Colville Real Estate Agents

One of the most important parts of being a landlord is dealing with tenants. From the beginning of your relationship with them, your regulations and expectations should be covered in a tenancy agreement backed by Alberta laws. If tenants violate significant areas of your agreement, you may need to evict them. Here is an outline of the major portions of a rental agreement, as well as steps that can be taken toward eviction.

According to Calgary Residential Rental Association president Gerry Baxter, landlords need to review lease agreements with potential tenants in a personal meeting. Baxter said that most tenants do not bother to read the agreement, so you need to ensure that every aspect of the document is understood and agreed to by the tenant. The renter must actually sign the agreement, so you are legally covered in case the tenant claims to be unaware of the conditions of his or her lease,

The CRRA makes a boilerplate lease agreement available to member landlords, but there are additional lease components that may be added. For example, if you do not want smoking in your property, you must add a clause to the agreement. If you wish to prohibit pets, or limit pets to certain breeds or weights, you must also include the appropriate language in the agreement.

Should you discover that your property reeks of cigarette smoke, or has been damaged by your tenant’s large dog, you can terminate the tenancy. You can make an application to the Residential Tenancy Dispute Resolution Service, an organization whose sole purpose is to settle tenant problems. The RTDRS has the quasi-judicial power to enforce decisions on claims with a value to $25,000.

For potentially damaging conditions such as permitting pets or smoking on your property, Alberta law allows you to impose a fee, non-refundable, that is equal to one month’s rent. This fee may be imposed in addition to your agreement’s damage deposit. This deposit also equals one month’s rent.

There is a quick resolution available if you have a tenant that causes serious trouble. Should the tenant incur significant damage to your property, or if he or she physically attacks you or another person, you have the option to serve the tenant with a 24-hour notice of eviction. To be effective, the notice will have to be in writing and you or your agent must sign it. The notice must provide the reason why the eviction is taking place, and it must contain the exact date and time that the eviction will occur.

For offences that are more minor yet still significant, you can evict the tenant by going to the RTDRS or to court, and have the tenant served with a two-week notice of eviction. This notice must contain the same information that is part of the more immediate notice. Although an eviction can take place, a tenant may be able to appeal the eviction. Should this happen, you must provide documentation of the violations and complaints that have occurred. Lease agreement copies as well as the affidavit must also be filed.

There may still be delays in forcing out undesirable tenants, however. If a tenant appeals the 14-day notice, the case must be heard in court. Even if you win against the tenant, the tenant may decide, however incorrectly, to remain in your property. Again, you will have to go to court to obtain an order of possession. When the order is served upon the tenant, the tenant has another two weeks in which to pack up and depart. It is suggested that if you must get an order of possession in court, you should also obtain a judgment against the tenant for any back rent owed, as well as legal fees you incurred in evicting him or her.

Shaun Colbrait – Real Estate In Calgary

The proper rental property insurance coverage can protect you from losses caused by many dangers, including fire, storms, burglary, and vandalism. A comprehensive policy also includes liability insurance, covering injuries or losses suffered by others as the result of defective or dangerous conditions on the property. Liability insurance also covers the legal costs of defending personal injury lawsuits – a valuable feature because the legal defense costs of these cases are commonly much greater than the ultimate award of damages, if any.

Common coverage’s

The following list describes the three levels of coverage available for primary policies, all of which include liability coverage. Many insurance companies offer competitive insurance packages especially designed to meet the needs of rental property owners, so remember to shop around.

Basic coverage: Most companies offer a basic coverage package that insures your investment rental property against loss from fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, and even volcanic eruptions.

This coverage often doesn’t include certain contents, such as boilers, equipment, and machinery unless specifically added as an endorsement. Based on the type of property you have, you may need to consult with your insurance agent about additional coverage that may be beneficial.

But just because you own a small retail strip center with a couple of plate glass windows doesn’t mean you need to have the special coverage that’s offered. Insurance companies often have minimum policy premiums, so certain insurable items and acts aren’t worth insuring because the potential for a claim is minimal and the costs are high.

Broad-form coverage: You get the basic package, plus protection against losses of glass breakage, falling objects, weight of snow or ice, water damage associated with plumbing problems, and collapse from certain specific causes.

Special form: This coverage is the broadest available and covers your property against all losses, except those specifically excluded from the policy. It offers the highest level of protection but is typically more expensive.

An insurance company can pay owners for losses in two ways:

Actual cash value: The coverage pays the cost of replacing property less physical depreciation. The standard policies most insurance companies offer provide for actual cash value coverage only.

Replacement cost: This coverage pays the cost of replacing the property without subtracting for physical depreciation. You must specifically have an endorsement and pay extra for replacement cost coverage. However, we do encourage you to purchase it.

As with homeowners’ insurance policies, the location, age, type, and quality of construction of your property are significant factors in determining your insurance premiums. Be sure to get an insurance estimate before you buy your property to avoid unpleasant surprises (older properties with wood shake shingles located away from fire protection may not even be insurable, for example) and realize the benefits of lower risk properties. For example, newer commercial buildings, and even some residential proper- ties, were constructed with fire sprinklers and alarms that reduce your insurance premiums – so do as monitored intrusion alarms).

Some insurance companies have a coinsurance clause that requires rental property owners to carry a minimum amount of coverage. If you carry less than the minimum amount of coverage, the insurance company imposes a coinsurance penalty that reduces the payment on the loss by the same percentage of the insurance shortfall. For example, if you carry only $1 million in coverage when you should have $2 million, you’re only carrying 50 percent of the minimum required insured value. If the building suffers a loss, the insurance company pays only 50 percent of the loss.

Many rental property owners first become investors by renting out their former personal residences when they buy new homes. They may not realize they should immediately contact their insurance agent and have their home- owners policy converted to a landlord’s policy, which contains special cover- age riders that aren’t in the typical homeowner’s policy. Because of the increased liability risk for rental properties, some insurance companies may not even offer this coverage, whereas others specialize in this business. Either way, obtain proper landlord’s coverage for your rental property, or you may face the possibility of having your claim denied.

If you own multiple investment or rental properties, consider

A single insurance policy that covers all locations: Rather than have separate policies for each rental property, you can get better coverage with a single policy. For example, if you currently have three properties each with a $1 million policy, you could get a single policy with a $3 mil- lion limit at a more competitive cost.

An aggregate deductible: An aggregate deductible is the portion of your loss that you essentially self-insure, because the losses at any of your three properties can go toward meeting the aggregate deductible.

Excess liability (umbrella) coverage

Excess liability (umbrella) coverage can be a cost-effective way to dramatically increase your liability protection and is designed to supplement your main or basic policies. An umbrella policy provides both additional and broader coverage beyond the limits of the basic commercial general liability insurance and other liability coverage and this coverage is only available after the primary policy limits have been exhausted.

Your primary policy may have liability limits of $500,000 or $1 million, but an umbrella policy can provide an additional $1 million in vital coverage at a cost of $2,000 to $4,000 per year. Depending on the value of your property and the value of the assets you’re seeking to protect, buying an umbrella liability policy with higher limits may make sense. Umbrella policies are avail- able in increments of $1 million with even lower rates per dollar of coverage as the limits go higher. The most common umbrella coverage amount for the owners of large investment properties now is $5 million at an annual cost of approximately $7,500 to $12,000.

Purchase your umbrella policy from the same company that handles your underlying primary liability insurance package. The reason: If you have two different insurers rather than just one, the companies may have different agendas if legal problems arise.

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