Housing built before 1978 is likely to contain lead-based paint. Common renovation activities such as sanding, cutting and demolition, when performed in structures that contain lead-based paint, can create lead-based paint hazards, including lead-contaminated dust which is harmful to adults and children. To protect against this risk and minimize exposure to lead-based paint hazards, the Environmental Protection Agency (EPA) issued the Lead Renovation, Repair and Painting Rule (RPP).

Under the RPP rule, contractors performing renovation, repair and painting projects that disturb painted surfaces in homes and child-occupied facilities (including child care centers and schools), built before 1978, must, among other things, be certified and follow lead-safe work practices.

Natural disasters can result in significant damage to buildings that require immediate renovations and repairs in order to avoid safety and public health hazards and significant additional property damage. These activities are likely to qualify for the emergency provision of the RRP Rule, thereby exempting firms from certain lead-safe work practices and other requirements.

Under the emergency provision of the RRP Rule, contractors performing activities that are immediately necessary to protect personal property and public health need not be RRP trained or certified and are exempt from the following RRP Rule requirements of: information distribution, posting warning signs at the renovation site, and containment of dust and waste handling. Firms are not exempt from the RRP Rule’s requirements related to cleaning, cleaning verification and recordkeeping. The exemption applies only to the extent necessary to respond to the emergency. Once the portion of the renovation that addresses the source of the emergency is completed, the remaining renovation activities needed to return the renovation work area to its pre-emergency condition are subject to all requirements of the RRP Rule.

When you selectively offer tenancy to some individuals and not to others you have violated Fair Housing Acts. Title VIII of the Civil Rights Act of 1968 (the Fair Housing Act), as amended, prohibits discrimination in housing and housing related transactions based on race, color, religion, sex, national origin, disability or familial status. While the Act does not expressly ban discrimination based on age, age discrimination is prohibited under the broader discrimination protections afforded familial status and disability.

Additionally, many states and some cities have fair housing laws that provide additional anti-discrimination protections including age. You cannot refuse to rent to a person or require additional terms and conditions for tenancy solely because of age. If an older individual applies for a vacancy and qualifies under your rental standards, the same consideration for tenancy must be given to that applicant as would be given to any other applicant. Note that an elderly tenant may also qualify as a disabled tenant who is entitled to reasonable accommodations of a rental policy as a result of disability. Disability is a protected class under the Fair Housing Act.

In most states a person under the age of 18 is a minor and cannot legally enter into a contract. However a minor can become an emancipated minor through emancipation by marriage, military enlistment or court permission. An emancipated minor is treated as an adult and has legal capacity to enter into a legally binding lease agreement with a landlord. If an applicant who is an emancipated minor applies for a vacancy and qualifies under the landlord’s standards, the same consideration must be given to the emancipated minor as for all applicants. A refusal to rent to the emancipated minor could be the basis of a fair housing complaint.

You will want to research the issue to make sure if there are any state and local requirements, but generally a landlord is not required to paint a unit in between tenants. As of this writing the one known exception to the general rule is the New York City ordinance that requires repainting every three years or sooner if the walls become unsanitary through no fault of the tenant. As per the ordinance: “The landlord must paint occupied apartments in multiple-unit dwellings (defined as buildings with three or more apartments) every three years. (NYC Administrative Code §27-2013). Tenant occupied apartments in private dwellings are also required to be painted as necessary.”

Painting of a rental unit is generally a cosmetic issue that falls under the landlord’s discretion. Most often unless warranted for safety, health, or repair issues, painting is done to make the rental unit more attractive to potential tenants.

Landlords do have the obligation to maintain the rental unit to safe and sanitary conditions under the implied warranty of habitability of most states.

As example, under many habitability requirements in regards to paint, , a landlord must be keep “interior walls, ceilings and other exposed surfaces in rental units smooth, clean, free of flaking, loose or peeling paint.”

You should also review your lease to determine whether there is a clause regarding painting of the unit, the landlord or tenant responsibility for painting, and terms and conditions of painting the unit. Normal wear and tear of the rental unit including worn, faded paint is the landlord’s responsibility. Using good quality paint, a landlord should not have to frequently paint a unit unless the painted surfaces have been damaged. A common practice is to refresh the painting about every three years.

