Home Child care in our IP

Hi,

Our tenant has recently asked us that they would like to open a home child care on our property. We have a garage at the back of our house that was converted into an entertainment room. The tenants have offered to renovate it completely so that it satisfies all the council conditions for undertaking home child care.

However, can someone tell me what my liabilities as landlord are? The property is insured through Terri Scheer and they have told us our policy would be void if we are aware of the property being used for commerical reasons including child care. Are their other policies that would cover such a use of the IP?

Cheers,
MrHyde
 
There was a thread on this situation a few months ago. I am not good at finding things, so you could try a search or perhaps someone who does it better than me could find it for you.
 
I don't know which state this is in, but I would assume the property needs to be in the correct zoning to run a business from it, and then business insurance would need to be undertaken to cover public liability etc.
 
Sorry, the property is in Victoria (Altona North) and the council has already inspected the property. They have provided a list of things that the tenants will have to do to get approval to start the child care. Being a home child care, I think the laws are slightly different in that the property does not have to be zoned as Commerical.

I am quite ok with the tenants wanting to do this as it means I will get a longer lease tenant and they are paying for all the renovations. The current setup is nowhere near appropriate for the purposes and I reckon it will cost about $25,000 to get it into shape. My biggest concern is my own liability as landlord. If the landlord's insurance does not cover this, I might need to get separate public liability insurance.
 
Family Day Care is controlled by various groups, so it would probably be easiest to contact one and ask for the name of an insurance company who will cover a private home used for this purpose.
Marg
 
Gosh yeh there was exactly the same post - posted a few months ago I had to look at the date this one was posted to make sure it was not the same one - lots of info in the other post BTW
 
Wouldn't it be just easier for the tenant to take in a couple of kids informally to provide child care?
At the end of day, the profit is about the same.
Been there....
 
Council zoning aside.. I'd be more worried about this:

The tenants have offered to renovate it completely so that it satisfies all the council conditions for undertaking home child care.

I reckon it will cost about $25,000 to get it into shape.

There have been a bunch of threads recently from people who have tried to sell (or buy) IPs affected by Caveats.

Lets say you do let them go ahead with the improvements. They would be contributing to a constructive trust, entitling them to an equitable interest in the land... yes?

Is this something you want to interfere with the sale of your IP 5.. 10 years down the track?
 
As an aside to your original question...

If you incur additional costs, I'd certainly pass them on - further they will likely be a long term tenant - consider if this is good or bad for you (i.e.: if you're hanging on the the property long term, awesome!)...if you do have a long term strategy...maybe consider an extended lease (with appropriate rent review mechanisms) and losing the PM, if any...
 
Hi,

The tenants have offered to renovate it completely so that it satisfies all the council conditions for undertaking home child care.


Cheers,
MrHyde

Our tenants in a Rent to Own property were permitted to make improvements.Only problem, everything they attempted, they did wrong.
It cost us $15k to get it back to where it was rentable again.

Be careful, unless they plan on using trademen you approve of.
 
Council zoning aside.. I'd be more worried about this:
Lets say you do let them go ahead with the improvements. They would be contributing to a constructive trust, entitling them to an equitable interest in the land... yes?

Hmm... don't know anything about constructive trusts. I'll have to look into that as well as I don't want anyone else having caveats or interest on my property.
 
Our tenants in a Rent to Own property were permitted to make improvements.Only problem, everything they attempted, they did wrong.
It cost us $15k to get it back to where it was rentable again.

Be careful, unless they plan on using trademen you approve of.

Thats a good point. I have already told them that I would expect to review all plans and veto them if I don't like it. After all, it is my property and I need to make sure that its value is not adversely affected when I sell it.
 
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