Enterprise, AL asked in Real Estate Law for Florida

Q: My name is on the deed for my mother’s rental property in FL. Can I be sued if a lawsuit comes against the property?

My mother inherited a paid off home in Florida that she now rents out. She added me to the deed several years ago, but I just found out tonight that she doesn’t have insurance on the house (which is not required if the house is paid off, but doesn’t make any sense to me to be uninsured). I am very concerned that if she is sued by a tenant (or anyone really), that I will be implicated as I am listed on the deed. Is this true?

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3 Lawyer Answers
Terrence H Thorgaard
Terrence H Thorgaard
Answered
  • Freeeport, FL
  • Licensed in Florida

A: Yes, it's true that you could be sued if someone claims that they were injured as a result of the owners negligently allowing a hazardous condition to exist on the property. That doesn't necessarily mean the plaintiff would prevail, but yes you could be sued.

Barbara Billiot Stage agrees with this answer

A: I agree with my colleague you would be sued if anyone were to bring a claim against the property for injury or a tenant makes a claim. It doesn't make sense not have insurance and if your mother is going to be a landlord she should have an attorney draft her leases for everyone's protection. Your options are to consult with a real estate attorney to have a proper deed drafted to give your interest back to your mother or, if she was wanting you to inherit the property, find a real estate attorney with estate planning experience to determine the best way to hold title to the property and get insurance quotes. The rent should cover the cost of the insurance premium plus put money aside for repairs.

Jane Kim
Jane Kim
Answered
  • Naples, FL
  • Licensed in Florida

A: I agree with all prior answers, but would like to add...

You are confusing insurance types and their purposes. Insurance you are alluding to is called Private Mortgage Insurance (PMI), which is required if you have a conventional loan. PMI protects the lender—not you—if you stop making payments on your loan.

As for your personal protection, you need to get a liability insurance, any condo/home owner's insurance may suffice (although it is primarily a property damage insurance with limited personal liability protection). If this is a rental property, I'd consider transferring ownership to an LLC. LLCs protect you against personal liability regardless of insurance. In FL, you can have two equal shareholders of an LLC (you and your aunt). LLCs are also pass-through entities, meaning there is no double taxation. You'll pay the same tax on income as you do as the property owner today.

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