Considering Lawsuits Specific to Real Estate

The law recognizes real estate owners as guarantors, or the responsible party for the safety of tenants, visitors, and other populations associated with a property. While this recognition within the law is intended to protect the populations of people inhabiting a premise or property, it also places a significant burden and liability on the property owner. Any injury on-site, regardless of fault, tends to be the responsibility of the property owner when taken to court.

While the law intends this to protect the population from inhumane living or working conditions, it can also be applied to situations that are very challenging to foresee. If, for instance, an elderly man trips over a hole in the lawn of an office building, sustaining a head injury from the fall, the liability associated with his injury may become the responsibility of the party who owns the office building. In these kinds of unforeseen instances, on-site injury liability can often quickly exceed the amount covered by insurance and a property owner may suddenly find his or her other personal or private assets at risk. Creating boundaries between assets becomes useful in managing liability. To understand how to create these boundaries, it is important to understand inside and outside liability.

- Inside Liability

Inside liability refers to the liability associated with the asset itself, or in other words, it is the risk of a lawsuit produced by a piece of real estate and the activities associated with it. A rental property will always inherently bring unavoidable inside liability with it. The dynamic nature of rental real estate increases liability and it is important to recognize just how uniquely complicated rental properties can be. This kind of business is dynamic because it involves many third parties, including buyers and sellers, as well as tenants and visitors, who all interact with the site. The property itself is also dynamic because the land, building structures, and surrounding environment can all change in condition. All of these complex interactions generated by real estate creates a potential inside liability that may be assumed by a property owner.

- Outside liability

Outside liability refers to any potential risk that is not associated with an asset directly but may threaten an asset. Most commonly, this form of the outside threat comes from other parts of life or business that can become legally entangled with otherwise discrete activities. For instance, if you have a teenage driver who is at fault for a vehicular accident, the court will consider all assets for which you are the owner or proprietor to fulfill the financial responsibilities associated with the accident. Outside liability can be particularly threatening because we cannot predict exactly where it might arise.

Topics: Real Estate Investment, Liability, Lawsuit

Work Cited: Michael Bowman, June 11, 2019

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