A recent article by U.S. News indicates that investing in manufactured home communities has become a popular choice for good reasons.
While renting a home lot or community-owned homes to tenants can generate hefty returns on investments, operating a manufactured home community also has its pitfalls.
To protect their investments, manufactured home community owners should be aware of the liability risks involved in renting out a piece of property and take the necessary steps to prevent them or minimize their potential negative effects.
Here are the five most common risks faced by manufactured home communities.
Owning a manufactured home community involves more than just collecting payments from tenants and pocketing the profit. A community owner must also keep the rental units habitable for renters.
In addition to regular maintenance tasks, unexpected events like fires, hurricanes, theft and accidental damage caused by tenants or animals to the rented units and/or furnishings can significantly impact overall maintenance costs.
If a community doesn’t carry adequate manufactured home insurance and an unfortunate event does occur, the community owner might have to pay for repairs and/or replacements out of his or her own pocket and even face civil litigation.
Injuries can and do happen. If a tenant, guest, contractor or courier gets injured or is attacked by an animal while on the rented property of a community resident, the community operator can be held liable for the injury.
In liability situations, it’s essential to remember that the owners of manufactured home communities are treated like their tenants. Under the legal theory of premises liability, a manufactured home community owner or a renter can be held legally responsible for an injury, as long as it results from the owner’s or tenant’s negligence. The same theory applies to negligent acts that damage personal property.
While manufactured home communities typically hire independent contractors for maintenance and repair work, most also have their own employees who perform various tasks.
But what happens if an employee damages one of the community homes, a tenant’s personal property, or worse, does something that leads to another person’s injury? Without adequate manufactured home insurance, the community may need to cover all the costs on property damage and/or injuries.
Manufactured home communities aren’t necessarily responsible for their renters’ belongings.
But if a tenant's personal property is stolen, damaged, or destroyed because of the action or inaction of the community owner, other renters, or their pets, the community may need to settle the claim at its own expense, provided that its insurance doesn’t include coverage for loss or damage to the renter’s personal property.
To avoid such situations, we suggest that manufactured home communities opt for specialized insurance that provides comprehensive coverage.
A manufactured home community that operates without manufactured home insurance risks having to pay not only the monetary compensations that courts might award in the future but also the associated defense costs.
Opting for a comprehensive renters insurance program designed to meet the unique needs of manufactured home communities remains one of the best ways to protect yourself, your investment, and your residents against various perils.
To request a free, no-obligation insurance quote or learn more about managing your insurance costs, please contact Triad Financial Services today.