Limiting Your Liability as a Landlord
That doesn’t guarantee that you’ll never have a liability issue, of course, but it does tend to make things easier and help you sleep a little bit better at night. It’s also not the only thing you can do to protect yourself. Another way to reduce your liability risk is to have the right insurance. Don’t just carry the minimum required by law. If something major goes wrong on your property, that amount of insurance might not be enough. Instead, buy more insurance that you have to have, and get as much as you can reasonably afford without completely overdoing it. Your insurance agent can give you a good idea of how much insurance you should really have for your rental property, in order to properly protect your interests.
In addition to insurance and good tenants, you’ll want to consider limiting your liability by creating a company. If you just own the building, you open yourself up to being personally sued if there’s a problem on your property. If you have an LLC, for example, and that company technically owns the property, the company can be sued but the landlord, personally, cannot. Of course, you’ll want to consult with an attorney about what kind of company structure might be best, and whether it’s a good idea for you to form an LLC or any kind of corporation to protect your interests. Knowledge is power, and can help lower your liability.
Don’t forget that the safety of your property matters, too. Handling repairs quickly and making sure everything is in good working order can keep the chance of a tenant getting injured much lower. A slip, fall, or other injury could still occur, but it won’t happen because of dangers on the property or the negligence of the landlord. If you do get sued for the injury, that attention to keeping the property up can make a difference in the outcome of the case.
No matter which ways you limit the liability you have as a landlord, there can still be problems. There’s no way to completely reduce all of your risk, but being a good landlord and taking the proper precautions to ensure you’re protected as much as possible is very important. Then, if something does go wrong, the amount of risk you’ll be taking will be limited, and even that can make a significant difference in the outcome of any liability issues that arise.
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