Making money as a landlord is hard.
As a real estate investor, you have to deal with zoning, regulations, bookkeeping, advertising, online marketing, showings, no-shows, bounced checks, late payments, and the fun of fixing a broken toilet on Christmas eve.
Keeping the money is even harder.
You are constantly spending money on maintenance and repairs, expenses, insurance, mortgage payments, marketing, and more.
But as a real estate investor, you have probably taken all these costs into your investment strategy. There is one risk too many landlords overlook, however: dog bite liability.
Unfortunately, if you are renting to tenants with dogs, you have a furry minefield of liabilities threatening your growing real estate investments. One dog bite lawsuit can wipe out all your hard-earned rental profits in the blink of an eye.
No matter how much you love dogs or how well you treat your tenants, a dog bite lawsuit against your tenant will almost certainly include you as the landlord. Pet ownership laws tell you your legal responsibility for your pets. These laws are complex and different in every state.
As usual, we'll start with some education ...
Fortunately, in most cases, you (as the landlord) may not be DIRECTLY liable if your tenant’s dog bites someone. Just because you leased property to tenants with dogs is usually not enough to make you legally responsible for damages. But again, the landlord’s liability is different in each state and hard to predict.
As a real estate investor, you should know the three critical scenarios that affect your liability.
If a landlord has actual knowledge that his tenant is keeping a dangerous dog on the premises, some states will find him liable if he does not remove the dog to ensure the safety of others. The tricky part is that it is not the knowledge that makes the landlord liable. It is the fact that he knew and did nothing about it.
Suppose the landlord has control over the property and knowingly allows a dangerous and vicious animal to be kept on the property. In that case, many states will find him at least partially liable for any damages.
But, let’s say the landlord knows the dog is vicious but cannot remove the animal. Seems impossible, but it is not. If you bought an apartment building with existing tenants, you might not have the authority or power to remove the tenant or the animal according to the existing lease.
If you try to legally remove the dog but are denied by the court, you might not be held liable in some states for future dog bite attacks. But don’t count on it. Even if you could not remove the dog, you still have a duty to protect the other tenants and visitors to your property. Imagine what the judge will think if you do nothing. Now, imagine what the judge will believe if you warn all the tenants, put up warning signs, erect fences, establish safe areas and walkways, and closely monitor the situation.
If you can remove the dog, then do so. If you can’t, you better have a suitable safety protocol in place.
This one is simple. If the vicious dog belongs to the landlord, or the landlord takes care of the dog for someone else - the landlord will most likely be liable in every state.
There are about 85 million dogs in the US and millions of dog bites each year, according to the American Veterinary Medical Association. Unfortunately, most of them are children.
The number of dog bite claims in 2020 was 16,991 and dog owners paid out $854 million in damages, according to the Insurance Information Institute.
The top five state with the most dog bite claims are
The average payout claim in the U.S. was $50,245, with New York at the highest with an average of $66,917. California averages almost six dog bite claims per day.
As a real estate investor and landlord, you should be aware that there might also be punitive damages in some cases should you be found liable under certain circumstances.
Build your dog-bite case defense today. Remove dangerous dogs from your properties if you can. If you can’t, then do the following:
The American legal system can be stacked against you. A single lawsuit can wipe out your real estate portfolio if you are investing as a sole proprietor. That's why you need to protect your real estate business from dog bite liability. Man's best friend can be a landlord's worst enemy.
Whether you use trusts, LLCs, or other entities, you can establish asset protection and privacy—and usually gain tax advantages as well.
Most lawyers give cookie-cutter advice and use boilerplate forms and agreements. Remember, you are building your real estate portfolio for future income and asset security. Find asset protection experts who understand the risks you face.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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