsuits, including attorney's fees and costs. Include the right to select legal counsel.

Obtain Adequate insurance coverage.

Purchase sufficient coverage to protect the current value of the property and all fixed assets and improvements.

Policy coverages must include not only physical injury but also insulate against potential claims for libel, slander, discrimination, unlawful and retaliatory eviction, and invasion of privacy suffered by tenants, guests, invitees, and even trespassers.

Obtain and maintain current liability insurance on all vehicles used for business purposes, including by those of managers and employees' cars or trucks used in connection with company business.

Obtain and maintain current Worker's Compensation coverage for all officers, directors and employees involved in the management, maintenance and repair of the properties.

AUTHOR / EDITOR: J. NORMAN STARK is an Attorney-at-Law, a Registered Architect, (AIA, NCARB) Registered Landscape Architect, Interior Designer, Planner and Senior Appraiser (ASA), admitted to practice law before the Bar of Ohio, the US District Courts, Ohio and Illinois (Central Dist.), the US Court of Appeals, and the United States Supreme Court. He is a Mediator, Arbitrator and Litigator with experience in Business, Construction Law, and Public Works, and with additional experience in Real Estate, Construction Attorney (Legal Project and Crisis Management), and as an Expert Witness (Forensic Architect). His office is in Cleveland, Ohio.

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