The Fair Housing Act as amended prohibits discrimination in housing decisions based on the seven protected classes of race, color, sex, national origin, religion, disability, and familial status. Some states, cities, and counties have expanded fair housing protections to include additional protected classes such as ancestry, marital status, age, military or veteran status, sexual orientation, gender expression, source of income, and Section 8 Housing Choice Vouchers.

In those localities where source of income is a protected class, landlords are prohibited from discriminatory actions such as refusal to rent based upon an applicant’s source of income, offering different terms and conditions to applicants based on source of income, or the use of income discriminatory marketing and advertising.

As a protected class by state, city, or county statute/ordinance, source of income (SOI) must now be recognized by landlords and incorporated into their fair housing rental policies and practices. A landlord cannot reject a rental applicant on the basis of the applicant’s source of income as long as the income is from a lawful source. In many of these states and localities, source of income protection includes rental assistance through participation in the Section 8 Housing Choice Voucher program. Per statute or ordinance a landlord cannot refuse to accept the applicant’s Section 8 voucher in evaluating rental qualifications.

Rent defaults are cited as the top concern for most landlords. Accordingly, financial ability to make rent is an important decisioning factor in the tenant selection process. Traditionally tenant screening for financial ability has included checking an applicant’s credit report, verification of employment, and requiring copies of current pay stubs. Employment wages have been considered a steady, stable source of income that could be reliably verified and a generally dependable means of rent payment.

Alternative sources of income include any lawful income that comes from sources other than employment. Alternative sources of income can be verified and documented similar to employment verification and wages documentation. Verification of income means that the amount of the income can be proven or that the receipt of the income can be proven. An applicant must be able to provide written documentation that shows either the amount of income or that the income has been received. The written documentation must also name the source of the income. An applicant can provide multiple documents that together identify the source of income and the amount of receipt.

As examples, lawful sources of income may include but are not limited to the following:

• Self-employment
• Pensions
• Private benefit programs
• Mutual funds
• Trust funds
• Investment – stocks and bonds
• Investments – rental property
• Social Security benefits
• Supplemental Security Income (SSI)
• Unemployment insurance benefits
• Disability benefits
• Workers compensation benefits
• Temporary Assistance for Needy Families (TANF)
• Veteran Affair’s Supportive Housing (VASH)
• Housing Choice Vouchers (Section 8)
• Student loans
• Short-term emergency grants from state and local agencies for rental assistance
• Assistance programs from community service agencies, non-profit organizations, or charitable organizations
• Alimony
• Child support
• Foster care subsidies

Landlords participating in the federal Low-Income Housing Tax Credit Program are prohibited from discriminating against potential tenants using Housing Choice Vouchers even if their locality does not have source of income protections.

Source of income discrimination can take many forms, as evidenced in rental advertising, qualification requirements, and rental policies and practices. In advertising a vacancy, a landlord posts an ad that expresses limitations on the source of income, such as “No Section 8”, or “we do not accept vouchers or subsidies”. When a potential tenant during the initial contact discloses an alternate source of income to be used for rent, the landlord quotes a higher than advertised rent amount, or falsely claim the unit is “no longer available”.

In qualifying an applicant a landlord rejects the application due to an alternate source of income or refuses to consider a co-tenant’s alternative source of income to calculate income eligibility.

In rental policies, source of income discrimination occurs when:

• A landlord’s rental criteria requires income documentation of copies of pay stubs, typically only available to individuals employed, i.e., a “regular job.”
• A landlord’s requirement for qualified income is inflated in order to discourage or disqualify applicants with public benefits or other alternate source of income.
• A landlord charges a higher rent for an applicant with alternate source of income, requires a co-signer/guarantor, or requires a higher security deposit.
• A landlord limits an applicant’s choice of rental unit by only showing less desirable units because of the applicant’s source of income.
• A landlord sets different rental terms and conditions, or places restrictions on the use of rental facilities or services for tenants utilizing housing assistance vouchers.

One of the most common examples of source of income discrimination is the refusal of landlords to accept tenants who receive tenant-based rental assistance through the Section 8 Housing Choice Voucher program.

Landlords must apply the same screening criteria to all applicants in a non-discriminatory manner according to applicable fair housing laws. To that end, landlords should conduct all due diligence to keep current with fair housing protections for the location of their rental property. A landlord must set his rental policies to business necessity and legal compliance with applicable federal, state, and local regulations and requirements. The landlord’s rental policies must be nondiscriminatory, legally compliant and consistently enforced.

