19. After Acceptance

When the seller signs and dates his acceptance at the bottom of our offer form, we are ready to put certain machinery into motion in preparation for taking over. Our first call is to the insurance agent.

When people buy real estate, they are notoriously neglect­ful of certain highly dangerous situations that exist. One of the most glaring is that of insurance. Often I have seen this to be so in transactions even though the buyer is represented by com­petent counsel. This is especially true where the buyer delays seeking out his counsel until the passing of papers, or leaves it to the bank lawyer to represent his interests at the passing. You should make contact with a not too busy lawyer who will be glad to get all your business and who is not too proud to accept suggestions from you as to some precautions and procedures you will have learned here. Have him represent you, and have him look over your offer before you present it, if you can.

If he is your lawyer, he has only one master to serve, unlike those cases wherein the bank lawyer acts for two or more par­ties. Your lawyer will have things to do in your behalf that are much better done by one who is not too busy to find time to do them thoroughly and who is willing to take the pains for his fee.

It is precisely because it is a dangerous practice to transfer insurance that I have omitted the customary reference to this point in the offer. Ordinarily the seller remains covered against loss until he either sells the property or until the company assents to a transfer of the policy. In other words, when you sit down to pass papers and the deed, and the seller signs an assignment of his policy to you, and you pay him proportion­ately, there is not the faintest obligation on the company to honor that assignment until its authorized representative has assented to and signed the transfer. If you are to be protected against the very serious danger of a crippling lawsuit, you must take other precautionary measures that seem to be customary in legal practices in my experience.

To put it bluntly, you must be protected against public lia­bility from the moment you take title. This can only be accom­plished by one of two means. One way is to have the insurance transfers drawn a week or so before the passing of papers, and have them effective as of the time of passing title, have them signed by the seller and then assented to by an authorized rep­resentative of the insurance company. The other method is usually a little more costly in that you will pay more for the insurance than if you took over the old policy. This means plac­ing a new policy on the property before you take over, covering yourself as of the day before you take title. This may save you from loss only once in a lifetime, but that loss is so catastrophic as to merit your precautionary steps. My own experience demonstrates this.

I signed an agreement with Jim R. to sell me Pond Avenue on April 4. We were to pass papers on May 1. He was covered by a well-known company and one would think the company would never avail itself of a subterfuge to evade responsibility. But here is what happened.

The old liability policy would be transferred to me on May 1 but the assignment would then be forwarded to the company for assent as a routine matter, and might take a week or more. Between May 1, at 10 a.m., and perhaps May 10, there was nothing by way of any policy, contract or concent, signed by the insurance company, wherein they agreed to cover Bob Kent. Their contract was with Jim R. If a tenant or visitor should fall on a defective step, or in a darkened hallway, and sue me, I would be on my own.

Hence I called Ace Todd, my insurance man, and covered as of April 30. In the usual course of its business, Ace's com­pany sent out an interviewer to check on the tenants of the building to be sure there were no professional suers in the building. The first floor tenant, a Mrs. V., would answer no questions as to her maiden name, et cetera, until the (dumb) insurance man told her the purpose of his call. He informed Mrs. V. that I was taking over on May 1 and that his company would be covering against Owner's Landlord and Tenants Lia­bility. Mrs. V. answered the questions and the coverage was confirmed to me on April 25.

On May 1,1 met with Jim R. and he signed an assignment of the policy he held with U Company to me. Then the assign­ment was forwarded to U Company's agent for the usual assent.

On May 2, Mrs. V's mother-in-law came to visit her and fell, she said, on a cracked step, injuring herself severely. I was served with the usual summons and writ. If things had turned out as badly in this case as they have often done in similar cases, I would have been wiped out. When I called U Company to ask them to cover, they informed me that their contract (the pol­icy) was to protect Jim R., not me. Until they had signed the assent, accepting me as assured, they had no obligation to cover the loss I had suffered. Legally, of course, they were right.

By the way, Mrs. V., by her own acts spoiled her own case. She sent me the rent for May and enclosed a letter which she thought would strengthen her case. It said that when she moved into the flat she had noted the cracked step and had called Mr. R's attention to it but he had never fixed it. Under our laws, the tenant who knows of and accepts a condition like this is said to assent to it in the hiring and any damage resulting from it is not the responsibility of the owner. Any guest of the tenant or member of his family is bound by the same bar, and thus Mrs. V. and her mother-in-law got nothing.

