Landlord Liability For Tenant Injury

This Is A Member-Only Page
Members' Homepage

It is important to know how a landlord might be held liable for injury to a tenant that occurs on the landlord's property.  Knowledge regarding this subject will (1) help the landlord avoid most claims in the first place and (2) make it more likely that the landlord will maintain adequate insurance to protect himself against claims that do occur.

To be held responsible for an injury on the premises (1) the landlord or his employees must have been negligent in maintaining the property, and (2) that negligence must have caused the injury. All of the following must be proven for a landlord to be held liable:

• The landlord was responsible for maintaining the item that caused the accident.
• The landlord failed to take reasonable steps to avert the accident.
• It would not have been unreasonably expensive or difficult fix the problem (or at least giving adequate warnings).
• The injury was the probable consequence of not fixing the problem (the accident was foreseeable).
• The landlord's failure to make the repair caused the tenant's accident.
• The tenant was actually hurt.

For example, if a tenant falls on a broken front door step and breaks his wrist, the landlord will be liable if the tenant can show all of the following:

• It was the landlord's responsibility to maintain the steps (probably true in most, although not all, scenarios).
• The landlord failed to take reasonable measures to maintain the steps (for days or weeks, not if it had only been broken for minutes).
• A repair would have been easy or inexpensive (fixing a broken step is a minor job).
• The probable result of a broken step is a serious injury, and it was foreseeable (falling on a broken step is highly likely).
• The broken step caused the injury (the tenant must be able to prove that he fell on the step and that the step is where he broke his wrist).
• The tenant is really hurt (e.g.,  a broken bone).

A tenant can file a personal injury lawsuit for medical bills, lost earnings, pain and other physical suffering, permanent physical disability and disfigurement, and emotional distress. A tenant can also sue for damage to personal property, such as a stereo or car, that results from faulty maintenance or unsafe conditions.

Minimize Risks Related to Maintenance

Landlords can avoid many, probably most, problems by maintaining the property in excellent condition. Ways of doing this include the following:

• Set out responsibilities for repair and maintenance  clearly in the lease agreement.
• Use a written checklist to inspect the premises and fix any problems before new tenants move in.
• Encourage tenants to immediately report safety or security problems, whether in the tenant's unit or in common areas.
• Keep a written log of all tenant complaints and repair requests, with details as to all communication regarding the complaints and how and when problems were taken care of.  Be sure to include info about any vendor scheduling and/or parts/material availability problems.
• Make urgent repairs as soon as possible.  Take care of any safety issues within 24 hours. 
• Keep tenants informed as to when and how the repairs will be made.
• Respect tenant privacy by making appointments as early ahead of time as possible.
• At least annually, better yet quarterly, give tenants a checklist on which to report potential safety hazards or maintenance problems that might have been overlooked.  Required return of signed  lists even if no problems reported.  Use the same checklist to personally inspect all rental units once a year.
• Take the necessary steps to insure that any "independent contractors" cannot be considered employees, including understanding and following IRS guidelines and using written agreements.

Insurance

A well-designed insurance policy can protect a landlord's rental property from losses caused by many perils, including fire, storms, burglary, and vandalism. (Earthquake and flood insurance are typically separate.)

A comprehensive policy will also include liability insurance, covering injuries or losses suffered by others as the result of defective conditions on the property. Equally important, liability insurance covers the cost (mostly lawyer's bills) of defending personal injury lawsuits.

Important factors when choosing insurance:

• Pick a company and agent who is experienced in and knowledgeable about income property insurance coverages.
•  Purchase enough coverage to protect the value of the property and assets.  Use replacement cost value, not original cost.
• Be sure the policy covers not only physical injury but also libel, slander, discrimination, unlawful and retaliatory eviction, and invasion of privacy suffered by tenants and guests.
• Carry liability insurance on all vehicles used for business purposes, including the manager's car or truck if he or she will use it on the job.
• Cover all employees with workers compensation insurance.
• Require proof of liability and workers compensation insurances from maintenance vendors.

Holding Title

Finally, it is extremely important to give serious thought to the potential liabilities associated with owning rental properties and to take the necessary steps to minimize your risks.  There are dozens of ways in which it is possible to lose your entire net worth if ownership is not properly vested.  As examples, for judgments for issues not covered by your insurance, and/or for judgments that far exceed your coverage limits.

Investors should research the subject themselves and/or seek competent legal advice regarding the tax and legal implications of the various vesting options.  For many investors, it is currently recommended that the Limited Liability Company (LLC) provides the best tax benefits and risk management, with a separate LLC used for each separate property.

Members' Homepage