By Nancy L. Gusman, Esq., BuckmanLegal, PLLC/Palisades Title Company

In an opinion issued March 22, 2010, the Maryland Court of Appeals ruled that “a trier of fact could hold [a member of an LLC] personally liable for lead paint-related injuries suffered by children who occupied a dwelling that the LLC owned.”

Under the facts of this case, an LLC purchased the property at tax sale and planned on re-selling it “as is” instead of holding it as a rental property.   At the time of purchase, the Managing Member was unaware that the property was occupied by tenants of the prior owner.  Upon discovery of occupants, the LLC provided them with a 30-day notice to vacate.  The occupants failed to vacate the property and were finally forcibly removed from the property by court order several months later.  The LLC sold the property 1 year after it had acquired title.  Two years later, the occupants of the property filed a complaint against the LLC for elevated lead levels suffered by two minor children.

The Court found that, despite the fact that there was no formal tenancy established and that the occupants had no legal right to possess the dwelling, that the owner of the property had a duty under the Baltimore City Housing Code to keep the property “in good repair, in safe condition, and fit for human habitation”.

The Baltimore City Housing Code states that any “owner or operator of a property … shall be responsible for compliance with all of the provisions of the Code.  It defines “owner” as “any person, firm, corporation…who…owns, holds or controls” an interest in property.  Within this definition, the term “owner” includes “any vendee in possession of the property and any authorized agent of the owner”.  It defines “operator” as “any person who has charge, care or control of a building…”  The Court determined that the term “control” is defined as one who has “an ability to change or affect” title to the property.  Since the member of the subject LLC “was responsible for running the day-to-day affairs [of the LLC]” and had signed certain deeds and other documents on behalf of the LLC, the Court found that a “trier of fact” could find that he may have changed or affected title.  They further found that “a reasonable trier of fact could determine that Respondent personally committed, inspired or participated in the tort alleged in this case, even as a member of [the LLC] and if so, he may be held personally liable…”

This Court Opinion is based upon the very broad definitions contained in the Baltimore Housing Code, however, similar language is contained in the Maryland Lead Poisoning Prevention Act.  The point to remember here is that when purchasing property, it is important to determine the physical status of the property and whether or not the property is occupied.   In this case, no member of the LLC had ever visited the property, before or after the purchase.  The Court has ruled that whether or not occupants are legally in possession of the property, the Owner of the property owes a duty of care to those occupants.  Further, the Court has re-emphasized that simply acting on behalf of an LLC or corporation, does not eradicate a person’s liability for their own acts and failures to comply with law.