Why you should screen your tenants

[justin0419]

From Yahoo.com today:
http://news.yahoo.com/s/ap/20101206/ap_on_re_us/us_explosive_house

The most interesting line of the article from an REI perspective:
 The home has been declared a public nuisance and therefore the county does not have to reimburse the owners, who were renting the house to Jakubec.

Wonder how the LL's insurance will view this?

[redhawk]

I do not believe that there would be a way to screen out people like that. He could have been a great tenant for years until he lost his job. How would the insurance co see this? Certainly the bank would want to be paid and call the loan due. Seems the LL will be on the hook for this.And another small business is driven out of business. They make it sound radioactive with the toxic waste thing, though.
Redhawk

[tatertot]

I'm pretty sure my insurance does not cover seizure by government, which is exactly what this was.  So I think the owner of the house has got a serious problem.

You can screen out a lot of bad ones, but a few of them are going to get through.  Even the FBI, with all their resources, doesn't screen out all the bad ones when they do a security clearance.  There is no way a landlord can do an FBI grade security clearance on applicants.

[davewindsor]

Wonder how the LL's insurance will view this?

That got me thinking and I had to google that one, but I think it would be covered (but, it's always best to double check with a lawyer).

It wasn't related to a drug seizure, but to a guy with an illegal "virtual bomb making factory".  It even said that the type of bombs where "normally the domain of suicide bombers."  Suicide bombers commit terrorist acts.  If there's a hint, which I think the article is implying, that he could be selling/giving bombs to terrorists, then that's a plan to commit a terrorist act and it should be covered under a homeowner's policy.  I'm willing to bet that the prosecutor will even try to portray the bomb maker as a terrorist.  I googled for reference the following article on homeowners policies and terrorist acts below.

http://www.houselogic.com/articles/homeowners-insurance-terrorism-covered/#ixzz17iXOIxHG

It says unless it's an act of war, terrorist acts should be covered under regular homeowners policies unless there's a terrorism exclusion.  Furthermore, the article states, "Several states, including Florida, Massachusetts, New York, Ohio, Pennsylvania, and Texas, forbid terrorism exclusions."

[furnishedowner]

I just looked at my new policy for a 4-unit property.  Under "EXCLUSIONS" is listed:  Governmental Action, Seizure or Destruction of property by governmental authority.

Looks like that property owner is out one house, hope his land value is greater than his mortgage.

Maybe his insurance will pay off anyway, there could be a lot of bad P.R. if the news media interviews Mr. Desperate Escondido Landlord.

Furnishedowner

[tatertot]

Maybe homeowner's insurance would cover acts of terrorism. I'd check to be sure before I depended on it. But there is no homeowner's insurance on a rental house. Rental insurance gives much less coverage than homeowner's insurance.

For a house covered by homeowner's insurance to be chock full of bomb making paraphernalia, the home owner would have to be the guilty party. At that point, the insurance company would not pay because a criminal activity was taking place. (they won't pay you if you blow up your own residence with a meth lab, either).

I checked the new policy I just got for a rental and it does not cover seizure by government.

Perhaps the landlord will get paid under eminent domain. Maybe.  I sure hope this landlord isn't out the value of his house. At least he didn't have to pay for the clean up and disposal of the explosives, like he would have had to pay for the clean up of a meth lab. 

But yeah, agreeing with the OP--- screen like crazy and reject anyone even slightly suspicious. Hope that the bad ones haven't traveled under the radar and that you can find something in their record so you don't get stuck with them.

[davewindsor]

Maybe homeowner's insurance would cover acts of terrorism. I'd check to be sure before I depended on it. But there is no homeowner's insurance on a rental house. Rental insurance gives much less coverage than homeowner's insurance.

In the past, I bought a SFH with a homeowner's policy on it, assumed the policy, and rented it out.  I told the broker I wanted to rent it out and the insurance company added a clause that said I could sublet it to renters provided no more than 3 unrelated people lived there.  The policy was $600 a year.  I saw the clause right in the policy.  Went up by like $40.

Whether they had a homeowner's policy or not, I don't know.  Maybe things have changed since then or maybe it's different in your area, but I didn't need to switch to a renter's policy to rent it out.  The only time I needed commercial policies where with larger buildings like I have now or a fourplex with one retail unit on the main floor and the other three were apartments..