Daily Development for
Wednesday, May 20, 1998

By: Ira Meislik

Daily Developments normally are edited and prepared by Prof. Patrick A. Randolph, who is in China until late July. Ira Meislik will file periodic developments reports in Professor Randolph's absence.

LANDLORD/TENANT; TENANT LIABILITY; RENT INSURANCE: Absent an agreement to the contrary, a tenant may be liable to its landlord for lost rent as a result of damage to the property caused by the tenant even though the Landlord already recovered the monies by way of its lost rent insurance coverage.

Osborne v. Chapman, 574 N.W.2d 64 (Minn. 1998).

A tenant negligently caused a fire in the home that the tenant leased, resulting in its landlord's loss of approximately eight months of rental income. The landlord sued the tenant for the lost rent. The Court of Appeals held that the landlord could not sue the tenant for lost rent because a tenant is a co-insured with the landlord for the purpose of shielding the tenant from liability for insured losses and the landlord had insurance coverage for lost rent. In reversing the lower court ruling, the Supreme Court distinguished lost rent insurance from casualty insurance, reasoning that casualty insurance is obtained for the benefit of both the landlord and tenant whereas lost rent coverage is obtained solely for the landlord's benefit. Thus, while the landlord and tenant may be co-insureds for purposes of casualty insurance, they are not co-insureds for purposes of lost rent insurance. Since there was evidence that the parties had agreed to allocate responsibility for maintaining insurance coverage for lost rents, the court remanded for a determination as to whether such an agreement was made.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1-6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Stacy Woodward at the ABA. (312) 988 5260 or woodwars@staff.abanet.org

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