prospective tenant wants to do daycare


I have a prospective tenant that says that she currently does daycare for 4 - 6 kids.

I’m trying to understand the liability concerns. I’m assuming that she and/or I might need more insurance. Any recommendations? Watch-outs?

Thanks. :-\ :-\ :-\

I don’t let tenants run business out of my rentals.

I think this is a problem looking for a place to happen. If you think tenants can cause problems, think about 4-6 soccer moms that have kids there…millions in liability insurance wouldn’t be enough.

Do you hold your properties personally or in an entity?

I would pass on this…


I don’t mind a business; my concern would be that many kids tear up a place - especially carpet. Get a bigger deposit.

I’d also get a written waiver that I was not responsible for maintaining any daycare or playground equipment (that they could get hurt on). My responsiblity is to maintain the structure to residential, not daycare, standards.

And make sure you maintain the place. Regular inspections would be a must.

And nobody should own rental property in their name. It makes you a target.

Also what’s the zoning for your property? Does the city allow that type of business and will they need a permit and all that? 4-6 kids running around will also add to the wear and tear, better make sure you get a good cleaning deposit plus a nice security deposit.

Good points!

Thank you! :slight_smile:

As a former daycare mom, I can say that in most states there are no requirements for providing daycare for less than six children. More than that is where zoning rules come in. I would raise the rent, with an extra “business” deposit, and have the tenant sign a waiver, as well as have the children parent’s sign a waiver, to hold you harmless in any event. Just my 2 cents.

If you do allow this, redo the lease (or an addendum) making them have daycare insurance policy listing YOU as an additional insured. This way, if any liability suit is started, their policy is brought in first (you are an additional insured) before your landlord policy is touched.

Also keep in mind, some insurance companies do not allow a business like daycare to operate out of something they insure and may have an exclusion to that effect written into your policy. Check with your insurance agent on that one.

Your biggest exposure is the liability of these kids on your premises not the propertyu damage that may be caused.

Good luck!