Liability - Owner or Management Company

Liability - Owner or Management Company

Stamford, CT · Member since 2016 · 12 posts · 9 votes

I have a legal question.  In the case where a property owner is using a management company to manage their property and someone get's hurt due to negligence, i.e. management company does not fix broken stair and tenant falls on stairs, or a tenant complains to the management company about a mold problem, but the company does nothing about it, and the tenent gets sick, who is liable, the management company or the owner of the property, or is it both. What recourse does an owner have to assure something like this won't happen.

I am outlining this under the assumption that the owner is unaware of the problem, as the tenant is dealing directly with the management company, and the management company is telling the owner everything is "fine and dandy." 

This is a hypothetical situation.  I pose the scenario to prepare myself on what could happen when I use a management company to take care of my property. If I actually were in that situation and my management told me there were a probably I would direct them to fix it right away.

Thanks for any insight.

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  • Investor · brentwood, CA · Member since 2016 · 1k+ posts · 730 votes
    8y

    The answer is very likely that it depends.

    Upon what for example?

    1) Laws of your state

    2) The terms of the contract you have with your management company

    I can tell you anecdotally, one of my property managers had to pay a pretty large settlement recently on a property with black mold. I didn't inquire into the details, but it would be my guess (given that particular state) that the owner was also sued.

    In my case, one of the reasons I have a property manager is risk mitigation (beyond wanting nothing to do with the day to day hand holding of tenants). That with solid liability insurance is all that I feel I need (LLCs are very expensive and cumbersome to maintain in my state). I will likely be adding umbrella coverage sometime in the near future assuming I can find something at a reasonable rate that will cover all of my activities.

  • Carl FischerPro Member
    Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
    8y

    @Brian Stratton

    America is very litigious. Most likely everyone will be sued. The owner, the management company, the management company owners, anyone associated with the property, any construction companies that worked on the place, etc. insurance and ananymity is good in the situation you outlined. 

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