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Is One Of Your Tenants Running a Bed and Breakfast?

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There is a new movement afoot. My son recently returned from an extended overseas trip. He was on a limited budget so he took advantage of cheap accommodations in many of the places that he visited. One method he used was to find a place to stay by searching on the internet website Couchsurfing.com. People who have an extra place to sleep list their home on the website and offer the bed to travelers for a reasonable fee. My son got to stay in several decent places for far less than he would have had to pay in a hotel or even in a youth hostel. Sometimes he even got breakfast. He particularly enjoyed meeting his local hosts in some of the world’s interesting cities.

If you need a car but don’t have one, you can now go online and rent a car from a car owner for less than it would cost to obtain a rental from a car rental company. One can rent temporary access to and use of a computer, power tools, a motorcycle, a parking space, you name it. The concept is that many of us own assets that we are not using all of the time, so there is available excess capacity. Others need those assets, but usually not for long, and are willing to pay the owner for their use. It is cheaper for them to pay to share the use of the item than renting or buying the item that is needed.

Several months ago an on-site manager client called me and said that she found that one of her tenants was advertising his rental residence as a bed and breakfast. The tenant was offering his extra bedroom to anyone needing a place to stay and the tenant made breakfast for his “guests,” too. As a result, there were “visitors” coming and going at odd hours and unfamiliar cars parked in the lot. The tenant was earning upwards of $100 per night from his customers.

Most residential leases contain language prohibiting the tenant from operating a business out of the rented residence. The landlord may be called upon to prove that the tenant is operating a business. The mere fact that the tenant is advertising on the internet as a bed and breakfast is not, itself, a lease violation if the tenant never has anyone coming to stay at the apartment. But it is evidence that the tenant is trying to run a business. Assuming that the landlord has sufficient evidence to prove that the tenant is running a business in the rental unit, is this something that the landlord should do anything about?

If yours is a secure multi-unit property, your tenant is providing keys to strangers who have not met the landlord’s residency qualifications. These strangers are being given access to normally secure common areas. Neighboring tenants might be rightfully concerned about the impact of these comings and goings on the level of security in the community. What if one of these “guests” commits a crime at the property and another tenant is the victim?

If the “guests” are present and the resident is not, a guest might make requests of the management or maintenance staff. Do you have a duty to respond?

The “guests” may seek to use amenities without being accompanied by the resident. Are you comfortable with these “guests” using the pool or the gym? What if one of the “guests” slips and falls at the pool or, the “guest’s” vehicle is damaged while in your parking lot. Does your insurance policy cover these damages?

Does the “guest’s” status as a paying customer of your tenant change their status as a guest or invitee on your rental premises?

Landlords are right to be concerned about these issues. There may or may not be evidence sufficient for you to take action to evict your tenant. However, make sure that your lease does several things:

  1. makes your listed tenant responsible both for the behavior of his guests and invitees and liable to them in the event that they sustain an injury or suffer some kind of damage;
  2. requires, or at least suggests, that your tenant obtain renter’s insurance which covers damage, injury or losses due to crimes committed by anyone that your tenant permitted on the premises;
  3. prohibits your tenant from operating a business from the residence.

If you think that you have a problem like this, or if you have questions on this or any other issue, call KlassLawGroup.

2109 S. Wadsworth Blvd | Suite 202 | Lakewood, CO 80227
Phone: (303) 758-0500 | Fax: (303) 969-0501

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