3 most important points as landlord to know about Methamphetamine
New Zealand landlords are on the verge of learning a big lesson through hard study time. Interestingly enough many people still play “ostrich” game pretending that if they keep their heads in sand no one will notice them.
Well, it does not work like that does it? Last week (December 2015) it was an article in NZ Herald about a new research of (get ready) waste water in Auckland. The team of researchers are going to spend $200,000 of government money to monitor trace of illegal drug use. The point of the study is to find out fluctuations of use and to monitor increase use. I am only guessing what would the next step…
If the government is so concern should landlords also worry? Well, it depends. If you do not care and think that there is no problem as such as meth use in New Zealand continue to do nothing but if you are one of those responsible people who are planning to keep their investments properties for years to come there is one simple solution to the problem.
Even the solution is quite simple it would still require you to jump a few hoops.
What should a landlord do?
You would want to keep records about your property inspections and no there are not for your accountant there are for a possible court hearing where you would have to proof that you as a responsible landlord have done everything insuring that your property is safe to stay/live in.
Even I called the article 3 most important points for landlords to know about methamphetamine for not being sued.
Who would possibly take you to court as the landlord?
- Your insurance company
I am not even talking about property managers, let’s agree here – those people whom you employ to run checks on tenants and to schedule house inspections are getting paid to perform certain tasks and it is you who decide what exactly need to be done with a tenancy or with the property.
Imagine this: accidently you discovered that your house was used as a meth lab a couple of years ago. Your current tenants are lovely people with a couple of gorgeous looking kids and one of them was diagnosed with cancer. Would you feel responsible? (this kind of stories getting published quite often).
Exactly, it would be you the landlord who would have to proof in court that the house had been regularly checked and there some evidence to proof that. For instance with every new tenancy your property manager is instructed to get a meth testing. Just think about it for a while…
If it was you who is about to rent a house for your family would you want to know that the house you are going to spend a couple of years in is safe for your kids? Or would you be happy to gamble and take a chance?
You see, my view on it is simple: each and every new tenancy there is a meth testing inspection performed and records are kept somewhere safe.
I can almost hear some people go “huh” who would do it””? Anyone who is concerned with a safe house to live in would, that’s my answer. It is in fact your property and subsequently your rules. If you say “in order for you to get the house we agree that you pay now or I withheld it from your rental payments later to pay for a meth testing once you vacate the house” the only tenant who would not want to do it- possibly not your “ideal tenant” anyway. You are even better off by letting the house to someone else who understands importance of meth testing and certainty of living in the house where there is no hidden danger.
Let’s face it, all prospective tenants read as many articles about houses being contaminated as you do. People in general get nervous of renting a house or an apartment that may have been contaminated by methamphetamine usage in the house (when someone smokes meth in the house) or even worse the house was used as a Meth lab (just think about your investment property is being used as a lab). I hope by now you would agree that it is not a big deal of money to ask your prospective (“ideal tenant”) to do a meth check and keep your house in pristine condition.
Now let’s get our facts together:
Landlord agreement specifically says about “a must do methamphetamine test” for every new tenancy. All checks performed every time once the tenant vacates the property. If the house readings shows “positive” trace you report to the police and submit a landlord insurance claim.
In order to proof to the insurer that you always act responsibly you have and keep records of quarterly house checks with photos, plus, on the top of that all those meth-inspection reports. Even if you do it all yourself it is not difficult to have a standard property check report you complete routinely each time and tenants sign it off.
What the insurance company wants you to do is to be responsible for the property they insure. Your insurance company can be your certain friend in uncertain times and possibly the only friend. Here think about how would your bank behave if they get a notice from the police advising the bank that the house they finance (first mortgage) was reported being a meth lab… question would the bank recall the mortgage? I do not have the answer for it. But what I know is that the bank would ask you:
Do you have landlord insurance on the property?
Now let’s talk about property insurance. When you insure your property insurance company asks you about following terms of occupancy:
- owner occupied home
- owner occupied home and rental
- rental property
- holiday home owner and family
- holiday home owner and casual letting
- unoccupied home
As you can see options reflect all possible scenarios from owner occupied to unoccupied home which subsequently reflects in premiums you pay. Sadly this is one of the mistake people often make- thinking about being “smart” choosing something what does not reflect real situation and then they get frustrated with the insurance company declining the claim.
Second point here is to understand that any landlord insurance has “limits” on certain items of the policy. For instance NZI Landlord insurance policy specifically states that meth associated limit for each and every claim can only be limited to $30,000
Would that be enough? I do not know – sorry, it is up to you to decide. My view on it: No it will not be. Reason? Well, builders charge about $20 per square meter of installed gib including stopping. You do the math – I think if you ordered to remove all gib in the house $30,000 run out very quickly.
For your convenience in this article I compare Landlord insurance policies and limits between NZI and AMP landlord insurance. Read it to understand importance of policy limits.
Finally, it is up to you to decide where to insure your rental house and how to insure it. Yet, I want to explain term “direct insure”. Direct insure means that there are no intermediaries between you and insurance company you insure your property with.
On one hand it can look attractive, you might even pay less (even it is very unlikely still many people think that) In this article I compare house insurance policies and costs from different direct insurers in New Zealand and ta-da two direct insurance companies have higher premiums to compare to AMP house insurance. Click on the link and read it later.
Point here is, think about would you be better off by having someone who knows an awful lot more about insurance or not?
Just think for a second: you call an insurance company call centre, get the premiums, start the policy and then expect that company to help you if there is a claim….that is exactly how it works and this is the reason people often learn the lesson of “small print” in the policy.
Would that be better to have someone who is going to play your ball and your game on your terms being your team player? I sincerely think – yes, it is in fact better.
Let’s face it, I get paid to look after your interests, it is in fact my job to make sure that your rental property is insured with the right policy.
Now, let me once again sum up everything what we have discussed here:
- Methamphetamine testing with each new tenancy.
- Occupancy of the house
- Landlord insurance policy limits
Do not hesitate, complete the form below to get a quote or call my office and let’s work together.