Queensland Coroner makes recommendations aimed at increasing property managers’ duties to tenants and landlords

On 19 September 2012, Coroner Hennessy handed down her findings on the inquest into the death of Isabella Diefenbach.

The Coroner’s findings provide important reminders about property managers’ duties to landlords and tenants and also indicate potential legal reforms on the nature and extent of these duties.

Background

Mr and Mrs Diefenbach rented a house in Yeppoon, Queensland. Termite damage on the verandah had caused wood rot.

Mr and Mrs Diefenbach complained to the property manager many times about the condition of the veranda. The veranda was also inspected by an independent tradesperson on three occasions. The independent tradesperson provided two written reports that identified the presence of wood rot on the veranda. The property manager received these reports but did not read them, instead forwarding them to the landlord.

On 29 May 2010, Mr Diefenbach, holding his seven week old daughter Isabella in his arms, stepped on to the veranda and his leg fell through a part affected by wood rot. Isabella was thrown from his arms and on to the steps below. Isabella died from head injuries.

The Coroner’s decision

The Coroner made a number of recommendations that, if implemented, would impact on property managers’ duties to both tenants and landlords:

• First, the Coroner recommended the amendment of the current property management training program to incorporate training on how to conduct a satisfactory inspection of decks, verandas, and stairs. In particular, this training should include how to identify wood rot and termite activity and how this may impact the structural integrity of verandas and stairs.
• Any residential property with a deck, veranda or balcony more than 10 years old should be inspected by an independent licensed builder before being rented. In addition, these inspections should be carried out every three years.
• The Coroner commented that in this case the property managers’ records were incomplete and therefore it was not possible to determine when the tenants had made a complaint and whether this complaint was acted upon. Accordingly, the Coroner recommended the amendment of existing legislation to require property managers to maintain a register of all complaints and maintenance requests lodged by tenants and landlords’ instructions in respect to them.
• Existing legislation should be amended to address property managers’ responsibilities in relation to building, pest or termite inspection reports they receive. She suggested that property managers should read these reports, brief the landlord on the report’s recommendations and request instructions from the landlord regarding any necessary repairs.

Lessons for real estate agents and their insurers

The coronial inquest into the death of Isabella Diefenbach highlights the importance of property managers maintaining proper written records of all complaints and maintenance requests.

Insurers should make sure that property managers have proper systems and procedures in place to keep these records in order to prevent claims and to provide proper evidence of complaints should proceedings such as a coronial inquest or civil litigation eventuate.

The Coroner’s recommendations (if implemented) will place property managers’ duties to landlords and tenants at a higher threshold than the current position at common law. Presently, a property manager only becomes liable in negligence if a defect to the property is readily observable to a layperson or the tenant notifies the real estate agent of the defect. Courts do not expect property managers to have knowledge held by a person with building, engineering or trade qualifications.

However the Coroner, by recommending that property managers be trained in how to identify wood rot and termite damage and read and comment on reports undertaken by independent licensed builders, indicated that a higher duty should be expected of property managers. These recommendations indicate that property managers may be required to have greater knowledge about identifying and remedying defects than a typical ‘lay’ person.

While these recommendations for legal reform have not yet been considered by the Queensland parliament, as a matter of best practice insurers should ensure that:

• wood rot on verandas and stairs are part of property managers’ inspection procedures
• property managers read any building or inspections reports they receive and seek instructions from the landlord regarding any necessary repairs.

If you would like more information on these issues, please contact our team on +61 7 3231 2444.