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Trust This.
By Joseph E. Seagle, Esq. ● Apr 28, 2023
Smart Brevity® count: 3.5 mins...920 words
👋 Happy Friday! 🚨 Today is the last day to pay your Florida real property taxes and not suffer another month’s penalty. Also, ⚠️ Monday is the last day to file before the $400 penalty kicks in on Tuesday for late LLC and Corporate annual reports filings.
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Rufus, with only four teeth left, isn't much of a danger even if he bites someone.
Photo: author
We had two dog bite cases arrive in our inbox over two days this week.
Why it matters: There was no liability insurance coverage on either property where the tenants’ dogs bit visitors.
Yes, but: As we’ve discussed before, properties owned in trusts, LLC’s or anything other than a human’s name do not enjoy automatic liability coverage as part of the hazard insurance policy.
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And as our clients learned this week, even if they had such typical liability coverage as part of their landlord policy, it would most likely not cover dog bites.
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Many insurers have started automatically excluding coverage for dog bite cases because they are so common and expensive.
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Most leases and property management agreements have hold harmless or indemnification clauses. These are worth the paper on which they are written.
📊 By the numbers: According to SafeHome.org’s 2022 Renter’s Insurance Industry Report:
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55 percent of U.S. renters, or 61 million people have renter’s insurance policies. This number could rise to more than 65 million this year.
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Their landlords require 75 percent of insured renters to obtain renter’s coverage.
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The average renter’s insurance premium was $211 per year, or about $18 a month. The most popular deductible was $500.
But even if a tenant has renter’s insurance that includes liability protection, it likely won’t cover dog bites either.
🛡 So what can be done to protect landlords, or at least their other assets, from such lawsuits?
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Hold the property in a land trust or LLC that only holds one property and nothing else.
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Carry a blanket premises liability policy that schedules all properties you own, and at least try to get dog-bite coverage.
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If a tenant has a dog that could bite, be sure they post a “Bad Dog” sign on the property. “Beware of Dog” doesn’t cut it in Florida. It must specifically say “Bad Dog” to be of any help in a subsequent lawsuit.
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The US economy grew by only 1.1% in the first quarter of the year, according to yesterday’s Bureau of Economic Analysis data.
Why it matters: Forecasts had pegged the growth at 1.9%, so the actual number disappointed analysts. Meanwhile, the rate of inflation preferred by the Fed rose to 4.9%.
📈 It’s a perfect (horrible) storm of rising inflation and dropping GDP, coupled with a drop in jobless claims that will likely mean the Fed does another 25 bps raise of its Lending Rate at next week’s meeting.
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Some are saying that there’s “stagflation” in the air as the economy slumps while inflation stays higher than two percent.
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Consumer spending on drawing down existing inventories accounts for most of the anemic growth last quarter.
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But that consumer spending is expected to be weak and will portend more slowing into the second quarter.
👀 What we're seeing: Local community banks are telling us, flat out, that they are not making any new loans on any commercial real estate unless it is owner-occupied.
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They’re also courting deposits. Any deposits. Smaller banks want to shore up deposit reserves so they don’t have to go to the Fed’s overnight lending window if they can help it.
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Banks are tightening commercial credit, likely leading to more commercial mortgage defaults on office and retail properties as those loans balloon and can’t be refinanced.
The bottom line: Those with cash and time should be able to pick up some steals on office buildings and retail locations over the next few years. But don’t expect to find lenders rushing to lend on those assets in the near future.
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Photo: Markus Spiske
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FinCEN renewed its Geographic Targeting Order that requires special record keeping and reporting whenever an entity (not a trust) buys residential property in certain counties for $300,000 or more without using a bank loan. Miami-Dade, Broward, and Palm Beach are the only Florida counties targeted by the order. FinCEN
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Ten things that real estate professionals should do to “spring clean” their businesses. Bigger Pockets
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Mortgages may increase this year. MReport
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The FHFA Director had to come out and clarify this week that borrowers with higher credit ratings are not going to pay more for a mortgage than those with lower scores. HousingWire
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US consumer confidence hit a 9-month low in April, and the housing market appears to be bottoming out. Reuters
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Home prices are all over the place. See whether they’re up, down, or the same where you live. Realtor
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Home buyers are now accustomed to seeing a “6” as the first number in their mortgage interest rate? CNBC
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The orchids are blooming ... again. I don't know why everyone says they're so difficult to grow. Ours are thriving with very little care.
A couple of things I learned this week:
In school, we learn and then we’re tested. In life, we’re tested and then we learn.
As much as success is generated from what you do, it’s limited by how much you’re willing to sacrifice.
When you come to a fork in the road, turn left and keep movin’ right along.
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We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.
Be on the lookout for our next issue! 👋
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