There is another most vital insurance matter that should be attended to, before the passing. If there is an employee of any kind, part time or full time, you must cover for Workmen's Compensation Insurance so that you are covered from the day before you take over. If your state does not have a Workmen's Compensation law or its equivalent, you can and must place a policy that will cover you should the janitor be carrying a rub­bish barrel up a cellar stairway and take a nasty fall, or be up on a ladder and tumble.

In this regard it is well to note a word of caution as to who is classified legally as an employee. Many owners are often mis­led by the fact that a part-time or "contract" janitor only comes in a few hours a week to do a few chores, and is not bound by any requirement to put in any given hours, nor is he under the direction or control of the owner. Yet that janitor will probably be deemed your legal employee if he is hurt, and you may have to pay important damages when the jury or Arbitration Board passes on the case. It has even been decided that the janitor was an employee in cases where it was proved that the work was contracted to a company who could send any of its men to do the work, even men whom the owner did not know.

It is immaterial that you pay the man for the work on a flat or monthly basis, and that you do not direct nor control his labors. Some states have declared him an employee in spite of this, on the premise that you "could have controlled him, had you so chosen."

A final word on this matter as to the usual maintenance com­panies that may be giving service or care to your building. Exterminators, window washers, cleaners, washroom service companies, floor waxers and the like come within this category. If there be any such companies servicing your building, you ARE concerned with the question of whether the service com­pany has employee's compensation insurance!

Even though you do not hire the workman who comes to spray the bug-juice, or clean the windows, you can, in most states be held liable to his widow when the window washer makes his one allowed mistake from a high window. And it is no help to you that the window washing company has assured you (or even signed with you) that they will keep their help insured. It is your obligation to see the certificate of insurance that the company says it has. Otherwise you stand in danger of losing all if there is an accident. Remember, even a written con­tract between you and the contractor, guaranteeing to hold you harmless if an accident occurs, will avail you nothing. Nor will it help if you show the company's business stationery and busi­ness cards or phone book ads, warranting that the company is fully covered. You MUST see or hold the certificate. Nothing else will do.

The above warnings serve to emphasize again the freedom from care that is afforded us by owning Aunt Tobys.

Your final step in the pre-passing stage is the physical inspec­tion of the building for any dangerous conditions that may exist in the halls, walks or common stairways. Loose banisters, frayed stairtreads, cracked steps, broken glass, absent handrails, papers or rubbish under stairs should be corrected. In those buildings where the custom, the letting, or the local laws re­quire you to keep the stairs lighted, you will want to check that the lights are in order, and you may plan to install an inexpen­sive clock-switch to turn them on and off at pre-set times. Usually you will change the time setting in the clock twice a year, but beyond that they require no care or attention. It is notoriously dangerous to rely on memory, yours or the janitor's, to turn the lights on at the required time. Failing to do so may result in a serious lawsuit. In those cases where the custom is for the tenants to light their own halls, this entire responsibility is removed from your shoulders.

CHECKING THE HEAT

If you are to buy a heated building and pass papers in the fall or early fall, you will find it much better to check over the heat during the summer, even before you pass papers. It is much more difficult to effect full efficiency of the system and iron out all its bugs, when any interruption of the heat evokes complaint from the tenants.

If the building is one that is heated by the owner, fuel will be one of your biggest expenses, and there is much that you can do in this area to put the building on an efficient basis. Prelimi­nary surveys of the heating system may be begun at this time. Since heat bills form such an important drain on the income of a building, not to mention how the heat situation is the source of complaint more than all other items combined, we can and should devote some attention to effecting economy, satisfac­tion of the tenants, and freedom from breakdown and trouble, particularly when it is most annoying—in zero weather.

Start with a visit to the oil supplier. Explain to him that you would like to continue to buy from him, but will expect prompt service and will want his best expert (or the boss himself) to look over the system. Since oil will be the most frequently encountered system, we will list the recommended check points for oil systems.