Fair housing protections for source of income and/or Housing Choice Voucher participation do not prohibit a landlord from setting his rental criteria to include income qualification. However, if the landlord does require the applicant to have a certain income to qualify for housing, the landlord must subtract any payment from a Section 8 or other subsidy program from the total monthly rent to determine the amount of rent that the tenant would pay out of pocket); and include all sources of income in the tenant’s total income when calculating income eligibility for any tenant.

The landlord must count only the portion of the rent that will be the tenant’s responsibility in determining whether the applicant qualifies for the income requirement. If the landlord sets an income to rent ratio of 3:1; the rent is $1000/month; and the rent assistance voucher is $600/month, the tenant will be responsible for $400/month as his portion of the monthly rent. The tenant will need to have a total income of $1200 or more/month, (3x$400) to qualify under the landlord’s income criteria.

As of this writing, twelve states, the District of Columbia, and many cities and counties have fair housing laws that prohibit housing discrimination on the basis of source of income. However, not all source of income laws offer equal protection from discrimination. There is significant difference in the strength and effectiveness among current laws. While some laws provide specific source of income protections by source name, other laws use more generalized language to refer to source of income protections. Section 8 Housing Choice Vouchers may be explicitly named as a protected source of income in some localities but may be specifically excluded form source of income protections in other localities.

The process of a tenant move-out should be a routine business task that smoothly transitions the rental unit back to the landlord. With so many details involved in the transition, what can a landlord do to make the move-out process as trouble-free as possible? The key is to have comprehensive rental policies that are communicated to prospective tenants early in the rental process and applied to all tenants throughout the tenancy.

Having a written rental policy and detailed procedures for tenant move-out including timelines for notices, inspections, unit possession, and accounting and return of security deposits allows the landlord to exercise greater control over the process. The plan provides a consistent process that ensures all required steps are taken in proper order and are legally compliant. This creates a faster, more efficient process for the tenant to fulfill his rental obligations.

For many tenants, the priority in the move-out process is the return of their security deposit. For landlords, the priority is an orderly tenant move-out with no surprises. Clear communication between the landlord and tenant helps to accomplish those priorities.

At lease signing and tenant orientation, the landlord sets out his rental policies and procedures, rental rules and regulations, tenant responsibilities and obligations, and expectations during the tenancy and at lease expiration. The tenant acknowledges his consent to the landlord policies and procedures by his signature on the lease document. The lease becomes the governing contract between landlord and tenant.

Landlord Notice of Lease Termination Date

To minimize potential problems at the lease expiration date, a landlord should give the tenant appropriate written notice that the tenant’s lease will be expiring soon. This reminder notice, generally at 60 days before the lease expiration date, accomplishes several things. First, the notice of lease expiration gives the tenant sufficient time to look for another rental unit. Second, the notice allows time for the landlord to negotiate a renewal lease with any changes in lease terms, conditions and rents. Third, the notice provides time for the landlord to begin planning and preparation for unit turnover and marketing to fill the vacancy.

Tenant Notice of Intent to Vacate

A landlord should include in the lease agreement terms and conditions that the tenant is required to provide written notice of the intent to vacate the premises on a specified date. A landlord will need to conduct due diligence to determine the legal notice period required by applicable laws for tenant notice of intent to move. In many states, a tenant is required to give the landlord at least 30 days’ notice of the tenant’s intent to move. Absent specific language in state statutes, the lease agreement terms and conditions regarding the issue will apply.

Move-Out Letter

Once a landlord receives the tenant’s written notice of intent to move, the landlord should sent the tenant an acknowledgement and confirmation letter.

The landlord‘s move-out letter should detail what the tenant must do when his lease expires in order to meet the terms of the lease. These move-in procedures must have been stated in the lease agreement and should have been discussed with the tenant when the landlord conducted new tenant orientation.

