Maintaining a property and ensuring it holds its value over the course of a lease can be a challenge, mainly because that responsibility is split between the owner of the property and the residents. In an ideal world, property operators would keep the property perfectly maintained and up to code, while residents would care for their units as if it was their own property. Unfortunately, as many multifamily owners and operators can attest, that’s not always the case.
For property owners to protect their investment, many turn to implementing tenant legal liability waiver programs to prevent being on the hook for unexpected costs. A tenant tegal liability waiver (TLL) also known as property damage liability waiver is a legally binding agreement that defines who bears the financial responsibility for specific risks that occur as a result of a resident’s negligence. TLL programs enable residents to meet the renters insurance requirement in their lease by waiving the right to sue their landlord for damage they cause due to negligence. This protects the resident and the landlord from unexpected costs. Typically, the renter pays for the TLL with monthly payments along with their rent. It is essentially a limited insurance policy that is paid for by the renter and will cover specific property damage claims caused by the resident.
How Does a TLL Waiver Work?
TLL Waivers are typically executed when residents sign their lease agreement. If a property owner is enrolled in a TLL waiver program and the resident chooses not to obtain renters insurance, the resident can be automatically enrolled in the legal liability program at the time of signing their lease agreement. Residents will pay a monthly fee, typically with their rent payment, and the property owner will be listed on the policy as an additional interest.
Though program prices range by state and property, most renters can expect to pay between $10 and $25 per month, which will usually provide the unit owner with up to $100,000 in liability coverage. Depending on the policy, waiver programs typically cover damages due to fire, smoke, explosion, leaks, and other water overflows if they were caused by the renter’s actions or negligence. Waiver programs are backed by specialized commercial insurance policies that are issued to the landlords to cover the expenses from the damages caused by enrolled residents.
What Does a TLL Waiver Cover?
TLL waivers are specific in what they cover, they do not act as a blanket insurance policy. First and foremost, tenant legal liability waiver programs cover certain damages and losses caused by a resident’s actions or negligence. If a fire or water leak was caused by landlord negligence or a natural disaster, claims will not be covered by a TLL waiver. Generally speaking, TLL waivers will cover resident-caused property damage related to:
- Smoke: Imagine a resident tosses a late-night pizza in the oven and falls asleep. When a cooking accident caused by resident negligence creates smoke that discolors walls, corrodes appliances, or results in the need for deodorizing services, associated repair costs are likely covered under a TLL waiver.
- Fire: If a resident lights a candle, then forgets to extinguish it before leaving the house and a fire starts, property damages will be covered by a TLL waiver.
- Explosion: While comparably rare, explosions inside rented units do occur. An explosion could occur if a resident lights a match near a stover burner that was accidentally left on the ignite setting, property damages in this case would likely be covered by a TLL waiver.
- Water and other leaks or overflows: If a resident runs a bathtub for too long and the water overflows, flooding their unit and the unit below, TLL waivers cover the property damage.
While lease agreements may ban candles, firecrackers, space heaters, or unauthorized plumbing repairs, residents won’t always follow the rules. So, in cases of negligence or poor decision making, a TLL waiver can provide rental property protection, ensuring damages will be taken care of without running into budgetary issues.
What Isn’t Covered by a TLL Waiver?
TLL waivers cover specific types of damages caused by resident negligence. They do not cover any injuries to residents or guests or damages that take place outside of the individual unit. For instance, if someone slips on the stairs leading up to a unit or on ice outside the building, tenant legal liability waivers won’t come into play.
Standard TLL waivers also don’t always cover damage to or losses of the renter's personal items (unless the program has personal contents included). If a renter’s computer was damaged in a fire or stolen, those losses are unlikely to be covered by a TLL waiver. If looking for additional coverage, residents and owners should check their program to verify what is and isn’t included and seek alternate coverage like a traditional renters insurance policy (H04) or multifamily housing liability coverage if they want added protection.
Finally, any property damage caused by owner negligence or natural disasters will not be covered by a TLL waiver. Even with a TLL waiver program in place, property owners are still required to keep buildings up to code and respond to maintenance requests submitted by residents.
Benefits of a TLL Waiver
A TLL waiver provides numerous rental property protections for both renters and property owners. It clearly establishes boundaries and expectations so both parties know what they are responsible for and can therefore take the necessary steps to keep the property safe.
By establishing a TLL waiver program, property owners can:
- Drive total renters insurance compliance and guarantee all units have adequate liability coverage
- Create less effort for onsite teams
- Reduce the risk of disputes over damages and potential out of pocket costs
- Add an ancillary income stream and increase asset value
- Gain peace of mind that properties are protected and repair costs will be covered
By enrolling in a TLL waiver program, residents can:
- Obtain an affordable way to meet lease requirements
- Gain peace of mind that they are protected from being on the line for potentially high costs of damage they cause to their unit
The Role of TLL Waivers in Property Management
Working with a TLL waiver program provider significantly reduces property management risk, reduces the need for onsite teams to spend a lot of time tracking down renters insurance compliance, and decreases the overall costs of owning and managing rental properties. Administrative efforts are streamlined, and compliance is guaranteed when you use a TLL waiver program provider like Foxen that automatically enrolls residents and tracks TLL waivers and renters insurance policies to ensure all residents are compliant with their lease requirements. Foxen’s customer support improves the accuracy of your compliance records and helps you at every stage of the journey.
TLL waivers create a safer, more-fair environment for property owners, residents, and property managers. Clear boundaries and expectations are set, and the risk of unexpected property damage costs caused by resident negligence is greatly reduced for all parties.
Get Started with Foxen
If you’re looking to protect your property, streamline compliance, and reduce the administrative burden of tracking the status of residents’ renter’s insurance, schedule a demo with Foxen today.
.png)
