A minefield of legal issues looms over every Property Manager these days, and understanding legal jargon is often a challenge in itself. Lisa Jemmeson defines some important legal terms and applies them to common Property Management situations.
What do you know about torts? No, not those sticky cakes from the patisserie, rather “tort” from the Latin, meaning crooked or wrong. A tort is a civil wrong. You may know it by another name, “negligence”. Put simply a tort is a wrong that is based on a breach of duty of care. The breach gives a person a civil right of action for a remedy, ie compensation.
If we examine the relationships in Property Management, you have contractual relationships and relationships whereby a duty of care is owed:
The contractual relationship between the Agency and Lessor, ie the management agency agreement
The contractual relationship between Lessor and the Lessee, ie the lease
Duty of Care. The relationship between Agent and Lessee – this is a category of relationship that gives rise to a duty owed.
In Property Management, negligence actions can be brought by the tenant as a plaintiff in their private capacity who sues the wrongdoer, the agent, for compensation. When the tenant sues, the standard of proof is on the balance of probabilities.
It is our experience that some Property Managers do not give due consideration to duties owed to a tenant by the agency. The contractual obligations of the agency are largely concerned with the enforcement of duties that one person has, by agreement, bound himself to perform for the benefit of another. It would appear that as there is no contract between the lessee and the agency the obligations owed by the agency are unclear.
As an overview, the law of torts is concerned with breaches of duties, those duties are not established by any agreement or contract between persons rather by the law itself.
Negligence in the Agency/Lessee setting refers to careless conduct of the Agency as opposed to wilful conduct, however, in tort law it is used in a more technical sense. That is, to mean a breach of a duty by the agency consisting of the failure to take reasonable care to avoid a reasonable foreseeablity of harm to a tenant.
The elements of Negligence are:
* There must be a duty of care owed
* There must be a breach of that duty owed
* Causation, so a connection between the breach of duty and the damage that is not too remote
* Damage – flowing from the breach of duty that is connected to the breach
Whenever the agency is engaged in an act which they can reasonably foresee would be likely to injure another person, one owes a duty of care to that other person, and the law recognises that such a duty exists. To illustrate the point, in Nagle v. Rottnest Island Authority, Nagle was injured whilst diving into a rocky pool. The pool was promoted and operated by Rottnest Island Authority. The issue was did the Rottnest Island Authority owe a duty to Nagle? The Court held that the Rottnest Island Authority, by encouraging persons to engage in an activity, came under a duty to take reasonable care to avoid injury to them. The discharge of that duty required that they be warned of any foreseeable risks of injury associated with the activity so encouraged.
Now ask yourself, as a Property Manager, do you encourage people to engage in activity where there is a foreseeable risk of injury, and if so, how do you discharge your duty?
Here are some common situations to turn your mind to.
Vacating cleaning checklists:
I personally know of many checklists that instruct tenants to pour caustic soda down drains prior to vacating. Caustic soda has several brand names, but its chemical name is sodium hydroxide, which happens to be a strong alkali, which can react with, and decompose, a wide range of organic materials such as fats, proteins and carbohydrates, ie human tissue. So right on point, caustic soda is therefore a dangerous substance for human use, whether as a solid or in an aqueous solution, and is extremely dangerous if added to boiling water!!! So essentially it is pretty dangerous stuff in the wrong hands, and not something that an agent would be instructing a tenant to use in order to get a bond refund. One would argue that it is reasonably foreseeable that a tenant may misuse the product, or fail to read or understand the safety information, yet blindly follow the agent’s instructions to use the product in order to get their bond back.
Special conditions in leases:
What about the special conditions often inserted into leases requiring tenants to clean out the gutters of their rental property? Tenants are being instructed to get up to the gutter height then remove debris. The tenant then presumably falls off the ladder/Otto bin/whatever they are standing on and injures themselves. The agency has potentially breached their duty of care to the tenant by making it a term of the lease that the tenant engage in conduct which is reasonably foreseeable to cause damage to another, ie the tenant.
In general there is no liability without fault. So even where a person causes an injury to another, that person is not liable for a tort unless fault (that is intention to cause the injury or negligent conduct) can be proven. Where an injury is caused neither intentionally or negligently, it may be described as a pure accident and is not actionable.
The Duty of Care is the obligation to avoid acts or omissions which are reasonably foreseeable to cause damage to another. Whenever one is engaged in an act which he or she can reasonably foresee would be likely to injure another person, one owes a Duty of Care to that other person, and the law recognises that such a duty exists.
Damage in Negligence. For the tenant to be successful in an action in Negligence, the agent’s breach of duty must cause damage to the tenant or their property.
So in your day to day management of property, be mindful of your Duty of Care owed to your tenants, the scope in which the duty operates and finally the effect on the real estate agency and its exposure to litigation.