A good move-out letter explains the process of closing out the tenancy and what is expected of the tenant. The letter should include the following issues, all of which should be in the lease agreement:

• A reminder that the lease agreement gave the landlord and the landlord’s agents the right to show the unit to prospective tenants or to schedule contractor work upon reasonable notice per statute.
• A statement of the landlord’s expectations that the unit will be cleaned and left in the same condition as the tenant found upon moving in.
• An itemized list with instructions on how to meet the landlord’s cleaning standards and what items on the move-in checklist are the items of priority.
• A summary discussion of the move-out inspection procedures. This should include a reminder that all personal possessions must be removed from the premises prior to inspection.
• An instruction that the tenant must call the landlord at a specified time period before the lease termination date or move-out inspection date (whichever is earlier) to schedule an appointment for the final walk-through inspection.
• A statement that the inspection must be performed on or before the termination date and that the tenant must return possession of the premises including return of keys, garage door openers, gate keys, and pool pass, as appropriate to the rental unit. A reminder that the security deposit cannot be utilized for last month’s rent, including penalties for doing so.
• An explanation of how the security deposit accounting will be handled including reference to applicable state law for accounting statement, allowable deductions, and return of the deposit.
• A discussion regarding other deposits that were collected, their use and accounting.
• A reminder that the lease agreement prohibits using the security deposit as the last month’s rent.
• A request that the tenant provide a forwarding address and contact information for future communications and mailing of the check for the portion of the security deposit being returned and an accounting of any amount not being returned.

The letter should also remind the tenant that utilities must be left on until the final inspection has been conducted. All utilities in the tenant’s name should be scheduled for turn-off by the date of lease termination. The landlord should instruct the tenant of any climate and seasonal conditions that warrant special requirements for utility shut-off, such as cold weather water shut-off and draining of pipes and fixtures.

A detailed move-out letter can set the stage for a satisfactory final inspection. With adequate instruction and information, the tenant should clearly understand his duties and the landlord’s expectations during his move-out. Performance of those duties according to landlord standards should minimize the chance that a deduction for cleaning costs would be taken from the tenant’s security deposit.

It is advisable to attach a copy of the signed move-in property inspection checklist to the move-out letter. The landlord should also remind the tenant to refer to their lease agreement if there are any questions regarding move-out duties and responsibilities. A copy of the lease agreement with move-out policy, terms and conditions highlighted could also be attached to the move-out letter.

Move-in/Move-out Property Inspection Checklist

A move-in/move-out checklist and inspection conducted by the landlord and tenant can help the moving process go more smoothly whether the tenant is moving in or the tenant is moving out. The documented move-in property inspection report is the basis for the move-out inspection and determination whether the rental unit was well maintained during tenancy per tenant obligations under the lease. The move-out inspection cannot be more restrictive in determining property condition than was used during the move-in inspection.

Some states have specific rules and requirement for move-out inspections and use of checklists including whether the tenant must be present during the property inspection. In a few states the tenant must be provided a pre-move-out inspection. During a pre-move-out inspection, the landlord will note property defects that the tenant needs to correct before the final inspection if the tenant wants to maximize his deposit refund.

Landlords should require that the final inspection take place after the tenant has removed all personal possessions and the premises have been cleaned to the level of cleanliness that the tenant intends. This will increase the likelihood of positive identification of any damage to the unit including that which might otherwise be hidden behind furniture and damage caused by carelessness during the removal of furniture.

Best Practices

Best rental practices include clear communication between landlord and tenant of the tenant’s duties and responsibilities throughout the tenancy. A well-documented move-out policy and detailed procedures universal to all tenants provides a consistent, non-discriminatory process that minimizes misunderstanding and confusion regarding tenant obligations at lease expiration date. Waiting until the last minute to address move-out issues can cause unnecessary stress and lead to disputes regarding security deposit accounting and return.

When rent payment procedures are easily understandable to tenants and simple to use, there is a greater likelihood that tenants will pay as agreed.

Online rent payments may offer a best practice solution to timely rent payment that benefits both landlord and tenant by a more efficient processing of rent payments. An important decision is whether to use an integrated portal (all-in-one) or a separate processing module. An all-in-one system can integrate core property management functions such as applicant processing, tenant screenings, deposits and fees, rent collection, payments history, maintenance requests, and landlord-tenant communications into a full service package that benefits landlords and tenants. Generally a stand-alone payment processing module is a basic accounting/reporting system that can deliver management reports, rent receipts, monthly tenant statements, payment history, past due reports, and rent reminder alerts on demand, helping to reduce administrative costs and provide real-time data for analysis and projections.

By choosing an online payment processing system a landlord can help reduce his operating expenses and help increase his property cash flow. In addition, many online rent payment systems offer the convenience of expanded customer services with 24/7 access to system options.

