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  1. #1

    Default Rental agreement to protect against lawsuits

    I want to rent out my house as a landlord, but want to minimize the chances of being sued, as I understand its not hard for a renter to blame an injury on their landlord. For example, if a renter falls over a step, he might try to sue me for not having having my steps the exact height as required by current construction codes, when in reality he's just a klutz.

    Is there some kind of "caveat emptor" clause I can put in a rental agreement, that protects me from potential lawsuits like this? I'd like to put together the most exhaustive ironclad contract I can. My friend told me I should incorporate as an LLC but I don't think thats cost effective for a single rental property, is it?

  2. #2
    Join Date
    Sep 2004
    Posts
    759

    Default

    Many landlords do form a business entity to hold a property, whether as an LLC or as a corporation, before renting it, for the benefit of limited liability.

    All states limit the terms you can impose as part of a residential lease agreement, so you have to be careful. Additionally, whatever agreement you may create with the tenant (e.g., a "hold harmless" and "indemnity clause", if permitted under state law) may not impede a lawsuit directly against you by a third party - that is, the tenant's assumption of certain duties or promises to you may not affect the third party's right to assert a claim against you. That will depend upon state law. So truly, your best protection is to keep the property up to code (and a rental inspection will likely be required before you can seek a tenant, to help in that regard), and to carry adequate insurance.

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