Q: We’re renting a farmhouse from an owner who lives out of state and who inherited the property from an uncle. The owner is not familiar with the property but acknowledged that it needed some fixing up before it was ready for occupation. I’m a contractor by trade, so I offered to do it, and the owner said OK.
He gave us two months’ free rent in exchange for my hours of work and materials. But the cost to do all that was necessary was more than that amount by about $500. Does the landlord have to pay the extra? –Janice J.
A: It’s a shame that you and the owner didn’t anticipate this at the start. In fact, you should have anticipated the opposite result, too — that the cost to do the work might be less than two months’ rent. In that event, the question would be whether the owner could fairly expect you to pay something for those first couple of months.
The key to answering your question lies, first, in the type of work you did on the house. You say it needed "fixing up" before occupation, but you don’t say what had to be done. In every state but Arkansas, it’s the landlord’s responsibility to make the property fit for occupancy (and pay for the repairs necessary to make it habitable).
If the house was uninhabitable before you did the work — with nonfunctional plumbing, a leaky roof or serious structural problems, for example — then the landlord is legally on the hook for the repairs.
Next, we need to know how the two of you arrived at your payment plan. If the owner estimated that the work could be done for two months’ rent, then you could reasonably ask him to pay more when that sum proved inadequate. On the other hand, if you gave a bid for doing all the work necessary to make the home livable but you underestimated the cost, you could fairly be expected to cover the overrun.
What if the work you did was not required to make the home fit for occupation — perhaps you remodeled the kitchen or refinished the floors but the original structure would have passed the "fit and habitable" legal test? In this event, the only question is how you and the owner structured the deal.
Again, if the owner misjudged the cost of the agreed-upon repairs, perhaps he should bear the consequences of his poor planning. But if you bid on the job and just underestimated how long it would take or how much it would cost, you are out of luck.
Q: I have a mid-size apartment building on the outskirts of town. As a service to the tenants, I have a shuttle driver who uses his own van to take people downtown three times a week, and bring them back a few hours later. One day last week, he had to put on the brakes suddenly, and one of our tenants was thrown forward against the seat in front of her. She wasn’t badly injured, but it got me thinking … would I be liable if she had been? –Marissa T.
A: The answer to your question depends on whether the driver is your employee. If he’s legally an employee, then you, his employer, would be responsible for his negligent acts. So if he had to put on the brakes because he was speeding and a passenger were hurt, that passenger could look to you (and your insurance company) for coverage for any injuries.
But if the driver is an independent contractor, the passenger’s claim would be against the driver and his insurance carrier (with one exception, more on that below).
I’m betting that you think he’s an independent contractor, because you probably treat him that way: You don’t withhold or pay taxes for him (such as income tax and Social Security and Medicare taxes); you don’t monitor his performance the way you would, say, an office manager; and he might even work for others too.
He pays all of his state and federal taxes himself. That’s one big reason many people prefer to deal with independent contractors, not employees.
But in the eyes of the law, what you call the worker isn’t important: What counts is whether the worker is truly an independent businessperson or not. Even a part-time worker can be an employee if you closely control the way the person does his job, and if you provide the tools and equipment.
The driver’s use of his own vehicle is solid evidence of independent contractor status, but you’d want other indicators of independent status, such as the fact that he has incorporated or otherwise formed a separate business, that he carries his own insurance, and that he advertises his services to others.
Now, to that one exception. Even when dealing with independent contractors, landlords must exercise reasonable care when they know that the contractor will be interacting with tenants in delicate situations. An obvious example would be hiring a security firm with agents who will have access to tenants’ information and homes.
If you did no research on the reputation, stability and qualifications of the firm you used, and it later turned out that you’d hired a thinly veiled front organization for a bunch of burglars, you might well find yourself at the other end of a tenant’s lawsuit. Likewise with drivers, even if they’re not your employees.
You’ll want to make sure, for example, that this person has a good driving record, carries adequate insurance, and otherwise seems like a safe and reputable driver.
It’s a good thing that you’re thinking about this issue now, before a serious incident occurs. You’d be well advised to talk with a lawyer who practices employment law, and explain the nature of your working relationship with the driver. Your lawyer, knowing not only the federal rules on the differences between employees and contractors, but the state laws, too (they can be more stringent), can tell you which side of the divide you’re on.
If you’re legally an employer, you need to make very sure that you have the right insurance to cover any accident. You’ll need "non-owned vehicle" liability insurance, designed to cover you when an employee uses his own car in conjunction with doing work for you. This isn’t part of a standard liability policy, but it’s a common add-on.
