Who’s responsible? – Property Scouts
Timaru property management experts Mark and Cassie Stone break down the infamous Osaki case – a pivotal New Zealand legal precedent from 2014 to 2016 that became a turning point for tenant liability.
The Osaki Case (Holler & Rouse vs Osaki) hugely impacted landlords nationwide. Previously, tenants were held responsible for any damage they caused at a rental property regardless of whether it was accidental or intentional.
The Osakis were renting a property that was inadvertently burnt down when Mrs Osaki forgot about a pot she had on the stove. The landlord’s insurance company paid out the landlord, but then sought to recover the cost from the Osakis. Eventually, the High Court ruled that the Osakis were entitled to the landlord’s insurance cover, relieving them of any financial responsibility. The result of the case caused a great deal of anguish for landlords until new legislation took effect in 2019.
Now, if tenants or their guests cause careless damage in a rental property, they will be liable for the cost of the damage up to four weeks’ rent, or the landlord’s insurance excess (whichever is lower). If damage is proven to be intentional, then the tenant is liable for the total cost of repairs.
What are my insurance requirements as a landlord? Landlords are required to provide insurance information in any new tenancy agreement, including the excess amount. Tenants can request a copy of the insurance policy for their information. Landlords are also strongly encouraged to invest in meth contamination cover (which usually falls under a specialist landlord insurance policy). Tenants can only be held responsible for meth-related repair costs (averaging around $20,000) if proven to have caused the damage. Meth contamination cover safeguards against potential financial losses, as repair costs can be recovered from the insurer if needed.
For everything you need to know in property management from local experts, visit PropertyScouts Timaru, call 021 652 678 or email cassie@timarupropertyscouts.co.nz.
