Are rental LLC owners personally responsible for personal or property damages cause by a renter?

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Are rental LLC owners personally responsible for personal or property damages cause by a renter?

We have an LLC that rents a cottage and pontoon boat. If a renter were to cause personal injury or property damage with the boat, would the LLC owners be personally responsible?

Asked on March 29, 2011 under Business Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes, the owners of the property or the boat could very easily be responsible, so long as the renters were not causing the damage through an improper or illegal activity or use of the property (and so long as you had no knowledge of the improper or illegal activity). Overall though, you have considerable potential liability exposure. Technically, if it's the LLC and not you personally who own the cottage and boat, your potential exposure is limited to the assets in the LLC (unless there is some ground under which a plaintiff could show that the LLC is essentially just pretextual, you really own everything personally, and thereby void it's protection). Even with the LLC's liability shield, you should have insurance covering these  activities to better protect your business and assets.


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