Danger in the basement? Rent it out

Colin McCarthy

Published on February 7, 2013

So in American Horror Story, after some certain traumatic events occur

and the building’s history is uncovered, the protagonists STILL don’t move out of the house. The writers are nuanced enough to know that the audience will ask the question “Why do they not move out now?” So they actually attack this head on. Money problems prevent both an immediate move-out and obstruct a potential sale. So because I like to think I am still more nuanced than the newly nuanced writers, I counter with: “Why don’t you just rent the place out?”

Scary Basement

Somebody could move in and you could get paid for it. Not only will you get paid rent, you will also be removed from liability for injuries to third parties entering on the premises, the thinking goes. Well, the first part would be true. The second part — non-liability of an owner not in possession — is not as clear.

We know from our previous entries that possession and control are big factors in imposing liability. An absent landlord is not necessarily in possession, and may or may not have control. The law we know trends to basic duty of care obligations. The out-of-possession owner must act as a reasonably prudent person in similar circumstances.

They have to do those things that they can do to prevent injury, such as inspect the premises as permitted by the lease or between renters. You may be relieved while out of possession if there was no opportunity to inspect for new dangers. If the danger was added or formed after you left and you did not know or have the opportunity to inspect, there is a strong argument for relief. The defense is probably stronger in a commercial setting owing to the sophisticated nature of the tenant, the stronger lease language regarding duties, and an inability or obligation to inspect when a sophisticated commercial tenant is installed and alters the property.

In residential or commercial leases, the California courts have set forth their factors for determining the existence of a duty. These harken back to our very first discussions and the “Rowland” factors, for any of you paying attention. The factors are “likelihood of injury, the probable seriousness of such injury, the burden of reducing or avoiding the risk, and his degree of control over the risk-creating defect.”* All of this assumes the out-of-possession lessor knew or could have known about such risk-creating defects. If he did, the essence is, was there potential for serious injury and if so, could the out-of-possession owner get in there and fix the situation?

Perhaps because this area was not so clear, the ever-so-clever American Horror Story writers avoided the rental idea. Maybe they knew all about this.

*Brennan v. Cockrell Invest., Inc., 35 Cal. App. 3d 796, 801 (1973)

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Colin McCarthy

Colin G. McCarthy is a partner in the business litigation, products liability, and insurance practice groups at Robinson & Wood in San Jose, California.

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