Real estate liability refers to the unavoidable risks associated with owning real estate. As a landlord, even if you don’t live on your rental property, some of these liabilities are not transferable. That means you still have responsibilities to your tenants, and if you fail to meet up, you could face legal suits.

One of the habits of successful investors is protecting their assets and avoiding liabilities, so their business can continue to thrive.

This article is a guide for investors looking to understand their liabilities and how they can avoid them.

Common liability issues a landlord might face

When it comes to owning real estate, liabilities come in all shapes and sizes. Managing a rental property requires several interactions and the completion of several tasks, so liabilities are vast and multiple. But we can streamline them:

Harm to one of your tenants

Home accidents are avoidable but inevitable, and when they occur on your property, you could be at fault. Loose steps, dark hallways, and other minor defaults that you’ve been planning to get around to could be the basis of a lawsuit.

As a landlord, your foremost responsibility is guarding your tenants’ safety, and if your negligence can be linked to an injury, you can expect to pay compensation. Some claims, such as lead paint liability, are so detrimental they can put you out of business. You’ll find that it’s easier to prioritize your tenants’ health by fixing a faulty heater rather than footing the bill for their medical appointments and attorney fees.

Loss of property

Your duty as a landlord extends beyond protecting the person; you’re also responsible for safeguarding their property. If water floods one of your tenant’s apartments because you failed to carry out a routine inspection of your pipes, you have to answer for it. You’ll have to cover the damages to their furniture, appliances, and personal belongings that might have suffered in the mishap.

Most of the time, repairing or replacing the item should get you off the hook. But if the renter wishes to sue, you could be facing the added expense of attorney fees and their awarded compensation.


Another liability issue you might run into as a landlord is misinformation. Making false claims is wrong, but it’s also a punishable offense that could land you in some hot water. Yes, it might be tempting to add a few amenities you don’t have to attract tenants. Once they fall in love with the place, it won’t matter.

While it might work out that way, it could also end terribly. Intentionally misleading and essentially tricking your tenants could cost you a significant amount of money in reparation fees if they decide to go to court.

You could also look at the misinformation liability from the business angle, which applies to adverts and public statements. Here, you have to answer your competition. So a logo, tagline, or photo that is too close to theirs or qualifies as defamation falls under public misinformation.

How to avoid liability

Liabilities are inconveniences that expose your business to punitive damages. Protecting yourself from these liabilities allows you to channel your resources like time and money to manage your property efficiently and other investments. As the saying goes, “prevention is better than cure.”

Keep meticulous records
One of the easiest ways to avoid a liability problem is to keep meticulous records of the myriad of interactions you experience as a landlord. File away copies of your contract with short-term and long-term employees, and save receipts of rent payments and other charges. You should also take photographic and video graphic evidence of your units before tenants move in, during routine inspections, and after moving out.

Having physical and digital copies of your records in the cloud gives you a layer of protection from false testimony. It’s much easier to vindicate yourself when you have proof.

Include appropriate disclaimers

Steer clear of misinformation and other types of liabilities by including appropriate disclaimers where necessary. Under federal law, state-required disclosures dictate what a landlord should pre-inform their tenants about. It consists of using health hazards such as lead-based paint, existing property damage, and other tenancy charges.

You can extend this to your interactions by including disclaimers about the time and date of the photos in your listings. And also in scenarios where you have to consult an external expert, such as an accountant, to procure information about the property on behalf of your prospective tenant.

Draft your landlord-tenant agreements with caution
When drawing up your lease agreement, you need in-depth knowledge of landlord-tenant laws in the country and your jurisdiction. Ideally, it should protect both parties, but did you know you can make specific provisions for yourself to ward off liabilities? You can include disclaimers and add coverage for your attorney fees.


Landlords have many liabilities to navigate, but you can successfully run a drama-free rental business with the right info. Of course, you don’t have to go through it alone; if you are a beginner, hire a professional to manage your investment property and minimize the risks of owning real estate.

Sometimes, despite your best efforts to understand and mitigate the risks, you might still face a lawsuit. Getting liability insurance gives you a layer of protection from the damages you might incur during or after a court settlement.