Mobile Home Park Mastery: Episode 81

Perfect Protection From Liability Risks

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It’s a scary world out there. There’s liability in almost everything you do. In this sixth installment of our nine-part series on “Mobile Home Park Perfectionism” we’re going to discuss how to best insulate your mobile home park from risk. We’re going to show you techniques to be proactively remove potential liability on a continual basis. If you are a “worrier” then you’ll definitely get value from this episode (and if you don’t worry about anything, you need to start).

Episode 81: Perfect Protection From Liability Risks Transcript

An ounce of prevention is worth a pound of cure. I'm sure we've all heard that quote in the past, but it's never been more true than in a mobile home park. This is Frank Rolfe in the Mobile Home Park Mastery podcast series, in the sixth part of our nine part series of mobile home park perfectionism. We'll be talking about liability perfectionism, being proactive on liability risks, minimizing your risk in today's very dangerous world.

So, let's start off with the goals of liability perfectionism. First, obviously to have no liability risk because as we all know, when things go bad, they go very very bad in America today. We have more lawyers in the US than in all the rest of the world combined. There are many people out there who make their living out of doing nothing but filing lawsuits, sometimes frivolous, against property owners, so we would like to remove all risk altogether.

Second, we don't want to have any litigation or insurance claims, or HUD suits, because simply the action of those suits is very detrimental to our business. It takes away a lot of time and energy, so even if we don't have to pay any claims our of our pocket, which we haven't in the last 20 years, nevertheless the very act of being sued, the very act of having an investigation is very, very disruptive, very disheartening, and very depressing, so we just want to completely stay away from trouble. We don't want to have any problems at all.

So if that's true, if all people in the mobile home park industry don't want to have any problems, then what can we do as a perfectionist to stop that? Well, the first thing you can do is, don't let anyone ever set foot on your property unless they have insurance. Everyone on that property, whether it's your manager or maintenance man, or guy rehabbing a home, they all must be insured. There's no exception to that at all. If you have a maintenance man who says, "Yeah, I can start the job today," or "I can start the job in the morning," and "Yeah, I have insurance, but I don't know really where it is," do not let them on your property.

Every time that's ever happened, whether it's one of our properties or somebody else, it's a magnet for liability. You'd be shocked how many people out there in America have no intent of ever doing a job at all. All they do is they file suits. These people are serial litigators, and many many of them floating around out there. We once had a workman walk in a mobile home, walk right out and say, "Oh, my back, my back. I've hurt my back." Of course, the claim was stupid and didn't go anywhere, but that's the kind of mindset some of these folks have, so they have to have insurance.

Now, surely you're smart enough to have everyone on your team already insured. Your manager should already be carried under your workman's comp insurance, but whenever you let a workman in the property, whether it's a mower or someone to rehab a home, do not assume that they are insured. Call your agent and make sure that they have a minimum or carried under your policy, and better yet make sure they have an actual policy themselves that's in force. If you're not sure whether that person has the insurance they need, don't go it alone. Contact your agent and find out from them.

Number two, always be on the lookout every hour of the day for potential liability issues. I see so many of them when I drive in many parks that we're looking at buying, crazy stuff that I'll never forget. I went in a park once that has a master metered power system. This is a situation in which the park owns all the power lines, all the transformers, all the meters. They own everything, and the park is fully responsible for any damage or injury or death that may occur from that. In those typical master metered power system parks, you have a giant transformer at the front with a giant power box with fuses literally the size of your arm, and that's powering that entire park.

If you have 100 space park, all the power for all 100 lots flows through that box, so here was that box so chalked full of liability, yet it was unlocked and was wide open, flapping in the breeze. All it would take is an adult or a child to stick their hand into the box. They would be immediately electrocuted and killed. Why had no one noticed the box was open? Why had no one bothered to lock it? These are the things that drive you crazy.

