Jumping into the commercial real estate market is often a successful way to achieve the American dream. After all, if you can keep your units rented, you have a ready source of income. To avoid problems, though, you must be certain to make certain disclosures to new tenants.
Regrettably, individuals occasionally die when renting from landlords. If a person dies in one of your units, though, do you have to inform future tenants? The simple answer is yes, although there are some exceptions.
A death is likely a material fact
In California, owners of commercial property typically have a duty to disclose material facts to potential tenants. A material fact is essentially anything that may make a person decide not to rent a space. Generally, the death of a previous tenant is a material fact that requires disclosure. If you fail to notify future tenants about a death, you may face legal action.
Time affects materiality
While the death of a previous tenant is likely a material fact, it may not be so forever. In the Golden State, you have a duty to notify potential tenants about past tenant deaths for three years. Therefore, if the death occurred more than three years ago, you can probably remain silent on the matter.
Some death causes limit disclosure
In an effort to combat the stigma that often comes with HIV and AIDS, California legislators carved out an exception to the death notification rule. If you know your tenant died of AIDS or HIV-related complications, you do not have to disclose the death. This exception protects your deceased tenants right to medical privacy.
To increase profit potential and minimize legal exposure, it is critical to comply with required disclosure rules when renting to new tenants. While you have a general obligation to disclose previous tenant deaths, timing or cause of death may give you a legally valid excuse not to inform prospective tenants.