Lease/Purchase Liability

[dscurlock]

What is the name of your state (only U.S. law)? AL

I have someone interested in lease/purchase of my home in AL.
Seeing that I am the owner of the property, and I will have
property / liability through state farm. Lets say something happens
to someone on the property their fault or not, my fault or not...
like electrical fire, house burns down, child dies (out of my control)
Can they get a payoff from state farm, then turn around and sue me?
I have heard before where people have sued insur, and the owner,
where as, I thought the owner gets insurance to protect himself...
if not, then why even bother getting insurance or even renting...

I would like to rent to them, but not under a high stakes
game of me being liable for unknown factors out of my control,
even more so, if I have liability coverage, and they are able to sue me....

Can someone please clarify?

Thank-You

ps. I did call state farm, and they did not know the answer to this.
They said no one had asked them. They have a call info underwriting....

 

[justalayman]

I have heard before where people have sued insur, and the owner,
where as, I thought the owner gets insurance to protect himself...

really? Why would they sue the insurance company? What did the insurance company do that would make them liable to a tenant of yours?

It sounds like you need to have a long discussion with your insurance provider. Especially given you are considering renting or selling the property under a rent to own contract, your insurance needs will change. The type of insurance you require changes altogether as insuring a property you reside in and one you are renting or selling is very different.

 

[justalayman]

ps. I did call state farm, and they did not know the answer to this.
They said no one had asked them. They have a call info underwriting....

then apparently you need to find an insurance agent that knows what the Hell they are doing.

 

[dscurlock]

really? Why would they sue the insurance company? What did the insurance company do that would make them liable to a tenant of yours?

It sounds like you need to have a long discussion with your insurance provider. Especially given you are considering renting or selling the property under a rent to own contract, your insurance needs will change. The type of insurance you require changes altogether as insuring a property you reside in and one you are renting or selling is very different.

Ok, maybe I worded it wrong, that is technical....

Lets go with "file a claim" they get a pay off, can they still sue me?
Since I own the property, if someone were to get injured or death,
then I would have to "file a claim" Am I not getting liability to cover
myself, i justdont know to what extent? and that is my question, if they get a payoff/settlement
from the insurance company, can they still sue me....?

This is why I ask these questions here...I dunno, what if I get $100k
liability, and they think they should get million...
I was hoping to ask because someone here may have experience with these questions....

 

[FarmerJ]

If you own it free and clear then your best bet may just be to do it as rental only but then at the end of the lease ( one year ? two years then the tenant will have to have own financing in place to buy you out and if they cannot then you will list the property this way you are able to do a lease that insist they must carry renters insurance and they wont have any special legal hold on the property nor would they have the right to begin to do any kind of work on it since it would not be theirs and your lease with them can expressly forbid any remodeling /renovations alterations of any kind by them and last but not least if your going to do this anyway the biggest problem is that many so called tenants who enter into lease to own still think they have the right to do what they want to properties and some LLs who sell via so called rent to own then think they are excused from making repairs which is a crock to think it would excuse the LL because whats more likely to happen is say in winter a rent to own tenant has a furnace that totally dies , then the LL seems to think they dont have to fix it , in the time being the rent to own tenant cant even get a loan to fix it or pay for a new one out of pocket and has either electric heaters that burn it down or has electric heaters that cant keep up in the cold and has pipes freeze split and walks away leaving the carnage behind for the landlord. SO if your gonna do this you want to stay just a landlord but give them a set date to get own financing to buy you totally out.

 

[dscurlock]

If you own it free and clear then your best bet may just be to do it as rental only but then at the end of the lease ( one year ? two years then the tenant will have to have own financing in place to buy you out and if they cannot then you will list the property this way you are able to do a lease that insist they must carry renters insurance and they wont have any special legal hold on the property nor would they have the right to begin to do any kind of work on it since it would not be theirs and your lease with them can expressly forbid any remodeling /renovations alterations of any kind by them and last but not least if your going to do this anyway the biggest problem is that many so called tenants who enter into lease to own still think they have the right to do what they want to properties and some LLs who sell via so called rent to own then think they are excused from making repairs which is a crock to think it would excuse the LL because whats more likely to happen is say in winter a rent to own tenant has a furnace that totally dies , then the LL seems to think they dont have to fix it , in the time being the rent to own tenant cant even get a loan to fix it or pay for a new one out of pocket and has either electric heaters that burn it down or has electric heaters that cant keep up in the cold and has pipes freeze split and walks away leaving the carnage behind for the landlord. SO if your gonna do this you want to stay just a landlord but give them a set date to get own financing to buy you totally out.

I appreciate your reply, but your reply has nothing to do with my liability question.
yes, it will be 1 year lease/buy option, after their lease is up, and if they are able
to purchase, then fine, if not, then they can walk away, or even lease again (if I wish) or I can put on market.
and for the rest of what you are saying, I understand, this just isnt anyone, this
is a friend of my friend that lives next door, so I know she will help out as much
as she can, and let me know otherwise, If it were not a friend of a friend that lives right across the street, it would be on the market...
I am doing my friend a favor, and the renter because I know she wants to live next to her.******
and more then just a friend, family, and I am trying to do what I can, as I am not a complete ass...
but none of this has anything to-do with my liability questions. I am not concerned over stuff...
they broke this, they broke that, all of that is apples to oranges compared to injury or death....

 

[TigerD]

1. Talk to an estate planning attorney about asset protection.
2. Follow that attorney's advice.
3. Talk to a real estate attorney about the "lease/option" plan.
4. Follow that attorney's advice.
5. List the property for sale with a Realtor
6. Or place the property for rent with a property management company.
7. Stay away from the business until you study up some.

