Legal issues with trading living quarters for barn work
I exchange free rent for a mobile home on my property for caring for my horses, feeding, cleaning stalls etc, few hours a week. I have had different people do this and have current people right now. I have never put anything in writing as I am unsure what that would hold me to. I am nervous about being considered either a employer or a landlord. After that nanny in the news out in Cali, I am now really nervous.
Has anyone had experience with this and what did they do to dot the I's and cross the T's, I live in Florida. I really can not afford to pay someone and thought this was a win/ win for someone that needed cheap housing but had a "real" job.
Employment law only varies somewhat from state to state, but residential tenant and landlord rights vary a huge amount.
The tenant is probably supposed to be declaring the fair market value of that rent as taxable income, and you are likely supposed to be reporting it. The IRS likes to convert barter arrangements back into dollar amounts.
Well of course I would advise you to discuss with your CPA/tax planner and an attorney that can handle real estate transactions, but general things to consider (not to be considered legal advise):
-yes you would be considered a landlord
-yes you should have a written agreement (which is required in some states, but advisable even if not a legal requirement). If you do not want to hire an attorney, you can start with a standard rental agreement and modify the payment and obligation terms to fit your situation.
-the services you receive are considered "rental income" even though not cash and taxable as such
The nanny in CA was a tenant, just like your tenants are. If they were ever to refuse to leave, you would need to evict them in accordance with the regulations of your state.
That said, the nanny case was a complete failure of background check. If you google her ("-nanny" to, avoid the current media coverage), previous lawsuits pop up, even a reference to her as a vexatious litigant.
10seconds on google, not even a background check. Hey, if you're stupid enough to employ something like that in your home, you pay the consequences.
Paint and Coanteen are both correct. The CA people hired a woman they found by advertising on Craig's list, didn't do a background check, and so they hired a woman who is on the vexatious litigators' list in CA (or something like that for the list name), and who has lawsuits constantly. Supposedly she'll move out soon, but only if the entire cosmos lines up the way she wants it to. Apparently one big sticking point is the minimum wage laws vs. work for board. From what I read the no pay for room and board isn't legal. Now the poor CA people may have to live with this woman in their house for months if they don't pay her to go away. Don't end up on Judge Judy or CNN from the same mistake. I think I would go with a legal lease, and tenant relationship, and a separate pay for work arrangement, to keep things legal.
from what I read the no pay for room and board [in the nightmare nanny case] isn't legal. .
That struck me as bad, too. Seems like looking after one's children is an important job, for which one would expect to pay a good wage. Not just room and board. Cause that way you'd be likely to get homeless wackos.
And OP, you will want to guard against that, too. So again, I'd caution you to only use people whom you know or whom trusted friends have recommended.
I am just googling stuff here, so ask an accountant. But the way I read it, in order to do it right, you will have to do paperwork. It looks like money will have to change hands; your tenant will need to pay you rent and you will need to pay her salary, withhold taxes and benefits, and buy workers comp insurance. You will need to declare your income from the rental. Will it cost you more to do that? I don't know; do the math. If you are charging enough rent, I would think you will break even or come out ahead.
Info for cost of worker's comp insurance:
To arrive at a base rate for workers' compensation insurance, each classification is translated into a dollar amount, which is then multiplied by 1 percent per $100 of the total payroll for that employee. For example, the office clerk classification in California is roughly $1.25 per $100. So if that employee is paid $500 per week, the workers' compensation insurance premium for that employee costs roughly $6.25 per week.
Standard Classifications, workers code for "STABLES – all employees" is 7207(1). I think that might be the code you (not you specifically, OP, since you are in Florida, but anyone in California who may be reading this) need to give the insurer to find out the cost of insurance. http://www.wcirb.com/sites/default/f...ing_2014_0.pdf
I have never put anything in writing as I am unsure what that would hold me to.
It will hold you to exactly what you put in writing and agree to, assuming of course that the terms of the agreement are legal.
I am nervous about being considered either a employer or a landlord.
You're already considered an employer and a landlord because you are both an employer and a landlord whether you have something in writing or not. Lack of a contract doesn't protect you in any way. It would be wise to put the entire agreement in writing to protect yourself on both accounts.
Not having these agreements in writing opens you up to far more liability than attempting to fly under the radar does. I strongly suggest finding a lawyer experienced in employment law (and with these types of arrangements) to assist you in drafting an appropriate agreement. I also strongly suggest doing your due diligence on potential employee-tenants, including background checks and references. You might also want to consult an attorney experienced in landlord-tenant law to understand your rights and responsibilities as a landlord. You should also seek professional advice regarding tax reporting, etc. either from an attorney or a CPA. It sounds overwhelming, but it really amounts to a few simple steps to save you a lot of headaches and potential liability in the future. Not even the collective wisdom of COTH can substitute for actual professional advice from your own attorney.
Why don't you have the person pay you "X" amount for rent and you pay them "X" amount for labor and keep it straight
That's how I've heard it done before. The tenant works for a flat rate of $500/month, and the rent is then set at $500/month. That way, if the tenant wants to go travel around Europe for two months, she'll have to pay rent since she's not working. Or if you want to fire her, then she needs to pay rent until she finds a new place to live. It's supposed to give you a little more leeway, but I'm not sure if it provides any additional (or less) legal protection since I (thankfully) don't know any of these situations that have gone south.
There was a dairy farm in Vermont who did this: man worked farm, lived in house on property as payment.
Man quit job on farm. Did not move out of house.
Owner/landlord had to find another person to work the farm, but no way to let them move into the house. Owner had to follow all laws to properly evict tenant from the property, costing quite a bit of money.
Something to think about if your tenant quits the job but wont' leave the house. Do you really want to deal with that?
"If you think nobody cares about you, try missing a couple payments..."
There are any number of reasons to be above board with the kind of arrangement. Have a lease for the rented property. Have a work agreement. Depending on your legal advice, get appropriate insurance, pay appropriate taxes, and declare appropriate income and expenses. Is it so much easier to do it right and if things go wrong, it is so much easier when everything is in writing and legal. I handle my farm rental house this way -- weekday feeding reduces the rent. Everything related to it is in writing and above board.
first what type of lodging are you offering? Is it a mobile home - mobile or is it a home that is for the most part permanently affixed to the property - like trailer home? That could be your first legal obstacle. Rather than spend time and $ on talking to a lawyer or a CPA, the thing to do would be to call your city or state landlord/tenant office and just ask them about it. You don't have to give them a bunch of details. Don't say you are and is it legal, ask as if you are considering it - say sometime like you are considering purchasing this property that has a mobile home and were thinking it could be helpful to have someone live there for free in exchange for help around the farm - is it legal. what do i have to do.