Landmark court ruling: Landlords responsible for damage that tenants cause

Yeah, I know.  Have a read first before you go “that can’t be right?”

AMI Insurance has been fighting a $216,413.28 repair bill since March 2009, after a house it had insured was gutted by fire when a pot of oil was left unattended on high heat.

The insurer – which acted in the name of the landlords – claimed the massive cost from the tenants, Kenji and Tieko Osaki, and won in the Tenancy Tribunal.

However, the District Court reversed the decision – which was upheld by the High Court – and ruled the Osakis were not liable.

Under commercial property law, tenants have immunity if there is inadvertent damage.

The Osakis argued the same should apply to residential tenants – and the Court of Appeal agreed.

So accidental damage caused by tenants will not make them liable.  Somehow the owner of the building, who wasn’t there, who didn’t put the pot of oil on, who didn’t walk away from the pot of oil negligently, is responsible.  

The ruling could also hit tenants as well, according to the executive officer of the Property Investors Association, Andrew King.

“A lot of landlords may not want to have parents with children in their properties for instance, or students – the types of people they deem to be a little more irresponsible.

“Insurance companies may want to know what type of tenants landlords have and they’ll apply premiums which they deem to be appropriate.”

He said it set a dangerous precedent.

“It relieves tenants of responsibilities and it could mean that they’re a little more lacklustre around rental properties and accidentally cause more damage through carelessness.

As if Housing New Zealand isn’t already picking up more bills than it should, now it is clear that the tax payer – as the landlord – will have to pick up all the accidental repair bills, no matter that the damage would not have occurred if the tenant had not acted, or failed to act in some way.



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