Renting out space on personal property to a sports team

[Softballmom2018]

What is the name of your state? MI

A sports team approached my husband and I about renting out our barn to practice in during the winter. They would pay us. So I'm assuming we need to start a business to protect our personal assets from liability. But since we would be a business, our homeowners insurance no longer covers the facility so we would have to take out a commercial liability policy, which then means the insurance company will need to do inspections regarding lighted exit signs, and points of entry, etc. Is there a way to still rent this space to the sports team with out going through all of the insurance stuff and yet not exposing us to huge liability risk?

 

[Taxing Matters]

That's a good question to ask a business attorney in your state. But the answer is likely to be no. You will want to have insurance and you will want to have the place meet the local code requirements for that kind of facility as well. If you don't take the necessary steps to ensure the facility meets at least minimum safety requirements that can come back to bite you big time if someone gets injured. You can ask an attorney whether waivers of liability signed by the team members would be effective to help you. If the team is made up of kids, however, I certainly wouldn't count on those waivers being good.

 

[quincy]

What is the name of your state? MI

A sports team approached my husband and I about renting out our barn to practice in during the winter. They would pay us. So I'm assuming we need to start a business to protect our personal assets from liability. But since we would be a business, our homeowners insurance no longer covers the facility so we would have to take out a commercial liability policy, which then means the insurance company will need to do inspections regarding lighted exit signs, and points of entry, etc. Is there a way to still rent this space to the sports team with out going through all of the insurance stuff and yet not exposing us to huge liability risk?

In Michigan, a release and waiver of liability, assumption of risk and indemnity agreement can defeat an ordinary negligence claim, if the waiver is drafted clearly and carefully - but it cannot protect against gross negligence claims.

Insurance would be a must, not only for you but as a requirement for the sports players.

There was s Michigan Court of Appeals case last year that involved an injury suffered by a roller derby participant. The women sued both the insurance company and the roller derby association for ordinary and gross negligence.

If I can find a link to the case that works on this site, I will return with it. The Court's discussion in Budros v. Womens' Flat Track Roller Derby Association,, 2017 Mich App LEXIS 1525, is worth reading. The woman lost her suit, in large part because of the waiver she signed.

I am not sure you will want to go to the expense, or expose yourself to the risk, of hosting the sports team - but it is doable. You will want to discuss the idea with an attorney in your area.

 

[adjusterjack]

Is there a way to still rent this space to the sports team with out going through all of the insurance stuff and yet not exposing us to huge liability risk?

No.

You buy the proper insurance, you have an attorney draft a proper contract, and you insist that the team have its own insurance and get their certificate of insurance.

Otherwise don't do it.

In fact, don't do it. Period.

I know how tempting it is to make money off your property. There's just too many ways it can go wrong. Believe me, I spent 35 years in the insurance industry and I have seen all the ways it can go wrong.

Even with insurance, you won't like what happens.

Here's the decision Quincy referred to.

https://scholar.google.com/scholar_case?case=14291634680002220049&q=budros+v.+womens'+flat+track+roller+derby&hl=en&as_sdt=4,23

 

[quincy]

Thanks for providing a link to the case, adjusterjack.

It has a good discussion of ordinary and gross negligence, and of waivers.

Budros, the injured roller skater, lost her suit against the Derby Association and the insurer but, like many lawsuits, it was time consuming and costly for all parties.

If you are interested in making alternative uses of your barn - and I can understand how the idea might be an attractive one - you should do so only after considering all of the pros and cons, and preparing in advance for worst case scenarios.

Good luck.

 

[xylene]

Why not make the team finance the improvements and then structure the cost over a 5 year lease?

 

[LdiJ]

What is the name of your state? MI

A sports team approached my husband and I about renting out our barn to practice in during the winter. They would pay us. So I'm assuming we need to start a business to protect our personal assets from liability. But since we would be a business, our homeowners insurance no longer covers the facility so we would have to take out a commercial liability policy, which then means the insurance company will need to do inspections regarding lighted exit signs, and points of entry, etc. Is there a way to still rent this space to the sports team with out going through all of the insurance stuff and yet not exposing us to huge liability risk?

What kind of sport and how old are the players?

 

[quincy]

I like your idea, xylene. Putting the cost of improvements on the sports team eliminates a significant part of the problem.

It doesn't, however, eliminate the liability risk and the need for insurance and valid waivers.

 

[PayrollHRGuy]

Where in the OP is there any mention of needed improvements?

 

[quincy]

Where in the OP is there any mention of needed improvements?

First post. Plus facility must be brought to code.

 

[LdiJ]

First post. Plus facility must be brought to code.

I think that the OP has to tell us what sport is involved and how old the players are.

 

[quincy]

I am thinking the sport Softballmom speaks of might be softball.

The advice won't change much regardless of sport or age, though.

There will still need to be liability insurance and waivers and the facility brought up to code.

The risk a participant assumes in participating in a sport can vary from sport to sport and by age, so insurance costs can be less or more depending on a sport's inherent risk.

But it should be on all participants of any age to show their own proof of insurance. And waivers and release of liability forms can reduce insurance costs for Softballmom and provide some protection from an ordinary negligence claim.

What would need to be assessed is the risk of a claim of gross negligence and the amount of insurance required should such a claim arise despite best efforts to avoid all accidents and injuries.

 

[Taxing Matters]

It's a non residential rental, and yes, that makes it a commercial use of the property. The fact that it is on the same property as your residence is not going to change that. You will need to get appropriate insurance and ensure the barn meets whatever code requirements your city/county has and ensure that the barn is set up with appropriate safety features as well. It would likely be a good idea to set up a limited liability business entity, too and get an appropriate contract and waivers of liability (to the extent such waivers would be enforceable in your state when it comes to kids engaging in sports activities). You would really want to see a business attorney in your state for advice on this to get it right, as well as contacting one or more insurance companies to get the insurance you need.

 

[LdiJ]

What is the sport?

 

[quincy]

Softballmom's user name could provide a clue to the sport.