Day Care on Your Property??

Should You Allow a Tenant to Conduct a Daycare Business in Your Rental Property?
courtesy of http://www.rentalprop.com/tip.htm

I would never, under any set of circumstances, rent one of my California properties to anyone that might use the property as a day care facility. We have a "deep pockets" law in the Golden State that make you very vulnerable to lawsuits if the tenant is negligent in their operation of the daycare center (on your property) and it results in a serious injury or death to a child. Mr/Ms Landlord is a perceived deep pocket target and fully exposed to civil suits. I have in the past written into my rental agreements an exclusionary clause for someone that is or was a daycare owner or worker.
Howard BlumNovato, CA


Thanks, Howard, an excellent word of caution. Now to more words of caution about the same subject.

You need to be extremely careful, think hard, and get good legal advice before you allow a tenant to run a daycare business in your rental property.. In suit-happy America anything that goes awry results in a lawsuit against the person most able to pay, not necessarily the one who was at fault. In this case it will be you, the owner of the property, not the tenant.

Accidents are your biggest concern. Houses that care for children need to be retrofitted to avoid them. You would almost need to inspect the house yourself to be sure that there are no accidents waiting to happen. Even then you might not have spotted them all. Check the internet to see if there's information about setting up day care and preschools. One site that could provide the information you need is www.startadaycare.net.

You also need to get information about what, if any, businesses are allowed in residences and what permits are required. Check with the city attorney or building department. The failure of your tenant to have the right licenses and permits would geometrically increase your liability should a problem arise or a child be injured in the business.

Third, your tenant needs to have complete liability insurance, possibly with you named as a loss payee, in the event there was any suit against you.

Fourth, make sure you have a large umbrella policy to cover your liability. Ask you insurance agent for some ideas on how much you need to have.

Your first duty is to yourself, not the tenant. Err on the side of over-caution. You need to take the responsibility to see that the property is free from hazards. Most important, if you don't feel completely at ease having your tenant run a daycare business out of your rental property, don't allow it.