21 November 2018 Sharon Fox-Slater
While the Airbnb juggernaut seems to show no signs of slowing, hosts are risking their finances by failing to ensure they have legal liability insurance.
The tragic death of a 4-year-old boy and the injury of a 7-year-old girl, who were playing on a homemade swing when it toppled down a slope at a property being rented via Airbnb on the Sunshine Coast in September, raised a question about legal liability at Airbnbs. The incidents shone a spotlight on the insurance gap that exists if the property owner (host) does not have specialist short-term landlord cover.
My client has home and contents cover
Ordinary owner-occupier insurance is generally insufficient to cover death and injury if the property is being rented, either through a standard lease or via a share accommodation platform like Airbnb. Most home and contents policies stipulate that there is no legal liability cover if the premises are being used to generate an income — and that includes rent.
Policyholders intending to use the property for Airbnb can ask if their insurer will extend cover, but as most insurers consider this “high risk”, there’s a good chance they’ll be refused.
My client has landlord insurance
Typical landlord insurance will only insure stays longer than 90 days and usually requires copies of residential tenancy agreements, which means it won’t cover short-term stays. Those with standard (fixed-term lease) landlord cover should confirm with their insurer if it is possible to switch to short-term cover if they go down the Airbnb route — it may not be, as not all landlord insurers offer cover for short-stay leases, and even if they do, they may specifically exclude Airbnb.
BTW: If your landlord thinks a bit of “secret squirrel” is best and they suggest keeping their plans to rent the property via Airbnb quiet from their insurer, they should think again. It is a requirement under the Insurance Contracts Act 1984 (Cth) for policyholders to notify their insurer if there is any change in circumstances, such as a decision to offer their premises for short-term rental. Failure to notify an insurer of a change in living conditions could be considered a breach of the contract and may void the policy.
What about host protection?
Relying on Airbnb’s Host Protection Insurance is fraught. Although it offers up to US$1 million in cover “in the event of a third-party claim of bodily injury or property damage” during an Airbnb stay, it generally only applies when the host or landlord has been at fault or been negligent in the circumstances of the injury.
In this specific case, there would be a need to prove that the owner of the property was aware, or should have been aware, that the swing posed a risk to children who used it, and in light of that knowledge, that they had failed to repair and maintain the swing or remove it. If it is determined that no one was at fault, then there would be no compensation payable.
If, however, it could be proved that the swing was clearly unsafe and the property owner should have been aware it posed a risk, but still failed to repair or remove it, then the children’s family could have grounds for a claim against the host.
So how can my landlord protect their legal liability?
The best way for a host/landlord to protect their legal liability when they rent their property via Airbnb is to have the right landlord insurance. Your landlords need a specialist policy that covers the risks associated with short-term leasing — including legal liability — and one which specifically covers renting via share accommodation platforms like Airbnb.
Hosts/landlords and their agents should reduce the risk of being responsible for damage to property or for compensation for an injured guest by making sure they take steps to avoid any liability in the first place. A key to this is ensuring the property is safe and well maintained.
Despite the best intentions, sometimes things don’t go according to plan and the host/landlord — and also possibly you as their agent — can face a compensation claim from a guest. Having a guest injured or worse on the property is bad enough; finding out that your landlord (and quite possibly yourself) could be legally liable but not insured could be a financial disaster.
So, it pays to make sure landlords hitching their wagon to the Airbnb star have the right short-term insurance in place, and that your Professional Indemnity cover is up to date, too.
Is a Hard Wired Smoke Alarm Enough?
We have written on the important topic of smoke alarms on numerous times in the past and it has always generated considerable interest. Key issues have included:
What is the Current Issue with Smoke Alarms?
Hard wired smoke alarms were required to be installed on all new properties from 1 October 1997. READ MORE HERE.
Source:13th July 2018 AICWA e-Newsletter
With autumn here, now is the perfect time to make improvements around your home, and get your property in tiptop shape for winter. Here are some ideas for the to-do list.
Leaks can be extremely wasteful and costly. Regularly checking taps, pipes and fittings around your property could save precious water and precious money!
The National Electrical and Communications Association (NECA) have previously published information regarding the issuing of electrical safety certificates.
NECA has received confirmation via email from the Department of Commerce stating the following:
“Safety certificates are not to be issued unless it is installation work as described in the Electrical (licensing) regulations 1991 section 52B. Going to a property and ensuring correct operation and that the premises complies to the legislation is not installation work. The form is an official certificate and cannot be altered or details entered that do not relate to installation work that you the contractor have performed. We suggest in your circumstance that a letter which must have a company letter head should be sent when doing compliance inspections. This letter can outline whatever requirements are necessary including the amount of RCD’s number of Smoke detectors were they all operational and installed as per the Australian standards, were any faults or concerns found that may need further investigations or rectifications. The letter can include or exclude as much as the client requirements are you can add similar ticks and flick sections like the safety certificate but under no circumstances should a safety certificate be issued unless installation work has been done “.
AICWA is currently waiting to hear back from NECA regarding the template recommend to their members for producing an Electrical Condition Report.
