Landlord liability is a real threat. Owning a rental property, if done right, can provide cash flow and, ideally a nice profit when you sell. The flip side of owning a shiny, bright, new investment property is that you are now a landlord with legal obligations to your tenants, the city, the province, and the country.
Here are 7 of the most common landlord liability issues
Know the Minimum Housing and Health Standards
This is an area of landlord liability most property investors are unfamiliar with, especially if they are converting their primary residence into a rental. Your rental property must comply with the Minimum Housing and Health Standards under the Public Health Act which promotes the health, safety, and well-being of the occupants. Additionally, landlords are required to conform to municipal property standards, zoning bylaws, fire safety regulations, and building codes. If your property fails to meet these standards, you must make the essential repairs.
Prevent negligence
Not only is screening tenants’ good business practice that increases your chances of profitability dramatically, but it can also prevent you from potential liability from negligence. If your unscreened tenants cause injuries or damages, you can be sued.
Conduct regular maintenance inspections
Just because everything worked when your tenants moved in doesn’t mean everything won’t or doesn’t break down. Tenants don’t always understand what they should/shouldn’t report to landlords or may be afraid of being blamed or charged for maintenance that isn’t their fault. A leaky faucet unchecked can turn into a major mould problem. A running toilet can cost thousands of dollars in unnecessary water bills. After the 10-year mark, most properties need more maintenance, when things break down. When you conduct regular maintenance inspections, document leaks, the condition of the furnace, hot water tank, fireplace, smoke/Co2 detectors, laundry vents, hoses, loose handrails, deteriorating stairs, whether appliances are functioning, and if windows/doors close securely, etc. Maintenance inspections can prevent future disasters and provide your insurance company with the evidence you are doing your due diligence as a responsible landlord. Maintenance inspections are an excellent way to avoid landlord liability.
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Screen contractors
A team of trusted contractors or, at the very least, a knowledgeable handyman/woman is a necessity for landlords. Many tenants prefer the landlord or their trusted staff to be present when service work is completed. Since contractors have access to tenants’ homes/personal information, it’s critical to screen contractors to the best of your ability.
Document, document, document
CRA requires you to keep records and receipts for all your rental property’s financial transactions, repairs, and any services.
The Residential Tenancies Act (RTA) requires landlords to complete move-in/move-out inspection reports to document the condition of the property. For Alberta landlords, your essential documents should also include a lease and a pet lease.
Protect yourself and your property with rental insurance
As a landlord, rental insurance protects your property from acts of God (fires, floods, hail, etc.) and tenant injury resulting from a tenant injury. If a tenant falls and breaks their leg as a result of rotting boards from the outdoor deck, you could be liable. At a minimum, carry landlord liability coverage, property, casualty, and general liability. Tenant insurance should also be mandatory. Tenant insurance protects the tenant if the property becomes uninhabitable and protects you if they willfully damage your rental.
When the dog bites when the bee stings…
Lastly, can you be held liable for a dog bite or bee sting? Dog bites can cause a host of illnesses in humans, such as sepsis, rabies, tetanus, and Pasteurella, to name a few. In extreme cases, bee stings can cause anaphylactic shock/death. Dog bites and bee stings are also terrifying.
If you are aware there is a dangerous pet or even a bee’s nest on your rental property, and you do nothing to remedy the situation – you can be held liable.
Owning a rental property is not for the faint of heart and should not be treated lightly. Mistakes/negligence can result in fines and liability. For landlords who understand their legal obligations and perform their due diligence, it can be well worth the effort.
@Sterling
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Nelda Schulte is a property investor who is passionate about helping investors who self-manage have profitable investment properties through resources and education. If are worried that the gaps in your landlord knowledge could cost you sign up for Landlord Fundamentals 101.
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