Legal Question in Landlord & Tenant Law in Michigan

Re: Incorporated Renter Liability

This is about as confused as it gets. "She" cannot be incorporated. She may be the sole incorporator, shareholder and officer of a corporation, formed to provide a service, day care. Most states license day care, and often, corporations cannot be licensed, but must have a licensed person running it. You should require this person to prove to you that she is legally authorized to operate a day care center.

The day care facility, if it is not a person's home (and usually limited to a few children), must also meet licensing or use requirements. You should make sure she has obtained any necessary permits for using this house as a day care center.

She is not protected from personal liability, since the service she is offering is a personal service, and even if it is incorporated, if she is the sole shareholder and officer, "piercing the corporate veil" will be easy. If she claims a lawyer is telling her she is protected from suit and liability, get it from the lawyer in writing. I guarantee she will not be able to. If she does, have an experienced lawyer review it, because it cannot be done.

The day care license will require certain minimum insurance, and you should require at least twice what the state requires.

Your homeowner's policy probably specifically excludes business use of the property, business invitees (customers) and others working for a business user. Read your policy. If the state does not require screeing of day care personnel, including the owner, you should require it as a lease requirement: no criminals, especially child/sexual abusers, no alcoholics, no drug addicts, no one with a history of violence.

You can acquire (and have her pay for) a business policy, and you should have an umbrella policy covering anything except an act of God, but including criminal acts if possible (child abuse being anly the most likely crime)(insurers will rarely cover criminal acts). The additional coverage should not be all that expensive, assuming she has met all the licensing requirements.

And this is not the kind of advice you should be getting for free. If anything happens to anyone at the day care center, and it can be shown that you were negligent in protecting against it, you will be held liable. Especially if it involves children and especially if you are the one with deep pockets, because the lessee used up all her assets defending herself and is now in prison.

If she has a history of providing quality day care, she probably already does all this. If this is her first try at day care, you will have to help her and yourself by being super careful.

I have 33 years of working in juvenile law and children's services, including regulatory agencies.

Re: Incorporated Renter Liability

A day care facility and its operator must be licensed. You should see if she has a proper license. Also, she is not insulated to the extent she personally may be responsible for the handling of the day care and could be sued.

Also, she should not represent that the home is hers if she is renting it. If you knowingly permit this if a child is injured and they seek to attach the house you could be adversely effected.

The operator should carry proper insurance for operating the business, including liability insurance and you as the owner of the home should be an additional insured.

If a child is seriously hurt and you are sued as a Landlord $300k may not be sufficient. Moreover, some rental/home owners insurance policies exclude liablity coverage for businesses operated at home. So you should check with your insurance agent.

This is a very confused matter and you should have a proper lease written to protect your interests.