Some of the benefits of an online rent payment processing system include:

• A more efficient rent collection process
• Improved property cash flow by moving money more quickly into the landlord’s account
• Increased likelihood of full and timely rent payments
• Reduced administrative time and paperwork associated with processing in-house payments and collection duties for late, missed, or partial payments
• Tenants prefer to pay rent online
• More payment options such as credit card, debit card, bank transfer, other types of electronic payment services
• Convenient access for rent payment at any time or from any device
• Security of transaction
• Reduced risk of check fraud and theft including identity theft
• Ability to schedule recurring payments
• Co-tenants can synchronize payments for single rent payment to landlord
• Automatic notifications and reminders of rent due dates, account status
• Account access 24/7
• Reduce tenant late fees, missed payments
• Digital records for payment history and deposits
• Notification of new charges or fees

By reducing time and effort in the rent payment process, an online payment system can help reduce stress and improve the landlord-tenant relationship.

There can be many factors that influence a tenant’s decision to stay in place or move. A tenant may need to move for personal reasons, e.g., family, health issues, job relocation, or changes in income.

Generally there are three key factors that influence the tenant’s decision to renew:

• Local market conditions
• Physical condition of the rental unit and rental property
• Property management and rental policies

A landlord must stay current with local market conditions. Without market knowledge, a landlord has no idea if his business is competitive, or could be competitive with additions or adjustments to his business plan.

In conducting market analysis, a landlord will need to compare his properties with comparable local area properties for rents, amenities, rental policies.

Deferred maintenance or requests for maintenance that are ignored can be a major motivation for tenants to move. An objective assessment of the physical conditions of the rental property to identify needed repairs and improvements followed by subsequent action to implement needed changes could have a positive influence on renewal decisions.

Good property management and customer service can be a significant factor in attracting tenants and retaining tenants. Good communications between management and tenants and prompt responses to questions and requests can keep tenants satisfied during the current tenancy and increase the likelihood of renewal.

Tenant screening, as a core practice in good property management, also can have an impact on a tenant’s decision to renew a lease. Good tenants want to stay in good properties. They want to be sure that the management continues to screen for more good tenants. Tenant retention has been shown to be higher in properties where landlords conduct complete and comprehensive screenings for selection.

Enforcement of rental terms and conditions is another way that landlords can attract and retain good tenants. Good tenants leave when a landlord does not enforce his rental policies allowing lease defaults, dangerous conditions or illegal activities to occur on the rental property.

To improve tenant retention and maintain a satisfactory market position, the more tenant feedback that can be obtained, the more a landlord can improve his position in the marketplace. As an example, an exit interview or move-out survey of departing tenants is a marketing research tool that can provide valuable information on the tenant’s reason for moving and suggestion for improved tenant services.

Unlawful landlord retaliation occurs when a landlord uses his authority to punish a tenant who exercises his legal rights. Tenant protection laws in most states provide tenants legal protection from retaliatory eviction and other landlord retaliatory actions.

While state laws prohibiting landlord retaliation may vary by state, most commonly, statutes address issues regarding tenant complaint to a landlord or government agency; tenant involvement in a tenants’ organization; tenants’ exercise of legal right; and presumed retaliation if negative reaction by landlord is within a specified time of a tenant’s action.

In many states, tenant protection laws presume a landlord has a retaliatory motive if the landlord takes action to evict the tenant or takes some other retaliatory action within six months after the tenant has exercised a tenant legal right.

As examples of a tenant exercising a legal right:

• Tenant filing complaint with the landlord or a public agency regarding the condition of the rental unit, including issues of habitability, fair housing discrimination, health and safety, and repairs
• Tenant notifying landlord of the use of repair and deduct remedy for defective property conditions
• Tenant notifying an appropriate public agency for health, safety violations, and/or requesting property inspection and remediation of conditions
• Tenant initiated lawsuit against landlord for defective conditions of rental unit

Landlord retaliatory conduct can take many forms. A landlord is generally considered to be retaliating if he takes any of the following actions after a tenant has exercised a legal right:

• Refusing to renew a lease
• Filing an eviction proceeding
• Increasing the tenant’s rent
• Restricting the tenant’s use of the premises
• Refusing to provide or reducing essential services
• Terminating a tenancy
• Threatening a tenant
• Harassment or hostile behavior toward a tenant
• Interfering with the tenant’s rights under the lease agreement

Business insurance policies are important to protect landlords from financial losses resulting from unexpected events such as accidents, natural disasters, injury claims, or other liability issues.