If the interior of the fire chamber in the heating boiler is thick with soot, this is both a serious loss factor and a clear indi­cation of an inefficient system. Properly burned oil leaves little soot. The soot forms a coating on the inside of the heater and this insulates the surfaces against the absorption of the heat that the burner generates, letting it go up the chimney. The proper use of the heat is to pass it through the iron walls of the chamber to the water jacket, and thence to heat the building.

Sootiness is corrected in either of two ways. The burner noz­zle and mixture should be adjusted to properly vaporize the oil for complete combustion. This will stop the further accumu­lation of excess soot, after the heater has been cleaned. Another and more permanent method is to change the burner for one of a new type which is built for and with, a device called a Shell Head. The word "built" is emphasized because it is inadvisable to change over a standard burner to the use of the Shell Head. Nor is it satisfactory in those cases where the burner manu­facturer uses a standard burner and simply switches the fire head for a Shell. The burner must be built for the Shell Head to be fully effective in its purpose. This type of burner is so thorough in the revolutionary way it vaporizes the oil, that the oil is practically completely burned, and soot, which is the result of incomplete vaporization and combustion, is rarely formed.

A triple benefit results. The oil you buy is completely used instead of wasted. The heater absorbs the heat instead of re­pelling it and sending it up the chimney. And the breakdowns and repair bills are fewer.

It has been estimated that most breakdowns result from one single cause. That is inadequate filtration of the oil before it reaches the burner. When you consider that oil comes largely from desert-like soil, and contains fine sand and sludge, it is not surprising that any fine orifice through which it must pass will soon become clogged unless thorough filtration has been effected. Thousands of gallons must pass through some small filters in the burner and finally through a needle-size hole in the nozzle. It takes very little gunk or sand to plug the small filters or the nozzle.

After some study of the problem, I learned that ocean-going vessels that burned oil had met the same problem and had con­quered it through repeated filtration. I decided that every drop of oil that entered my burners would get thorough and re­peated filtering before it entered, and I installed two giant fil­ters (called here AS no. 8), for each burner. One caught the sand and sludge just as the oil left the tank and the other was installed at the other end of the pipeline, just before the burner. Each filter had its core replaced every August. Winter break­downs dropped to %o of their former number and burners lasted much longer, now that the grinding effect of the sand in the oil was eliminated. Pump parts in the burner and other important machinery that used to be worn away by the sand and grit now lasted indefinitely.

Controls are your next concern. These may affect your oil bill drastically. In the long run, an outdoor control, mounted in a shady spot, such as under a porch or eave, will save most oil, and still give the building its proper warm-up in the mornings and regulated heat during the day. This device makes allow­ances for such variants as sunny afternoons, bitterly cold nights requiring longer warmups before 7 A.M., et cetera, doing it all automatically. These controls often cost as much as $100 in­stalled, however, and take some adjustment before they are completely right for your building and system. Indoor clock thermostats, often called Chronotherms are more popular be­cause of the comparative ease of installation, adjustment and servicing, and cost only one-fourth as much as the outdoor type. These should be installed in the apartment or unit most remote from the heating system, on a wall that is not an outside wall, about eye level.

Of course, you will check carefully in the room where you mount the thermostat, against serious heat leaks. Upper sashes of windows that do not completely close, can cause the room temperature to fall so that the thermostat feels the need of heat almost continuously and your bills will soar.

It is well to check every window in the building in this regard and where needed, window cords or weather strips should be installed. In some buildings I have encountered such leaky, loose windows that the heat was entirely out of balance. In order to satisfy the third floors, the second and first floors had to be heated to 80 degrees or so. This was corrected by installing aluminum windows on the third floors. Thereafter, the thermostat became "satisfied" more easily and the lower floors were practically the same temperature as the third, with a nice saving in fuel and much added comfort.

By the way, it is almost common to find that the oil dealer extends a "discount" from the recommended standard price of fuel oil to those who request it. You may be asked to keep it mum, but there is no harm in trying. One cent off is the usual cut, and for a large-volume buyer, 1½ cents off may often be enjoyed. With No. 2 fuel oil this amounts to about 10 per cent —a substantial saving.

Note that it is always best, where possible, to use the same oil company as your supplier of fuel and for servicing the oil burner. This bars the common excuse by the service man that the "oil you're getting is bad" and the retort by the oil supplier that, "It's your service that's at fault."

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