Landlord Liability to 3rd Parties for Failure to Repair – The Residential Tenancies Act, Ontario and the Occupier’s Liability Act, Ontario – Are You at Risk?
Many residential landlords may assume that if their lease forms provide for their tenants to be responsible for maintenance and repair of the premises, then the landlord is not responsible if someone is injured or if property is damaged on the premises as a result of a failure to maintain or repair and a lawsuit is brought against the tenant and landlord.
Unfortunately for landlords, that is not correct. In a 2010 Ontario case (Taylor v. Allard), the landlord had granted tenancy of a house to a family. In the yard of the property was an existing fire-pit with partially sunken cinder-blocks. The lease terms (oral) provided for the tenant to be responsible for maintenance and repair of the premises. A party was held at the premises, alcohol had been consumed, a fight erupted and a guest tripped on and fell onto the fire-pit, burned himself and suffered $265,000.00 in damages.
On appeal the landlord was held “jointly and severally” liable with the tenant for 50% of the plaintiff’s damages (meaning either of them could be forced to pay the 50%) for failing to inspect the premises and remove the fire-pit hazard. The plaintiff was responsible for the other 50% for its negligence.
The rationale for the court’s decision was as follows:
1. Section 20(1) of the Residential Tenancies Act, 2006, SO 2006, c 17 provides that: “A landlord is responsible for providing and maintaining a residential complex, including the rental units in it, in a good state of repair and fit for habitation and for complying with health, safety, housing and maintenance standards”.
2. Section 3(1) of the Residential Tenancies Act, 2006 provides that: “This Act applies with respect to rental units in residential complexes, despite any other Act and despite any agreement or waiver to the contrary”.
3. Since one cannot contract out of the repair and maintenance obligations in Section 20 of the Residential Tenancies Act, 2006 any attempt to do so by the lease by making the tenant responsible for such matters was not effective.
4. As those repair responsibilities remain with a landlord, then, Section 8 of the Occupiers Liability Act, 1990, R.S.O. applied and it provides as follows:
“8 (1) Where premises are occupied or used by virtue of a tenancy under which the landlord is responsible for the maintenance or repair of the premises, it is the duty of the landlord to show towards any person or the property brought on the premises by those persons, the same duty of care in respect of dangers arising from any failure on the landlord’s part in carrying out the landlord’s responsibility as is required by this Act to be shown by an occupier of the premises.
(3) For the purposes of this section, obligations imposed by any enactment [e.g. Residential Tenancies Act, 2006] by virtue of a tenancy shall be treated as imposed by the tenancy, and “tenancy” includes a statutory tenancy, an implied tenancy and any contract conferring the right of occupation, and “landlord” shall be construed accordingly.”
Thus, despite the lease terms, the court held the landlord responsible for up to 50 % of the damages suffered. Assuming the landlord was a prudent landlord and carried insurance, then its insurer will bear the payment (less any deductible) and try to recover from the tenant’s insurer – provided the tenant took out insurance and named the landlord as an additional insured.
1. Residential landlords cannot contract out of their obligations to maintain and repair under the Residential Tenancies Act, 2006.
2. Make sure your tenants have taken out and provided proper evidence of insurance including liability insurance in adequate amounts (based on your insurance advisors’ recommendations for your particular situation);
3. Ideally, make sure you and your directors, officers, property managers and beneficial owners are covered under the policy.
4. Be proactive. Given your 3rd party exposure, regularly exercise your rights to access premises under the Residential Tenancies Act, 2006 to inspect the condition and make any needed repairs (under Section 26 – if without notice and under Section 27 – on notice).
5. If a tenant’s insurance lapses while in possession, you should move quickly to determine if you can obtain an eviction notice for the tenant’s interference with your interests in the premises (see Section 36 of the Residential Tenancies Act, 2006 which provides that a tenant cannot interfere with a landlord) as you will have even greater exposure if you are held jointly and severally liable with the tenant for 3rd party damages and tenant’s insurance is not in place.
6. The Residential Tenancies Act, 2006 does not apply to commercial tenancies so a landlord can pass on the repair obligations to a tenant and not be caught by Section 8 of the Occupiers Liability Act, 1990 (at least to the same degree since landlords do keep structural and base building repairs for themselves to do).
Disclaimer: This article is for general information purposes only and not intended as or to be relied upon for legal advice. Consult with a lawyer for your unique situation.
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