Published at: 8/12/2016 10:59:10 AM
Property investors wear some solid legal responsibilities – and it starts long before a tenant has signed up. We explain the risks and how to protect yourself.
There’s more to being a successful investor than watching the rent money roll in. Landlords also face stiff legal responsibilities and the last thing you need is to fall foul of the law. Yet even innocent oversights can land you in legal hot water, and the risks are there before a tenant has even moved in.
Here’s what you can do to protect yourself.
Step 1 – Landlord insurance
As a landlord, you have what lawyers refer to as ‘a duty of care’ to provide a safe property. That responsibility kicks off the moment you open the place to the public. So let’s say a would-be tenant checking out the place stumbles on a loose tile, trips and falls and breaks their arm. The next thing you know you’re on the receiving end of a lawsuit demanding compensation for injuries.
Protect yourself by taking out landlord insurance. Not only will this type of cover incorporate building insurance, it should also include public liability cover – usually up to around $10 million. You can normally claim the premiums on tax, and it could provide financial peace of mind.
Step 2 – Professional management
Investors may be tempted to manage their own properties to avoid paying professional management fees. However landlords need to comply with a host of regulations.
Failing to do something as easily overlooked as lodging bonds with your state’s bond authority or providing accurate rent receipts, could result in an appearance before a tenancy tribunal. There are even strict rules about when you can inspect the property, and how promptly repairs need to be carried out.
Unless you’re a seasoned landlord who knows all the rules, and you have the time to meet the requirements yourself, using a professional property manager could make life – and your investment property – a whole lot easier.