By: Tia Politi
September 2024
Running a business is full of risks – kind of like the rest of life. I’m a risk-averse person which has served me well as a landlord. When I was a property manager, my nickname was The Voice of Doom because I was always pointing out possible problems to my owners that could get them sued. There are three major categories of risk for landlords: the property, the tenants, and you.
PROPERTY RISKS
Property risks run the gamut from the obvious to the barely discernible. Obvious areas of risk would include electrical, heating or plumbing systems in poor condition; windows or doors that don’t open, close or lock properly; rickety banisters; rotting deck boards; etc. In addition to providing a legally habitable property, Oregon Landlord Tenant law requires that a rental home must be, “…safe and secure for all reasonably intended purposes.”
Because the unit may have met code at the time it was built, doesn’t make it safe as a rental property. One of the issues I often see in older homes are stair railings or deck railings that have six to nine inches of space between spindles, or fence boards with large gaps. Both scenarios could create a risk of injury to a toddler or small child. Your tenants don’t have small children, you say? Can you imagine that they have guests who do? Those guests may visit, and their child could be hurt. Who will be sued for that? You guessed it – you.
During the 2014 and 2015 legislative sessions there were back-to-back law changes addressing egress requirements for sleeping places. ORS 90.460(2) was modified in 2014 to state, “A landlord shall provide at all times during the tenancy a route or routes of exit from each bedroom and, if required, a secondary route of exit from each bedroom, for use during an emergency.” After a bit of hue and cry from landlords, in 2015 this section was modified to add, “The routes of exit must conform to applicable law in effect at the time of occupancy of the building or in effect after a renovation or change of use of the building, whichever is later.” Oh, okay, so it’s fine to let your tenant burn to death because that’s the way it was built and you’re too cheap to replace a window???!! Regardless of what the law would allow me to disregard, I turned down clients who refused to modify the bedroom windows to allow proper egress.
Fire Safety
Fire safety is top of mind right now, yet many landlords fail to minimize the fire risks by removing excess vegetation around the home, or trees that are too close to the house or overhang the roof providing a critter highway directly to your unit. Insurance companies are cancelling policies left and right. They will spy on your property using satellite imaging to check on the condition of your roof. Clean your roof annually or more often if you are in a heavily forested area. Remove trees and shrubs that contact the building envelope or overhang the roof and consider landscaping with fire-resistant shrubs. My most recent insurance bill quantified our wildfire risk with a score that considers the types of roofing materials, the presence of trees or vegetation near the home, as well as the proximity to the closest fire station. Take note.
Hazardous Materials
Older homes often contain hazardous materials such as asbestos or lead-based paint. Asbestos was commonly used as soundproofing back in the day and while most of us are aware that ceilings with popcorn texture are likely to contain asbestos (but not always), many are not aware that it also was used for wall texture. Remember that any renovations performed on an older unit built before 1978 (beyond clearly identified parameters when performing minor disruptions) must be performed by a lead-certified renovator and all proper precautions taken – with no exceptions for property owners as used to be the case. The Oregon Health Authority regulates lead paint; the Department of Environmental Quality regulates asbestos. Whatever hazardous materials you may be dealing with always check with the oversight agency for current rules and protect yourself by hiring certified professionals.
Water Intrusion/Mold
Failing roofs, poor drainage around the perimeter, inadequate flashing around chimneys, failing gutters, seeping leaks at shower valves, drain assemblies or toilet flanges can create water intrusion leading to mold, rot or structural problems. A verifiable claim by a tenant for toxic mold can be incredibly costly and insurance policies won’t cover this type of loss, much less pay for damage to the tenant’s health or personal possessions from the landlord’s negligence. Some tenants are good at reporting issues, others not so much. And tenants may not even realize that there’s a problem, so inspect. Buy a humidity tester and a wall moisture meter, both can help you discover the presence of water issues.
Slip/Trip Hazards
A less obvious kind of risk would include slipping or tripping hazards. If not properly maintained, decks can be slippery in wet or icy weather. Look for trip hazards not in and on your actual property but the sidewalk in front as well. Offsets in your sidewalk of more than ½ inch are violations of city code and are tripping hazards. Don’t wait for a trip and fall followed by an insurance claim to fix the problem. The more claims you make, the more likely your company is to cancel you.
TENANT RISKS
Risky tenants can be difficult to spot. There are people out there who we refer to as professional tenants, they come in many shapes and sizes and can be a landlord’s worst nightmare. Folks like this can create trouble in numerous ways, and they often know the law better than you do. They can pressure you to move in before your property is ready then claim you rented them substandard housing; sabotage your property, then claim habitability issues; bring in unauthorized people or animals; rent under false pretenses to set up a marijuana grow; and the list goes on.
That’s why it’s essential to screen tenants fully, document your property condition, and inspect your property regularly. (Read my articles on Screening and Inspections for a rundown of recommendations.) At the last private management company where I worked, we took over management of a property where a tenant had brought in an unauthorized pit bull unbeknownst to the owners who never inspected. The dog ended up biting and disfiguring the face of a neighbor girl who approached him. The owner’s insurance covered the claim, but it was a painful lesson for the owners who felt terrible about the injury to the girl and saw their insurance rates skyrocket. A good preventative measure you can take is to introduce yourself to the neighbors of your properties, share your contact information, and encourage them to call should they see something amiss, or have any problems with your tenants.
LANDLORD RISKS
Landlords create unreasonable risks for themselves by failing to stay up to date on the ever-changing regulatory landscape, by failing to properly screen, by failing to inspect, and by failing to properly address maintenance. With law overlays impacting Eugene and Portland landlords most heavily, it’s more important than ever to stay abreast of the requirements. (Read my article Landlord Penalties for a rundown of the ways you can be liable for financial penalties to your tenant.)
Another common way landlords create risk for themselves is by hiring unlicensed workers or trading work for rent. Hiring unlicensed workers is so stupid I don’t know where to begin. But you’ll learn when you do it and get turned in and must pay hefty fines for substandard repairs.
ORS 90.145 allows a landlord and tenant to agree to have the tenant perform certain repairs (no plumbing or electrical work) on the property in exchange for a rent reduction without creating an employee/employer relationship, but it’s almost always a bad idea. I’ve seen eviction cases for nonpayment of rent when work trades were involved where the judge couldn’t definitively determine the value of the work vs the value of the rent and the landlord lost. And having tenants perform risky repairs like roof cleaning, or other work that involves high ladders or chainsaws poses an incredibly high risk to you if they become injured, so don’t do it.
The Takeaway
To be successful in this business, be proactive. Evaluate your property with a critical eye for safety hazards or hire a professional to do it for you; make sure your property is legally habitable, and safe and secure for all reasonably intended purposes; screen all tenants thoroughly; document the condition of your property prior to transferring possession; use all proper forms and disclosures; make sure all forms are signed and initialed by all parties; inspect regularly; don’t allow risky recreational items to be used on your property such as pools or trampolines; use licensed contractors only; don’t trade work for rent; and document every interaction with each of your tenants. Make sure that your rental property insurance covers things like tenant vandalism and keep in force a Personal Liability Umbrella to cover you if you’re sued.
Nothing can prevent all risk but take it from the Voice of Doom, an ounce of prevention is worth a pound of cure.
This column offers general suggestions only and is no substitute for professional legal advice. Please consult an attorney for advice related to your specific situation.
Rev 9/2024
The other articles referred to in this article can be found at www.tiapoliti.com.
