Early Retirement Extreme Forums

I'd like to make a lease to protect my fam from liability claims from a tenant or two living in a separate part of the top part of the house. The lease is in addition to good protective measures like fire extinguisher + smoke/carbon monoxide detectors + good tenant filtering. Can you recommend a good lease template, or are things so bad that it's best to get a lawyer to make one for me?

No one ever likes lawyers until they need one....

Exculpatory clauses in a lease may not be sufficient to protect you from being sued by a tenant. The best protective measure is to make sure you have good insurance. A regular homeowners policy does not typically cover tenant situations. You will want to make sure you have an endorsement on your policy which covers issues re tenants, and probably umbrella insurance coverage.

Make sure you are very familiar with leasing laws and tenants rights in your state and city before leasing to anyone. This is stuff like how much notice you have to give before eviction, how that notice is to be carried out, what you have to file with the court, etc.

@Edith, what's an endorsement on a homeowner's policy, and how do I add one? Sounds like it's some sort of supplement to the regular insurance that one would would call the provider to add.

Still need to get that umbrella insurance policy, although I'm not sure if it'd cover my parent's house if I get it for myself.

Well, no, an umbrella policy on you wouldn’t cover your parents house. If your parents own the house and they are renting out space, an umbrella policy would be smart for them to have in place.

Yes, an endorsement is an additional form or coverage on a policy. I have a dwelling policy on my rental, but that’s a different deal because it’s not a house that I’m living in. So when I rent the whole house to a tenant, they have a pretty high level of responsibility for the premises and for putting me on notice of dangerous issues.

It’s a different deal if you’re renting space in your house. Say your renter trips over a piece of broken sidewalk coming into your house. Typically your homeowners policy would cover injuries to a visitor (like if I tripped coming over just for afternoon tea). But typically it would not cover injuries to someone who is a resident of your household. So you’d want to talk to an insurance agent about how to protect you from stuff like that. Your resident’s sprained ankle might not cost you much.... but if he decides to sue you, you probably don’t want to deal with that yourself. There are a lot of different forms and endorsements that cover different things.

Another issue a landlord faces: say your parents’ house burns down. A typical HO policy is going to cover your parents’ contents and temporary living expenses, as well as damage to the house. It won’t cover your tenants’ contents or your tenants’ temp living expenses. If they can’t live in the room, under a typical lease, your parents would have to pay for their temp living expenses while the room is ininhabitable, for the length of the lease. (A lot of this stuff may vary by state—caveat).

BiggerPockets recently came out with state-specific lease agreements. You may want to check those out.