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3 Key Issues When Shifting Repair Responsibility To Tenants
It would generally be a blessing if tenants are willing to take on the responsibility of repairs and maintenance of the property themselves.
Especially with commercial property, it is not unheard of for tenants to volunteer managing these tasks themselves.
It’s one huge burden off your shoulders… or is it?
While landlords and tenants can legally agree to shift responsibility of repairs and maintenance as long as there is consideration, the legitimacy of such an agreement can come into question if the conception of it is based on bad-faith on the part of the landlord.
Whatever the case, here are some key issues to take note before proceeding with such agreements.
1) Tenants performing repairs themselves
Letting tenants hire their own contractors or handymen to fix things in the house is one thing, allowing tenants to do it themselves DIY-style is another matter altogether.
The problem lies in how qualified they are to perform such assignments.
Buying a new screw for the dining chair can be a simple harmless act. But if your tenant is toying with wiring to install another power point in the bedroom, that can spell danger to both the tenant’s safety and your liability as well.
Should you entrust your tenants to perform such activities… and it leads to events causing personal injury, the potential for liability claims is on the horizon.
Moreover, tenants who lack the required expertise to conduct specific repairs might actually worsen a problem that you have to rectify later… at a higher expense…
And if for some reason an accident really happened, and you are taken to court, the amount of consideration could be deemed as inadequate if the repairs done by the tenant is judged to be major.
All these hiccups can result in a great liability judgment against you.
2) Agreements in writing
You must still be stuck in second grade if you have not learned that agreements like these should always be in writing instead of oral contracts.
Let’s not even talk about the “you said I said” type of scenario where one party denies agreeing to terms that was previously agreed upon.
Some people are just outright liars. Some even suffer selective intermittent memory loss.
There is a bigger possibility of misinterpretation, misrepresentation, and miscommunication when there are no written agreements.
When push comes to shove, who do you think a judge would sympathize with when an injured tenant is seeking damages for a landlord’s negligence?
3) Area of responsibility
It is pretty important that when moving responsibility to tenants, that the areas of their responsibilities are limited to their dwelling.
Especially with multi-family property, you might be tempted to save a few extra dollars by allowing tenants to work on stuff outside their rented place.
You might think that there is nothing wrong with this.
The charitable tenants might be a certified electrician anyway and has volunteered to do it. But when such situations happen, there is a chance that the authorities might determine that the tenant is not just a tenant, but an employee as well.
The implications of this is that your business might face federal tax issues.
Not only that, as an employee of yours, actions of the tenant could make your business liable when bad things happen as a result of his actions.
Finally, it can sound like a brilliant idea to have tenants take up the role of repairman. But for jobs that are more hazardous, it is best to hire experts and professionals to handle them.
You will have better peace of mind. And avoid the potential for liability as these tasks are entrusted to people who make a living out of repairs and maintenance.