There a number of decisions that a landlord must make to determine the appropriate policies and coverages for his business.

Coverages

While insurance coverage against almost any possible loss could be purchased at some cost from some company, what a landlord wants to do is pay for only the coverage for events and losses that are most likely to occur on his property. To do so, a landlord will need to understand insurance policies’ coverages, terms and conditions in relationship to his known business risks and financial condition.

There are two types of insurance coverages related to real estate. One is to protect the rental property from casualties, i.e. the physical losses or damage to the property caused by any of many potential events including fire, storms, theft, and vandalism. The other is to protect the landlord from liability for damages to other people or property. Adequate liability insurance includes coverage for injuries or losses suffered by others as a result of defective conditions on the property and legal costs of defending personal injury lawsuits. Liability insurance is important because judgments resulting from a lawsuit can be potentially larger than losses from casualties and the cost of defending against a lawsuit is often significantly greater than the ultimate award of damages.

Limits and Deductibles

Insurance premiums can be a significant cost of property ownership, but insufficient insurance can result in financial disaster. With the help of an experienced insurance agent, a landlord can evaluate important types of coverages, determine how high a deductible is acceptable to his business operations, and choose how large the coverage amount should be.

The more rental units and tenants, the more liability insurance is required to cover the risks, with all other factors remaining the same. Liability coverage can be much more important than all the casualty coverages put together. Exposure to financial loss due to physical hazards is actually limited, although the limit can be quite high. As a bottom line a landlord should obtain the highest possible liability limit even if it means accepting high deductibles on casualty coverages.

It is often more cost-effective to increase liability protection through the use of excess liability coverage, known as an umbrella policy. An umbrella policy takes over after the limit of another policy has been exceeded. It is often recommended that landlords purchase a moderately high basic policy liability limit and a high limit on the umbrella policy. When possible, it is best to obtain an umbrella policy from the same company that handles the underlying liability insurance in order to avoid possible conflicting strategies on how best to defend in litigation.

A deductible is the amount of money that is paid out of pocket before the particular insurance coverage begins to pay. Deductible amounts for casualty insurance range from a few hundred dollars to thousands of dollars. The maximum deductible to be considered would depend on a landlord’s risk tolerance, financial condition, and as applicable, the maximum allowed by the landlord’s mortgage lender.

Anytime that there is a deductible for a particular type of insurance, there is the opportunity for reducing the premium by accepting a larger deductible. This allows a landlord the option to use the money saved with a higher deductible to buy other types of coverages that are important to his business.

Costs

The type and amount of insurance coverages can affect the costs of insurance premiums. Some of the factors that affect premium costs are:

• Location of the property
• Identified risks in the geographic area of the property
• Type, age, construction, condition, and size of the property
• Number of rental units
• Building codes compliances and inspections
• Fire safety measures
• Burglar alarms and security monitoring systems
• Swimming pool on the property
• Gated access and entry/exit routes of the property
• Rental policies; e.g., smoking policy

Casualty Insurance

Dwelling insurance provides casualty coverage for physical damage to building structures caused by unexpected events such as fire, lightning, windstorm, hail, ice, snow or other covered peril.

Many landlords choose a policy which provides the broadest level of protection and covers a property against all losses except those specifically excluded from the policy.

Named Peril vs. All Risk Insurance

Casualty insurance is first party coverage for the insured’s own property against a wide variety of common perils.

First party property insurance is usually available in two types of coverage, named peril and all-risk. Under a named peril policy, a landlord must prove entitlement to collect under the policy whereas, under an all-risk policy, a landlord is assumed to be entitled to coverage unless the insurer can prove that there is some reason why coverage can legitimately be denied.

Named Peril Coverage

Named peril coverage relates to direct physical loss caused by specific named perils such as fire, hail, lightning, wind, or water damage. If the peril is not named, the coverage does not exist.

All Risk Coverage

An all-risk policy, called an open peril policy, covers all forms of direct physical loss that are not explicitly excluded from coverage, as opposed to coverage of a single peril or a combination of perils written as single coverages. Four elements have to be proven for the insured to be entitled to benefits under an all-risk policy:

• Occurrence of physical damage,
• Damage occurred during the policy period,
• The insured or covered property was damaged, and
• A covered peril caused the damage.

