November – 2013

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Know Your Renter’s Insurance Policies and Follow Your Review Protocols
The Eviction Educator
THS Sets Dates for 2014 Client Lunches and Education Workshops

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Volume 14 • Issue 11 November 2013 Landlord News 3600 South Yosemite Street Suite 828, Denver, Colorado 80237 Denver Phone 303.766.8004 FAX Completed Eviction Forms To: 303.766.1181 or 303.766.1819 Colorado Springs Phone 719.550.8004 FAX Completed Eviction Forms To: 719.227.1181 KNOW YOUR RENTER’S INSURANCE POLICIES AND FOLLOW YOUR REVIEW PROTOCOLS That’s not covered! And I’m getting sued! Do you know where you stand if disaster strikes? The majority of landlords now require renter’s insurance. Unfortunately, too many landlords are surprised when the insurance company informs them that an event is not covered. Worse, some landlords find out that an event is only partially covered by a tenant’s renter’s insurance and are getting sued by the tenant’s insurer. Tenant insurancerelated problems result from a lack of clear policy and a failure to monitor that the policy is being carried out. You may think you have it covered, but most landlords’ tenant insurance-related policies do not address all issues. The threshold issues are the types and amounts of insurance you require. Generally, are you going to require both liability and property, and what are the limits? For an extended discussion of insurance types, see the October 2009 edition of Landlord News. However, coverage amounts and types are not the only issues. Does the insurance company notify you if the insurance policy is canceled, either by the tenant or the insurance company? Is a tenant’s failure to comply with your insurance policies a clear breach of your lease? Do you know what subrogation rights are? Are you reviewing and monitoring to ensure that tenants have complying insurance? Insurance issues surprise landlords because they fail to monitor and review. Based on our experience, many landlords think they are monitoring and reviewing, continued on page 2 1. With the holiday season upon us it is very important to remember that filing dates may not follow the normal filing pattern. In order to be safe, not sorry, please check the filing calendar on our website at evictions/filing-calendar/. The website’s Eviction Calendar does not reflect court dates for clients that are on the Arrangement. 2. After your successful court date we must wait 48 hours to request the Writ from the court, and the courts can take up to 3 additional days to issue the Writ. Then, the sheriff can take anywhere from 1-4 weeks before coming to execute the physical eviction. If you know that your resident is NOT going to move/pay and you would like the resident removed from the property as soon as possible, it is important that you convey this information to the THS Evictions Staff immediately after the court date. By notifying us that you want the writ to go to the sheriff ASAP you will help to expedite the process. If you wait to let us know, you will only delay the sheriff’s eviction further. 3. If your case goes to trial, a writ must still be issued and sent to the sheriff if you’d like to proceed with a physical eviction. The writ requires the regular 3-5 day timeframe. We recognize that you are anxious to have the process move forward as expeditiously as possible, but it is important for you to know that all of these time consuming steps in the process must be taken in every case. Therefore, the only thing you can do is to just be patient. JJJJJJJJJJJ KNOW YOUR RENTER’S INSURANCE POLICIES AND FOLLOW YOUR REVIEW PROTOCOLS continued from page 1 but they are not. Monitoring is limited, in many cases, to receiving a piece of paper stating that the tenant has insurance at move-in. In the majority of cases, no one is verifying that the tenant’s insurance complies with the landlord’s coverage policies. Onsite teams fail to verify for a variety of reasons, including lack of training. However, the primary reasons onsite teams fail to verify insurance is lack of time and expertise. Insurance policies are written by lawyers in legalese to protect the insurance companies. The average person will struggle trying to understand and reconcile the fine print of most renter’s insurance policies. Onsite teams don’t have the time to review a handful of policies, let alone dozens or hundreds over the course of a year. Un-reviewed renter’s insurance policies become like boxes of chocolates. You never know what you are going to get. Most landlords are unaware of the importance of subrogation rights. Subrogation rights are a potential land mine for landlords. In layman’s terms, subrogation means the substitution of one person’s rights for another. Using a common scenario as an example is the best way to understand subrogation rights. The tenant leaves the unit and turns the heat off in the middle of winter. The pipes burst causing substantial damage. The tenant is insured so the tenant’s insurance company pays for the damage. However, the tenant’s insurance company asserts that the pipes burst because you (the landlord) failed to maintain them, and files suit against you to recover the money paid out on the tenant’s insurance claim. Many insurance policies require the tenant to assign his rights to sue to the insurance company as a condition of the tenant getting paid. Under subrogation law, the insurance company literally steps into the shoes of the tenant and can assert all claims that could have been brought by the tenant. State Farm has been particularly aggressive in