Our lease limits the use of a rental property to that of a residence. It was quite a surprize recently when our plumber followed up on a repair of a leaking drain line with a simple statement. “She must have 10 kids she is taking care of.” What?
Turns out our tenant was running an in-home day care in our rental. Easy enough to advertise for kids and pretty soon the home is full all day. Simple issues like being licensed or certified are not part of her agenda. I am certain she is good with the kids and hate to rain on this parade….but this is a business, not just watching a few kids for friends.
What to do? She always pays her rent on time and has never been a problem. Yet, what happens if something tragic should occur with one of these children? I decided to first contact the owner and share my concerns. The owner does not like his properties to sit vacant long so I find he typically gives lots of leeway for tenants as long as they do not fall more than 30 days behind on rent. In this case, he was more concerned about damage to the property that could possibly occur with all of these pre-schoolers running around. I shared the liability concerns and a decision was made. In this case, the child care business needed to cease and if it required a transition for the tenant, we would allow 30 days.
Thirty days is a long time for a lot of damage to occur. But it also was humane to the tenants and all of those parents who depended on this child care arrangement. Maybe too kind. The decision might have been different if it was not for the quality of the tenant. Call it a business decision, she just needed to find a new location.
The ensuing conversation and official letters involved a lot of debate about what determines residential purposes. I think the line in the sand is the difference in a hobby and a profit. This tenant was not caring for a couple of kids for friends a couple days a week. She was operating a child care that allowed her to pay the bills. She had lost her job that had been her position when she applied. She determined a plan involving child care, when accounting for her own pre-schooler, covered all of her personal needs. A worthy plan. One that should not work in a rental for all the reasons cited.
Interestingly enough, she found another home to rent and they agreed to the child care activities. Maybe it is easier if you know about it up front? I do not think so, but it might be easier for a cash hungry owner needed cash flow. If this is you, just make sure you have assessed the whole risk and start by insisting that your tenant has business liability insurance, that you are an additional insured, and take that certificate to your insurer and see if they feel like you might need to adjust your coverages.
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Tags: Indianapolis Property Management, Indianapolis Property Manager, residential use, tenant issues, Wilmoth
