1 August 2016

Tenant damage to property: Who is liable?

Landlords expect normal wear and tear when renting out a property, but what happens when a property is carelessly or intentionally damaged by a tenant?

The New Zealand Court of Appeal’s decision in the Holler & Rouse v Osaki case (2016) NZCA 130 (external link) has been referred to in a number of recent Tenancy Tribunal decisions, prompting the Tribunal to release a Practice Note outlining who is liable for damages to a rental property.

Landlords should check their insurance policy documents before discussing compensation for damage with the tenant, as their policy may cover the damage, providing it was not intentional or the result of an imprisonable offence.

If the landlord and tenant cannot agree whether the tenant is liable for the damage, the landlord can apply to the Tenancy Tribunal for the matter to be resolved. Copies of relevant insurance policies, photos of the damage, and receipts or quotes for repair should be included to support the application.

If the tenant is found to have intentionally damaged the property (including intentional damage caused by an invited guest) the Tenancy Tribunal can award compensation in accordance with the Residential Tenancies Act. In this case, the landlord’s insurance will not be involved.

However, if the damage is caused by carelessness and the damage is covered by the landlord’s insurance, the tenant will not be liable for the cost of repairs, unless it was the result of an imprisonable offence

Regardless of whether the landlord has insurance, tenants are not liable for damage caused by fire, flood, explosion, lightning, storm, earthquake or volcanic activity, unless the damage was caused intentionally or was the result of an imprisonable offence. Fire, flood or explosions are not required to be catastrophic natural events – for instance, this covers kitchen fires, floods in the bathroom or laundry and explosions caused by fireworks.

The full Practice Note can be read here. [PDF, 1.7 MB]