Go to a mobile home park, you see a big old hole in the sidewalk or maybe in the street, no protective barrier around it, no sense of urgency to fill it in. What are you asking for? Obviously a slip and fall claim. Certainly. The speed bump that's not painted, what's going to happen there? Someone could be walking down the street or riding a bike, they're going to hit the speed bump and go flying, maybe land on their head. It's not going to work. Individual power boxes on lots that are missing, they doors are actually missing off the power box, all the hot wires exposed right there for anyone to touch. It's these issues that are absolutely impossible to let stand in your mobile home park.

All the time you need to be completely proactive looking for all types of dangers. If you see a sidewalk that's separating from a tree root, and now there's a one or two-inch separation gap in height between the sidewalk, you've got to fix that. You can't leave that. You know somebody's going to trip on it. I bet that 90 of all mobile home park liability cases are things that anyone would have noticed if they had simply looked around.

Third item is, you've got to do something about the dogs. Probably the single biggest issue in mobile home parks today are dangerous breeds of dogs. So what are dangerous breeds of dogs? Well, Rottweilers, German shepherds, pit bulls, all these types of dogs which basically were bred with the concept of doing harm to people. If you go on Wikipedia and look at the history of these animals, you'll see they were bred by somebody at one point for almost a warfare nature. The Rottweiler was bred by the Romans. Why? They had them go out ahead of the army and battle.

So, what does it mean? These dogs are not very good for the neighborhood. Most people's policies today, most insurance companies will not insure you if you have dangerous breeds of dogs. The dangerous breeds, they simply have to go. It's not that you hate dogs or you want to be the dog police. The problem is, you cannot allow dogs that can attack other residents. We've had it happen a couple times. Fortunately, we were insured. Fortunately, we were not at fault. It was people sneaking dogs into the mobile home park, but nevertheless, if you talk about one item that can cause you massive amounts of liability, that is certainly it.

Large dogs that are not dangerous breeds still have to have their own private insurance because your insurance policy pretty much states any dog over 30 or 35 pounds is not insurable. However, sometimes they will allow you to insure large dogs, as long as they are not dangerous breeds but you've got to get all this figured out. And don't forget that you may end up with a liability lawsuit yourself over this issue of the dogs. If someone claims the dog is a service or a companion animal, you're not allowed to ask it to leave. So what do you do? It's best once again to go back to your insurance company before you take any action, tell them of the dogs you see and what's going on.

If someone says, "Wait, that's a companion dog," well, call your insurance agent again and say, "They say it's a companion animal. Is that good enough for you or not?" The insurance company may say, "No, I don't believe it," and they may contact the resident and get a copy of their medical claim or something proving it's a companion animal. We've never seen a problem with service dogs because we all know what they look like. They're very well-behaved. I'm not talking about service dogs here. I'm talking companion animals. Many people know you can go to eBay and buy companion animal certificates and vests on the internet for $20. Those are not legitimate. Those are not binding in court. However, it's up to most park owners to go through that smoke and mirrors to find out the truth so that you can get it corrected on the part of the community at large.

Number four, walk your properties, both front and back, every time you visit. Get out there and proactively look yourself for liability issues. Ask your manager to do the same every day or at least once a week, but you yourself should not just assume that's being done. Ronald Regan once said, "Trust but verify that the same is true here." Be sure and walk your properties yourself, and don't just do the easy part in the street. Buy some cowboy boots. Buy some boots at the local farm and ranch store, put those on and walk around the back. You'd be shocked what you can see around the back that's very different than the front. Everybody knows, most people approach the park from the front so all the bad things they do are hidden at the rear. That's the issues that are absolutely not allowable under insurance.

Next, listen for any comments or feedback that implies that the community manager is not following HUD or is doing any illegal behavior and act immediately. How do you do that? We suggest you create a help line, including a help line email address, that allows residents to contact someone around the manager to let them know what's going on. This is really a requirement, because otherwise, your manager can stop the complete flow of information. That is not going to work for you as the owner. You have to know exactly what's going on.

If your manager has gone bad or if your manager is doing bad things, you need to know that so you can make the appropriate action and remove that manager, so you've got to give people a back door approach to reach you as the owner. You don't have to live answer those lines. You can have them go straight to a Google or a Grasshopper disposable number where they're transcribed and captured, but you need to give all residents a chance to get to the source who needs to know the information of what's going on.

