‘Legal liability’. Just the words are enough to make many feel uneasy.
The fact that liability is prefaced by the word legal is a fair indication of how serious it is.
And it is something you don’t want to be caught up in while managing the investment properties on your rent roll.
Legal liability basically means that if a person is responsible for something happening (loss, damage or injury), then they may be liable for compensation.
Landlords, and an agent acting on their behalf (you), have a legal obligation known as a duty of care to provide a safe and habitable property for tenants and any person who is legally on the premises.
If you fail in this duty and someone suffers a loss or injury, then you can be found liable for that loss or injury and be required to compensate the person who suffered.
To fulfil your duty of care, you must take reasonable care to avoid foreseeable risk of property damage or harm to the tenant and other visitors to the property.
Five liability issues to look out for
There are numerous things that can pose potential liability risk.
Here are five commonplace ones.
1. Damaged woodwork
Rotting or damaged timbers can make places where people traverse dangerous.
They can also render a building structurally unsound and result in structures, like ceilings or pergolas, collapsing.
Dodgy wooden flooring, whether internal floorboards or external decking, poses the risk of the timbers failing and the person falling through them or being injured by broken planks.
If the iffy woodwork is on a staircase, there is not only the risk of injury from jagged wood shards but also that the person will end up falling down the stairs.
2. Dodgy fittings and fixtures
While it may seem to be just an aesthetic thing, fittings and fixtures that are in poor repair or damaged are not only unsightly, but they can also cause injury and property damage.
Here are just a few examples…
- A broken soap holder in a shower recess. A tenant could sustain a significant cut reaching for the bar or falling against it.
- A cracked shower screen that shatters when a tenant closes it, causing cuts.
- A piece of carpet that has come loose. It could be easy for someone to trip on it, fall and injure themselves.
- The kitchen cupboard door that is off its hinge that the tenant bumps their head on.
- A handrail that isn’t well affixed that comes away from the wall and causes the person to fall.
- The broken glass shade on the light fitting that slices a hand when the bulb needs changing.
- Un-serviced appliances
If the landlord supplies appliances at the rental, then they must be in safe working order.
Gas and electrical appliances (like heating systems) on the fritz can pose serious and even life-threatening risks.
Malfunctioning electricals can cause fires or result in electrocution, while damaged gas appliances could explode, cause fire or emit toxic gases (like carbon monoxide).
3. Insufficiently secured furnishings
Tragically, there have been too many incidents where heavy furnishings, like TVs or bookshelves, have toppled over and harmed a child.
Un-anchored or insufficiently secured objects can pose fall and crush injuries.
In most jurisdictions the tenancy legislation allows tenants to attach anchoring devices to a wall to stop heavy furnishings from being pulled over.
It is important that any anchoring device that the landlord has installed, and this includes things like picture hooks, are also adequately maintained and the tenants advised about their correct use.
If not, the landlord (or property manager) could be liable for an injury or property damage caused by a heavy picture falling from a hook that wasn’t able to sustain the weight or was installed in a weak spot in the wall, for example.
4. Unstable pool fencing
If there is a pool at the rental, then there is a legal obligation to have it properly fenced.
Fencing that is unstable or damaged, or gate locks that do not work properly, could result in unintended access to the pool and a drowning.
It is important to understand that, for you or your landlord to be legally liable, you must be found to have been negligent.
5. Being held liable
To be negligent, you need to have been aware of the risk and have failed to address it.
This means that you generally won’t be held liable for losses or injuries that are caused by something that you did not know about and could not have reasonably known about.
So, knowing about the risk is key.
Which means being informed about the risk is also key.
And this means if you (as the property manager) are aware of a potential liability risk at the rental property, you need to inform your landlord.
If you don’t, and a liability claim is made for a loss, then you are the one who could be liable.
Avoiding liability risks
The potential liability risks will generally fall under one of these three categories:
- Safety and security. Ensure the premises are safe and secure. If the landlord, or you as their representative, fails in that duty of care, any insurance claim may be impacted.
- Maintenance and repairs. It is a condition of insurance cover that the premises must be adequately maintained. It is also a cover requirement to act to prevent further loss.
- Statutory compliance (complying with laws and regulations). Failing to ensure that legislated requirements are met can jeopardise the landlord’s insurance.
Liability claims
When it comes to someone suffering an injury or damage on the property, whether there is a liability claim possible depends on the circumstances of the loss.
If the loss or injury is the result of the landlord or agent failing in their duty of care, there may be a legal liability claim to be made.
This is why it is important landlords have liability insurance and why agents need professional indemnity (PI) cover.
It is important to know whether the landlord’s insurance includes legal liability cover.
Whether there is cover, and the terms and conditions of cover, varies between insurance providers.
All EBM RentCover insurance policies include legal liability cover up to $20 million or $30 million (depending on the policy).
If there is a possible liability claim, the insurance provider needs to be advised as soon as possible.
Never try to go it alone, immediately get in touch with the insurer for guidance – legal liability claims can be messy and expensive, so it pays to let the insurer handle things.
If you have questions, reach out to your EBM RentCover Relationship Manager. Not partnered with EBM RentCover? Get in touch today.