asserting subrogation claims against our clients. Regardless of the facts, most of the time it doesn’t appear to State Farm or any insurance company that the tenant was at fault. Rather, the insurance companies view every subrogation suit as an opportunity for them to get all or part of their money back from you. Theses cases are sent en masse to continued on page 3 THS SETS DATES FOR 2014 CLIENT LUNCHES AND EDUCATION WORKSHOPS Please check out the dates for our scheduled 2014 Client Events and mark your calendars. Remember it is never too early to sign up for these activities on our website. Landlord News November 2013 Page 2 KNOW YOUR RENTER’S INSURANCE POLICIES AND FOLLOW YOUR REVIEW PROTOCOLS continued from page 2 collection law firms, who get paid on contingency so it doesn’t cost the insurance companies a dime. Even when the insurance company has a weak case, there is no or little risk to them because you can’t recover your attorneys’ fees in most cases. Unfortunately, because you have to pay attorneys’ fees to defend yourself, often it makes more economic sense to pay a nuisance settlement rather than running up a large unrecoverable attorney fee bill. You must take action to prevent subrogation claims from being asserted against you by an insurer. Your lease should contain a subrogation waiver. For example, “unless prohibited by law, Resident waives any insurance subrogation rights or claims against Landlord, Owner, and their insurers”. We have successfully used subrogation waivers to back down insurance companies. However, the law from subrogation is certainly far from clear. Accordingly, you cannot and should not rely on a subrogation waiver alone. The tenant’s renter’s insurance policy is the key to defeating subrogation claims. Subrogation rights are based on contract. The contract that creates subrogation rights is the renter’s insurance policy. Accordingly, if the policy contains no subrogation rights, the insurance company has no legal ability to sue you to recover amounts paid out to the tenant under the policy. You have the legal right to determine acceptable renter’s insurance terms and conditions. You do not have to accept a policy that gives an insurer subrogation rights. However, if nobody is reviewing renter’s policies, tenants will have policies giving insurance companies subrogation rights. The current industry model for renter’s insurance allows tenants to provide renter’s insurance two ways. Tenants can use the community’s recommended insurance provider (“Program Insurance”). Alternatively, tenants can shop for and provide their own complying renter’s insurance (“Independent Insurance”). Step one of any renter’s insurance policy should be to carefully review your Program Insurance policy. You can’t control State Farm, Allstate, or GEICO. However, when you are delivering dozens, hundreds, thousands, or maybe even tens of thousands of customers to an insurance company, their standard renter’s insurance policy should conform to your specifications in every respect. If your Program Insurance doesn’t conform to your exact specifications, find a new provider. By taking this simple step, you can ensure that a large percentage of renter’s insurance policies comply with coverage requirements, including notification to you if cancelled, and that the insurance company has no subrogation rights. For various reasons, some tenants are still likely to get Independent Insurance through a company other than your recommended provider. One common reason is that a non-program insurance company may provider better coverage or lower rates because the tenant has other insurance policies with that company. You may allow tenants to get their own insurance for marketing reasons. Due to the number of insurance companies and the variety of policies offered, with substantially different terms and coverage, monitoring and reviewing non-program renter’s insurance is problematic. Our recommendation is to leave insurance policy review to us. We can review Independent Insurance policies, economically, against your insurance criteria. You can charge an Independent Insurance coverage review fee. Assessment of an Independent Insurance review fee may further drive tenants to your standard Program Insurance policy, which has been or should be carefully vetted. The bottom line with non-Program Insurance policies is that you either review them or live with the consequences if something happens. JJJJJJJJJJJ Landlord News November 2013 Page 3 Questions To Ponder On A Slow Day Ever wonder what the speed of lightning would be if it didn’t zigzag? If you had amnesia and then were cured, would you remember that you forgot? Why do banks charge you an ‘insufficient funds’ fee for money they already know you don’t have? How much deeper would oceans be if sponges didn’t live there? If Barbie is so popular, why do you have to buy her friends? If horrific means to make horrible, does terrific mean to make terrible? Why is there always one in every crowd? If you took all the ones in every crowd and put them in another crowd, will there be one in that crowd? Landlord News November 2013 Page 4 IMPORTANT THS NOVEMBER DATES November 5th Advanced Fair Housing THS Lower Conference Center 3600 S. Yosemite Street Denver, CO 8:30 a.m. – 11:30 a.m. November 11th ALL COURTS CLOSED VETERANS DAY HOLIDAY November 13th AASC Legal Handbook Seminar @ Apartments Etc. 550 S. Academy Blvd. Colorado Springs, CO November 15th AAMD Charity Auction The Island Event Center 2233 S. Geneva Street 6:00 p.m. – 9:00 p.m. Denver, CO November 28th ALL COURTS CLOSED THS CLOSED THANKSGIVING DAY November 29th THS CLOSED