Knowing who you're renting too...

More importantly, know how you're being represented by.

1 of the investors I represent as property manager reached out to me because the city scheduled a hearing for a code violation.  This is for the city of Cleveland.

Context:  in late summer (it's early Oct when he got the notice), he had 2 representatives who helped him buy the single family house also helped him rent it out.  The tenant was wanting to use it as a residential treatment facility.  She presented her business plan, bank statements, etc as part of her application process.  From what I saw after the fact, I don't know how much more info she could have been given and what she did give was obvious what her intent was.  These 2 representatives signed her a 2 year lease.

Apparently there's been a complaint by a neighbor or someone in the area as to this being a code violation because there's another residential facility near by...too close to this newly set up facility.

The owner asked what he should do and I said not to ignore it but get an attorney ASAP.

He then asked me about getting the tenant involved to also appear at the hearing AND sharing the cost of the attorney fees and any other costs he will incur.

This owner gave the 2 guys assisting him 100% authority to get the unit occupied and this was the result.  I explained to the owner that it wasn't like the tenant hid what she was doing or anyone found out after the fact what she's doing.  Lastly, I told the owner that most insurance plans do not allow businesses to be run from a residence; that should something happen to the property and the insurance company finds out this residential facility is a violation of the insurance policy, the issue won't be covered.

I explained the city sees him as 100% responsible for the property.  Him giving someone else authority to lease up the unit; him having me as his PM, etc does not absolve him from being informed.  This situation is his alone.

He then followed up saying he was being swallowed up by his mortgage payment and was desparate to get it occupied with money coming in.

I hate to be blunt...but if you're THAT desparate to get a vacancy occupied, YOU HAVE NO BUSINESS BEING AN INVESTOR.

PLEASE NOTE:  I don't know of any city in the greater Cleveland area who absolves an owner of knowing the local codes because they "didn't know".  Buyer beware carries over beyond closing on the purchase of a deal.  At the end of the deal, the owner is responsible for the property.  Now, for Cleveland, there is the newer legislation of Local Agent in Charge...but I've covered that topic on a few other blogger posts.

What churns my stomach more than anything is 1 of these 2 guys "helping" this investor is from out ot state.  For several reasons (I've talked with him direct, I'm managing other investors he's "helped", etc), these 2 guys don't know AND, more importantly, don't care what happens once a house transfers.  These 2 guys are also advocating for no inspections either because these 2 guys have a crew that will help turn a property properly...wink, wink!


As a PM, I have it written in my lease addendums that businesses can't be run from the unit.  I do this because most, if not all, insurance companies for rentals have this as a clause.  Additionally, as I mentioned also to the owner, this is a HUGE liability issue for the owner.  You have up to 5 people at any given time that aren't on the lease...wow, there's just so much that could go wrong from a liability point of view.


D & K Property Management Services
Karen Bostwick

(440) 590-5925

KarenMBostwick@yahoo.com

https://dkpropertymgmtsvcs.blogspot.com/

Broker License 2018002999

 

Bostwick Environmental Services

(216) 325-8505

BostwickLeadSafe@gmail.com


Metro Pest Control

(216) 312-7702

MetroPestControlOH@yahoo.com

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