Vicarious liability: when a landlord answers for someone else's acts

Two kinds of responsibility

Premises liability is about your own conduct as the person in charge of a property. Montana's code states the general idea: everyone is responsible for injury caused to another by their want of ordinary care or skill in the management of their property or person, except as the law provides otherwise (MCA 27-1-701).

Vicarious liability is responsibility for what someone else did on your behalf. Montana again gives a clear statutory example. A principal is responsible to third persons for the negligence of its agent in the transaction of the business of the agency, including wrongful acts committed as part of that business, and for the agent's willful failure to fulfill the principal's obligations (MCA 28-10-602(1)). The principal is not responsible for other wrongs unless it authorized or ratified them (MCA 28-10-602(2)). The Montana section traces its history to California Civil Code sections 2338 and 2339.

Each state has its own rules, drawn from statutes and court decisions, so the details depend on where the property is.

Who may be acting for you

• A property manager who advertises, screens, signs leases or handles repairs for you.
• A leasing agent who shows units and talks with applicants.
• Employees, such as a maintenance worker or on-site manager.
• Vendors and contractors you send into units.

How much of their conduct becomes your responsibility depends on the relationship, the authority you gave and the law of your state. Writing down who may do what, and on whose behalf, is the first protection.

Fair housing: the clearest example

HUD's rule on liability for discriminatory housing practices sets out both kinds of responsibility:

• Vicarious liability. A person is vicariously liable for a discriminatory housing practice by the person's agent or employee, regardless of whether the person knew or should have known of the conduct, consistent with agency law (24 CFR 100.7(b)).
• Direct liability for failing to act. A person is directly liable for failing to take prompt action to correct and end a discriminatory practice by an employee or agent, or by a third party the person has power to control, where the person knew or should have known of it (24 CFR 100.7(a)(1)).
• Fixes cannot harm the victim. Prompt corrective action may not include anything that penalizes or harms the aggrieved person, such as evicting them (24 CFR 100.7(a)(2)).

In practice, a manager's discriminatory ad or screening decision can become the owner's problem even if the owner never saw it.

Tell renters who acts for you

Many states require landlords to identify the people who manage the property, which also makes the lines of authority clear:

• California: the lease must give the name, phone number and address for service of each person authorized to manage the property and of an owner or agent for notices (Cal. Civ. Code § 1962(a)(1) to (a)(3)).
• Texas: on a tenant's request, disclose the record title holder and any off-site management company within seven days, or provide it in advance in the lease or by posting (Tex. Prop. Code § 92.201).
• Montana: at or before the start of the tenancy, give the tenant in writing the name and address of the person authorized to manage the home and of the owner or a person authorized to act for the owner (MCA 70-24-301(1)).

Practical steps to manage the risk

• Use a written management agreement. Spell out the manager's authority, duties, fair housing obligations, reporting, insurance and how the agreement ends.
• Set written policies. Give agents and employees your screening criteria, advertising rules and repair procedures in writing, and require that they follow them.
• Train and check. Make sure anyone who deals with applicants or renters has fair housing training. Review ads, denial letters and complaint logs from time to time.
• Review your insurance. Ask your insurer whether your landlord and umbrella policies cover claims arising from the acts of managers, employees and contractors, and what limits apply.
• Require vendor coverage. Ask contractors for proof of insurance before they work in a unit, and keep it on file.
• Answer complaints fast. Investigate, correct the problem and document what you did, without taking action against the person who complained.

If a claim arrives

Notify your insurer promptly, preserve messages, work orders and other records, and talk with an attorney before you respond in detail. Do not change the renter's terms or treatment in response to the complaint.

This guide is general information, not legal advice. Rules change and vary by state and city, so confirm how they apply to your situation with a local attorney.

How Rentari helps

Maintenance requests from renters, work orders to vendors, vendor records and messaging with renters give each job and conversation a dated record in Rentari. Tenant screening ordered with the applicant's authorization helps apply the same process to every applicant. Rentari keeps the record; it does not give legal advice.

Sources and further reading

• 24 CFR 100.7: Liability for discriminatory housing practices (eCFR)
• Montana Code Annotated 28-10-602: principal's responsibility for agent's negligence, omissions and wrongs
• Montana Code Annotated 27-1-701: liability for negligence as well as willful acts
• Montana Code Annotated 70-24-301: disclosure of manager and owner
• Texas Property Code 92.201: disclosure of ownership and management

Common questions