As I look to a strong finish to the 2nd half of my 9th year in business and 19th practicing law, I thought a few legal pointers might be helpful for those of you looking to avoid the legal perils of becoming landlords.
As prospective landlords you should always hire a Connecticut attorney to set up a Limited Liability Company (LLC) to insulate you from personal liability. As a landlord, if a tenant is injured at your property your personal assets may be exposed to many types of claims without proper insurance coverage and an LLC. When you are borrowing money from a lender, please make sure to disclose your intention to own the property under an LLC. Landlords who bought their property personally and now have a mortgage should be aware that a transfer of title by way of quit claim deed to your new LLC while legal, may violate the term of your mortgage agreement, and you could if discovered be deemed in default of your note.
If you are buying a multi-family property or even a single family that is occupied by a tenant be sure to obtain copies of all leases, and the payment history and applications of the tenants with the amount of their security deposits. An important tip is to obtain a tenant signed estoppel certificate that confirms from the tenant the information being provided by the selling landlord about the lease term, the amount of the security deposit, and the payment history.
I also recommend to all prospective landlords that they use an attorney drafted lease agreement. Do not pick one from the internet as it will omit many nuances of enforcing Connecticut law. Leases offer both parties rights and obligations but are vital for a landlord when it comes to holdovers beyond the lease term and collections. A written lease can be sued on for 6 years from the date signed (later in some circumstances) while an oral lease must be sued on within 3 years in Connecticut.
I do not charge my landlord clients (or those looking to become landlords) for telephone calls as I want them to avoid the many pit falls I see landlords falling into daily. Please call 203-269-1665 or email geoff@einhornlawfirm.com if you or someone you know owns rental properties and wants to review their leases and insurance coverage or to discuss evictions, collections or real estate purchases or sales.
As always your referrals and business are truly appreciated.
Sincerely,
Geoffrey Einhorn
