You need to be extremely careful, think hard, and get good legal
advice before you allow a tenant to run a daycare business in your
rental property.. In suit-happy America anything that goes awry
results in a lawsuit against the person most able to pay, not
necessarily the one who was at fault. In this case it will be you,
the owner of the property, not the tenant.
Accidents are your biggest concern. Houses that care for children
need to be retrofitted to avoid them. You would almost need to
inspect the house yourself to be sure that there are no accidents
waiting to happen. Even then you might not have spotted them all.
Check the internet to see if there's information about setting up day
care and preschools. One site that could provide the information you
need is www.startadaycare.net.
You also need to get information about what, if any, businesses are
allowed in residences and what permits are required. Check with the
city attorney or building department. The failure of your tenant to
have the right licenses and permits would geometrically increase you
liability should a problem arise or a child be injured in the
Third, your tenant needs to have complete liability insurance,
possibly with you named as a loss payee, in the event there was any
suit against you.
Fourth, make sure you have a large umbrella policy to cover your
liability. Ask you insurance agent for some ideas on how much you
need to have.
Your first duty is to yourself, not the tenant. Err on the side of
over caution. You need to take the responsibility to see that the
property is free from hazards. Most important, if you don't feel
completely at ease having your tenant run a daycare business out of
your rental property, don't allow it.