Property Manager Q & A - Tenant Fire & Liability

fire-plug

QUESTION

A few months ago, there was a fire at one of the rental properties I manage. The heat was out, and I thought it would be nice if I brought the tenant a space heater. Well, as luck would have it, the space heater is alleged to have caused the fire. The tenant filed a lawsuit against us and even named me personally as a defendant in the lawsuit, even though the title is held in an LLC, and our management company is a corporation. What did I do wrong here, and is there anything I could have done differently?


ANSWER

This is a great question which goes to the heart of exactly how much (or how little protection) you can get from a limited liability company, or other limited liability entity.  

First, let’s change the scenario to something a little more understandable. Let’s say that you were on a trip to Home Depot to buy smoke detectors for a rental property and got in a collision which was your fault.  The rental property is owned by an LLC and the car is owned by you personally. In that case, you would be personally responsible for the collision, because you are the driver and owner of the car. The LLC would also be (theoretically) liable for the collision because you were on LLC business at the time of the accident. The plaintiff in that personal injury claim, if they filed a lawsuit, would have every right (and in fact the court rules would force them) to name both the LLC and you personally as defendants. You would be joint tortfeasors.    Now, because most such cases are settled out of court, there probably would be no lawsuit, and (assuming your personal auto insurance had adequate limits of liability), there would be no reason to go after anyone but you as the driver and owner of the vehicle.

Turning back to rental properties, most properties don’t manage themselves. The owner has hired you to handle the day-to-day affairs of the property. Your job is to interact with tenants and prospects, perform or oversee repairs, handle funds (both rents coming in and expenses going out), etc… Pretty much everything that you do in property management has to be done by a human. 

If I am understanding the fact pattern, the tenant is alleging that you provided a portable space heater and that the heater caused the fire. You don’t clarify whether the heater malfunctioned, or was defective, but I am gathering that the allegation involves you providing a defective heater. So, just like in the example above involving the car accident, we see liability on the part of the driver of the car, the owner of the car, and the person for whom the car was being used.

I am sure you have heard the old saying, no good deed goes unpunished. That is quite a cynical way of looking at the world, but it is also reflective of reality. When you take it on yourself to offer someone the use of your own personal space heater, you are responsible to take reasonable precautions to keep the users of the space heater safe. Presumably, you thought it was part of your job to help out the tenants while the furnace was out of service, so this isn’t merely a gratuitous act. In essence, although the landlord-tenant act doesn’t require you to provide the tenant a space heater, once you voluntarily take on that task, you are obligated to do so in a reasonable manner.

Of course, we don’t know from the simple facts you have outlined whether there will be any ultimate basis for liability or not. The space heater you provided might have been entirely safe and there may be no evidence of negligence on your part.  However, any time you take on a task, you need to act reasonably in doing so, and you open yourself up to a lawsuit like the one here. Candidly, while you had no legal obligation to provide a portable heater (and some landlords even prohibit such devises on their property), if you were going to do anything, it would have been better to reimburse the tenants for the cost of a space heater. 




Chris Benis
Christopher T. Benis is an attorney with Hecker, Wakefield & Feilberg (HW&F) in Seattle. The information contained herein is not legal advice. You are encouraged to consult with your attorney before relying on anything contained herein.

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