The Elderly + Owning a Rental Without a Property Manager = Trouble!

“Mr. Beaver, my parents—both in their 80s—have substantial lifetime pensions, no debt, money in savings accounts so they do not need any additional income source. Recently, they attended a seminar aimed at seniors, where a real estate broker talked-up the advantages of becoming landlords.

“Brochures downplayed age-related risks, and made a big point of saying, “You do not need to hire a property manager — Our lease form makes your tenants responsible for all maintenance — you just collect the rent.” I know this is nonsense.

“Regardless of age, my parents are not emotionally suited for the challenges of being landlords. I can picture them just frozen with fear and inaction if something happened to the property that required immediate action, as I have seen a decline in their health and ability to deal with stress.

“I’ll bet there are a lot of seniors, who are getting the same pitch and could get themselves in legal hot water if they drank the Kool Aide. My parents love your column and I’m sure your advice would cause them to think this over seriously. Thanks, Darren.”

‘There was a Loud Cracking Sound and the House Shook!’

Darren’s fears about his parents becoming “frozen with inaction” faced two longtime readers, Cynthia and Mike, who phoned our office upset and angry at their landlord.

“Early this morning,” Cynthia said, “We were awoken by a loud cracking sound and the house shook when a huge oak tree in our backyard came down on this house that we have been renting from Abe, for over 10 years. He is in his mid-80s.

“We immediately notified him of what had happened, but instead of reacting like someone who is concerned, emotionless he said, ‘Well, I’ll see if I can reach my son in Alaska and ask him for help.’ We replied, ‘No, you need to call your insurance company now and report this We might need some place to stay while the tree is removed and damage to the house, if any, is repaired.’

“It seemed that he did not understand the urgency. Abe has always been a thoughtful, caring, “hands-on” landlord, but age and infirmity has impaired his ability do everything himself, and he rejected our suggestion of hiring a property manager as too expensive.

“Can you help us?”

I phoned Abe, asked, and was given the name and phone numbers of his son, and insurance agent, putting both together on a conference call. The agent immediately took charge, and saw to it that a claim was started with the carrier.

For Some Elderly, Becoming Landlords is a Bad Idea

Over the decades that I have practiced law, if there is going to be a significant landlord/tenant problem, in almost every situation, the owner’s age, a strong sense of moral right and wrong combined with a lack of knowing their legal obligations and refusal to retain a property manager—(costing about 10% of the monthly rent) — became a toxic cocktail.

Often, it came down to real cognitive challenges, but just as often, an older property owner, frustrated with a con artist family of tenants—months behind in rent—refused to hire an attorney (“Oh, that costs money!” I heard repeatedly.) Resorted to self-help, turning off the water or electricity, and wound up being sued by a Legal Aid attorney, conned into believing these poor tenants were poverty-stricken.

I ran these issues by Anthony Dolan of Los Angeles-based Dolan and Knight Property Management Services. He has been a friend of this column for years, and always a source of good, common-sense advice. I asked:

“In your experience, are there more risks for older adults in becoming landlords?”

“Yes, there are,” Dolan replied, and stressed, “not just because of age itself, as many elderly are good landlords, but it is so important—especially for seniors—to have objective help in evaluating the downside risk of acquiring rental property. This includes:

• An evaluation of their financial situation. Do they need to invest in a rental at their age?

• Ability to handle the ‘Thousand and one’ day-to-day tasks, such as: rent collection, maintenance, legal responsibilities involved.

• Dealing with difficult tenants whose behavior can border on elder abuse.

• Cognitive impairment and health challenges that can drive up the cost of rental ownership.

• While a young person might be able to handle minor repairs or maintenance, impaired balance and mobility limitations can make it impossible for someone older to personally tackle the things that come up with any home.

Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.