Source: AICWA newsletter 4 October 2016
Electrical Condition Report - Update source:25 October 2016 AICWA Newsletter
The National Electrical and Communications Association (NECA) have previously published information regarding the issuing of electrical safety certificates and Electrical Condition Report. In their communications to their members they have also provided an example of an “Electrical Condition Report”. View a Report HERE
This article in New Zealand seems to indicate a growing trend... So might be worth considering for your lease between tenants and part of your contractual purchase conditions...
Listed, Sold or buying a property market value of $2 mil. or over?-ATO clearance certificate is required!
Contracts dated 1 July 16 on wards, will have the new requirements on ALL transactions with market value of $2 million or over.
Unless the Seller provides an Australian Taxation Office (ATO) 'clearance certificate' for each registered proprietors name (matched to the title) to the buyer 2 business days prior to settlement (-timing subject to REIWA special condition).
Then the Buyer must withhold 10% of the Purchase price (more specifically the 'First element of the cost base'-Capital Gains Tax defined term) from the Seller and apply for an ATO Payment Reference Number (PRN) then remit that payment to the ATO once settled, and before Title registration.
Even if Selling or Buying a percentage, where a total property value (aggregated/extrapolated) $2 million or more would likely impact that transaction.
Designed to catch Tax evaders, the new law places liability on the Buyers to withhold payment from the Seller unless they are given a clearance certificate, or exempted by approved variation.
Client not on notice of proposed heritage listing
Our client purchased an original 1950s style home in SA with the intent of demolishing it and building their dream home. The client exchanged contracts and began to prepare plans for their new home. Shortly after settlement, the client submitted plans to the Council to construct their dream home. The plans were rejected by Council on the basis of a proposed heritage listing, which was applied just prior to settlement. The client was in shock and immediately contacted their conveyancer.
What did First Title do?
On assessment of the claim, it was revealed the conveyancer and the client were not on notice of the proposed heritage listing of the property as the certificates from Council relied on were not up to date. First Title engaged a lawyer and expert heritage architect in support of an application seeking to overturn the proposed heritage listing.
What was the resolution?
First Title accepted the claim pursuant to its 'heritage cover' on the basis that the client was not on notice that the house was heritage listed. First Title paid for all costs associated with successfully overturning the proposed heritage listing, including legal and expert evidence fees.
Total payment exceeded $11,000
Registration Gap - Third Party Claim
One day after purchasing his home in WA, our client learned he could not become the registered owner of his property due to a third party claim. Our client was informed by his conveyancer that the stepchildren of the vendor registered a testamentary right to his property. The children claimed they were gifted the property in their mother's will. The children refused to remove their interest in the land unless they were given money from the sale of our client's property.
What did First Title do?
On assessment of the claim, it was revealed the conveyancer and the client were not on notice of a potential third party interest in the property. First Title engaged a lawyer to ensure our client would become the registered owner of the property and to put the potential interest of the vendor's stepchildren in the property to rest.
What was the resolution?
First Title accepted the claim pursuant to its 'registration gap' coverage on the basis that between settlement and registration of our client's transfer to our client's name another interest was registered on the property title. First Title paid for all costs associated with successfully settling the dispute over the client's property through mediation.
Payment to date exceeds $20,000
For more information on First Title's insurance options call us on
1300 362 178. Alternatively, you can visit our website.
Source: email News from First Title: Claims Chronicles - May 2016
On the cusp of strata reform, Community title might affect you and your strata titled property.
By Phil McCarroll | 19 Jan 2016 08:00 AM
The overhaul of legislation covering strata agreements in Western Australia would be a positive for the state, according to property professionals and lobby groups.
The overhaul has been in the pipeline for a number of years, with the reform and consultation process beginning in 2013, but a statement on the Landgate (Western Australian Land Information Authority) website claims the new legislation will be introduced in the second half of 2016.
According to the Landgate statement, the proposed reforms will cover five main areas.
In case you missed it in all the pre Christmas activities, there is now much more stringent F.I.R.B. (Foreign Investment Review Board) compliance in place.
Complete with application costs and severe penalties for breaches.
It affects Investors, Agents and Developers, please subscribe to my blog to ensure that you are kept informed.
1 December 2015 Media Release
The Turnbull Government’s robust new foreign investment regime comes into force today, providing stronger enforcement and a better resourced system with clearer rules for foreign investors, Treasurer the Hon. Scott Morrison announced today.
"The Government welcomes foreign investment that is not contrary to our national interest. Without foreign investment, production, employment and income would all be lower. But it is important that foreign investment is appropriately monitored to ensure that it benefits all Australians," Mr Morrison said.
"Foreign investment rules need to be strong, effective and enforceable. The changes taking effect today follow the passage of the Government’s Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015. They provide greater compliance powers to the Australian Taxation Office (ATO) and introduce strict new penalties for those caught breaking the rules.
"Foreign investors who have breached the residential real estate rules had until yesterday to voluntarily come forward under the reduced penalty period. From today any investors caught in breach of the rules will face severe penalties.
Keep me updated, join us here...