Next, you always want to build a paper trail of anything should ever have to go to court. We once had a resident who brought in a dangerous breed of dog. We told him, "You cannot have it." He signed a document claiming that the dog was gone and he would never bring it back in. Of course, he lied. He went out immediately and brought it back into the home. Later, it broke out of the home and attacked somebody, and it's a very serious injury, but we had the paper trail, so in court we got off and weren't included in it because we had done nothing wrong.

It's very, very important to build a paper trail. That's what most courts go by. He said/she said may sound great on a Jerry Springer show, but that's not how it works in the real world. When you go to court, it's all basically done on paper and whoever has the paper trail traditionally wins. Also, always watch for suspicious behavior by community managers or tenants. They may be trying to build a landlord retaliation eviction case or some type of other issue, maybe a fictitious overtime claim.

Watch for people, because again we all must acknowledge that in the modern world, there are people who are serial litigators, and they basically spend their whole life getting by by suing people and trying to shake them down for settlements. Don't let that be you. Always be watching for these individuals, and the first sign that that's what you've ended up hiring or letting move into your property, take the required action. Get an attorney on your side and let them handle it. Don't you go it alone.

So if you're going to evict someone for non-payment of rent and they contact the city and claim that your power lines are illegally too high or some other stupid idea, what they're trying to do is to set you up for a landlord retaliation case. When you then evict them, they'll say, "Wait. They only evicted me because I called the city about the power lines," which is of course absurd. Nevertheless, don't do this by yourself. Let an attorney in those situations handle it. Yes, I don't like paying attorneys anymore than you do. However, you'll save so much money. It's well, well worth it.

A few other considerations if you want to be a liability perfectionist. Just always remember the cost of going to court. Roughly $25,000.00 is probably the average legal cost of going to court, and that's $25,000.00 too much. That's actual hard-earned money that's $50,000.00 pretax out of your pocket, and you'll never get it back. Even if you win the case, and try to get a damage award against the resident, you know you won't get a penny of it. They typically have no money, and you'll never see a penny of it, so it's often better to avoid the court system altogether.

So how do you do that? Try and settle your cases. If the tree limb falls on the car and damages the car, you're probably way better off paying the guy's deductible of $250 than later that escalate into a giant lawsuit, so just try and stay completely out of court. Always try and settle things. Be reasonable, be fair. Don't be all moral about it. This is America, 2019. There's no room for morality anymore. You have to do what's best for you and your business, and even though you feel like you're getting ripped off by the person who you know you really don't owe the money to, often that's just a smarter way to go.

Also, don't forget, if you have too many lawsuits, your rates will go up from the insurance perspective, or they may cancel you altogether. Nothing could be worse than that, so you just don't want to go to court very much. You want to keep your claims at a minimum and you want them to go away at the smallest amount of money. Finally, small things can quickly develop into big problems if you don't address them. Hiding from issues is the worst thing you can do as a park owner. It's never been smart. It's definitely not smart in 2019. So whenever something happens, don't let it fester into something big.

If the resident has some problem, whatever it may be, he's got a tree limb hanging down on his home that makes noise when the wind blows, just get out there and cut it off. Don't say, "Well, I don't have to cut the tree. Look in your lease. In your lease it doesn't say that I have to cut it, only you have to cut it." So what's he do? He rents a chain saw, climbs up on his roof, saws his arm off, lands on his head and he's crippled for life. Not probably the smartest thing to do, so just be reasonable. Always remember, these tiny little issues you can solve for next to nothing can sometimes escalate into gigantic problems, and it's again not smart for you at all as a park owner.

Going back to our initial goals, we just don't want any trouble. We don't want any liability risk, we don't want any liability suits, we don't want the distraction, we don't want the heartache. We just want to be left alone. We're like Greta Garbo, we just want to be by ourselves, just leave us alone. That's where we stand as far as liability should go. This is Frank Rolfe with the Mobile Home Park Mastery podcast series. Hope you enjoy this, the sixth part in our nine part series on mobile home park perfectionism, and we'll be back again shortly.