DC

 

[dscurlock]

1. Talk to an estate planning attorney about asset protection.
2. Follow that attorney's advice.
3. Talk to a real estate attorney about the "lease/option" plan.
4. Follow that attorney's advice.
5. List the property for sale with a Realtor
6. Or place the property for rent with a property management company.
7. Stay away from the business until you study up some.

DC

easier said then done, i guess that Is why I am trying to reach out on the forum,
I have already called the local atty office, and they handle real estate....
after 3 days, 2 emails, they still have not returned my calls...
this is why I am hoping state farm can clarify more when
they talk to under-wring to clarify "liability"....

next you will say:
Why dont you go to the office.....

My reply will be something like:
I do not live in AL anymore...

 

[Zigner]

easier said then done, i guess that Is why I am trying to reach out on the forum,
I have already called the local atty office, and they handle real estate....
after 3 days, 2 emails, they still have not returned my calls...
this is why I am hoping state farm can clarify more when
they talk to under-wring to clarify "liability"....

You've called a whole one attorney?

Call a different one!

 

[dscurlock]

You've called a whole one attorney?

Call a different one!

its a small town...
I will start calling on monday....

 

[Stressed About]

I feel for you trying to get online advice.

It can be like pulling teeth. I tend to think the majority of us know that ultimately we need to contact an attorney, but we are looking to get examples of what has happened with people in the same situation or has some knowledge they can spread to help out when like you, we tend to be in small towns and tough to get around to compare lawyers in person.

 

[Silverplum]

I feel for you trying to get online advice.

It can be like pulling teeth. I tend to think the majority of us know that ultimately we need to contact an attorney, but we are looking to get examples of what has happened with people in the same situation or has some knowledge they can spread to help out when like you, we tend to be in small towns and tough to get around to compare lawyers in person.

Says the lamb who has started and deleted several threads, and received valid legal info from several experienced senior members.

 

[dscurlock]

I feel for you trying to get online advice.

It can be like pulling teeth. I tend to think the majority of us know that ultimately we need to contact an attorney, but we are looking to get examples of what has happened with people in the same situation or has some knowledge they can spread to help out when like you, we tend to be in small towns and tough to get around to compare lawyers in person.

If if find out anything, then I will post, maybe it will help someone else...
personally, I not sure why I should be liable past what tenant may
get from insurance; If injury should occur on property or (anywhere) then they should
have had health insurance, if death should occur on property or (anywhere)
then they should have had life insurance....

 

[justalayman]

I feel for you trying to get online advice.

It can be like pulling teeth. I tend to think the majority of us know that ultimately we need to contact an attorney, but we are looking to get examples of what has happened with people in the same situation or has some knowledge they can spread to help out when like you, we tend to be in small towns and tough to get around to compare lawyers in person.

OP asked a question that really cannot be answered here. It requires a review of his specific situation which is not going to happen online.


if he wants a simple answer;

buy as much insurance as you can afford to buy and hope the limit is never tested

but that results in wasted money so he needs to speak with somebody, and yes, he will likely have to pay them, to review his specific situation and advise him on the matter.


to his more specific questions:

Lets go with "file a claim" they get a pay off, can they still sue me?

yes. will it go anywhere? hopefully not as an insurance company will generally obtain a release of all claims concerning the matter as part of their job.

Since I own the property, if someone were to get injured or death,
then I would have to "file a claim"

while OP can be sued, unless he is deemed liable, which usually requires some failure to act under a duty imposed upon him (most often negligence is the basis for a claim), the suit is not sustainable. If he was negligent, there is no way to suggest what a proper amount of insurance for him would be with the info we have here.

Am I not getting liability to cover
myself, i justdont know to what extent?

(as I twist my little finger in the corner of my mouth) One BILLION dollars.

and that is my question, if they get a payoff/settlement
from the insurance company, can they still sue me....?

as noted above, hopefully a release was obtained by the insurance company but even with that, they could still file a suit.

but beyond that, the answer is a big: it depends on the facts of the situation

This is why I ask these questions here...I dunno, what if I get $100k
liability, and they think they should get million...

then you hope they don't win over $100k.

I was hoping to ask because someone here may have experience with these questions....

experience is not going to allow for an answer to the question. A review of your specific circumstances is what it takes to give you an answer.

 

[quincy]

If if find out anything, then I will post, maybe it will help someone else...
personally, I not sure why I should be liable past what tenant may
get from insurance; If injury should occur on property or (anywhere) then they should
have had health insurance, if death should occur on property or (anywhere)
then they should have had life insurance....

It is definitely smart for any tenant to have insurance to cover their personal property, their health and their lives. But it is equally smart for you to have insurance that covers your rental property.

The insurance company will either pay out in the event of a loss, or not, depending on the type of coverage you have and the facts of the claim. Just because you have your property insured against losses does not mean your tenant will benefit.

As to a lease with option to buy: You own the property so naturally you will want to protect it by having insurance. If the tenant decides to exercise the option and purchase the property at the end of the lease period, then they will become responsible for the property and its insurance coverage. They become the new owners.

An attorney is necessary just to ensure that the lease with option to purchase agreement is drafted properly and all of your rights and the rights of the tenant are properly protected. You want all terms of the agreement to address all disputes that could arise and you want the terms to be clear, unambiguous and understood by all parties to mean the same thing.

Your insurance agent should know exactly what coverage is required for you as a landlord.