Both Named Peril and All Risk policies will only cover losses that are sudden and accidental. Losses that occur over a period of time are not covered as they do not meet the test of sudden and accidental.

Replacement Cost vs. Actual Cash Value

Insurance policies can pay the insured for losses in one of two ways:

• The actual cash value of damaged or destroyed property which is the cost of replacing property less physical depreciation, or
• The replacement cost which is the amount it would take to replace, rebuild or repair damaged or destroyed property with materials of like kind and quality without deducting for physical depreciation.

In general, replacement value coverage offers greater protection against significant loss.

Liability Insurance

Liability Insurance is designed to cover against lawsuits, settlements, and judgments up to the amount of policy limit, including the cost of defending lawsuits. This includes coverage for injuries or losses suffered by others as a result of defective conditions on the property and legal costs of defending personal injury lawsuits

Usually the policy states a dollar limit per occurrence and an aggregate dollar limit for the policy year. Liability insurance should cover both bodily (physical) injury and personal injury.

Bodily injury is physical based and encompasses a variety of injuries or related problems that might be suffered by tenants or their guests.

Personal injury is offense based and encompasses a variety of injuries that might be suffered by tenants or their guests.

Liability insurance will not cover intentional wrongdoing such as arson or assault, but will cover negligence and strict liability.

Occurrence vs. Claims-Made Policies

Liability insurance is available in two versions: occurrence and claims-made. An occurrence policy covers events occurring during a specific policy period no matter when the claim is made.

A claims-made policy covers claims that are made during the policy term, no matter when the actual incident occurred. An extended reporting period can be added to a claims-made policy in exchange for an extra premium to cover claims that arose during the regular policy period but were not reported to the insurer or asserted against the insured until the extension.

Duty to Defend

Under a liability policy, the insurance company also has a duty to defend the insured against any allegation covered by the policy.

 Optional Coverages

There are optional coverages that could be important for business operations that are not covered in standard business insurance policies. As an example, some landlords choose a Loss of Income policy to compensate for lost income in the event that a rental property becomes uninhabitable due to a covered loss.

Annual Review

While insurance policies coverages are generally automatically adjusted annually to ensure that the policies are kept current on replacement costs, a landlord should also conduct periodic reviews of insurance coverages to ensure his properties are adequately protected.

Negligence is determined by facts of each situation. As an example, if a landlord violated a law requiring a safety measure and the violation led directly to the tenant’s injury, the landlord will likely be held liable. A landlord does have a general duty to take reasonable precautions to protect tenants from foreseeable criminal acts and property crimes. In evaluating a tenant’s claim, whether or not the landlord will be held responsible for the injury depends upon answers to several key questions.

To determine whether there was a dangerous condition on the rental property that the landlord had the legal duty to address (a duty of due care), the following questions are raised:

Did the landlord control the area where the tenant was hurt or control the item that caused the injury? A landlord will be held responsible for injury if he was legally obligated to maintain and repair an injury causing factor.

Was the accident foreseeable? A landlord may be held responsible for an injury if the tenant can demonstrate that an accident was foreseeable.

How difficult or expensive would it have been for the landlord to reduce the risk of injury? A landlord is likely to be held responsible for an accident if a response/action at a reasonable price could have avoided an accident. If there is a greater risk of injury, a landlord is expected to spend the amount of money it takes to avoid an accident. If there is a great risk of injury, the landlord knew about the risk, and failed to repair or remedy the risk, the landlord would be held liable for any accident that did occur.

Was a serious injury likely to be the result of the problem? If a major injury would likely have been the result of a dangerous situation, a landlord would be expected to immediately remedy the problem.

If answers to the above questions prove a landlord’s legal duty to remedy a condition on the rental property that posed a danger to tenants, the following questions apply.

Did the landlord fail to take reasonable steps to prevent an accident? A landlord is required to take reasonable precautions to shield tenants from conditions that pose some risk.

Did the landlord’s failure to take reasonable steps to keep tenants safe cause an injury? There is a critical connection between landlord negligence and tenant injury. Not every dangerous situation will result in an accident. A tenant has the burden of proof to show the injury was the result of landlord negligence and not as a result of some other reason.