The tragic warehouse fire that killed 36 people in Oakland on Dec. 2, 2016, should never have happened. The building was never fit for habitation. The first lawsuit has been filed against the landlord and eight other defendants, all of whom may face murder charges.
This is going to be a tough court case for everyone involved — for both the relatives of the victims and the people blamed for the fire. It’s certainly a good example of what any landlord should absolutely “not” do, to avoid liability, and in a case like this, to save lives.
The Dec. 2 fire occurred at a warehouse called the “Ghost Ship.” It was being used as a live-work space for artists, and had been rented out for a dance party on the night of the fire. There were no permits for residential use, and no permits for the dance party. It was set to take place on the second floor.
Let’s turn now to what this dance party venue looked like. The building had windows on the second floor but most were covered with locked grates. The inside was filled with furniture, rugs, and other objects. And, there were only two staircases, neither of which led to an outside door. One was all the way in the back corner of the building, very far from an exit. The second one was closer to the front door, but not next to it. It was also made of wooden pallets, and was certainly not up to code. Plus, the building had no sprinklers or fire alarms.
Fire investigators say the fire began on the first floor and by the time people on the second floor realized what was happening, it was too late. Smoke and flames were already overwhelming, and 36 people became trapped by the fire and the lack of an adequate exit. They died what was likely an excruciating death.
Three weeks after the fire, on Friday, Dec. 23, 2016, the parents of two of the victims filed the first lawsuit. 20-year-old Michela Gregory is one of those victims. Her body was found in an embrace with her boyfriend, 22-year-old Alex Vega, who also died in the fire. The other person represented by this lawsuit was 23-year-old Griffin Madden, who was a recent UC Berkeley graduate.
Attorneys are now suing the owner of the building, the primary tenant of the building who collected rent from other tenants, his wife, two other people involved with the dance party event, and two men who leased buildings next to the warehouse and were providing electricity and bathroom access during the event. The City of Oakland and the County of Alameda are also named in the lawsuit.
Specific Complaints About the Building Include:
- The victims were “unable to exit.”
- The facility “lacked adequate and sufficient safety measures.”
- It was also “not up to fire protection and safety codes.”
- “The premises were in a dangerous and unsafe condition.”
The attorneys also claim there was a “willful and conscious disregard for safety.” Without knowing the outcome of what is sure to be a very long and difficult case, it seems that the landlord and the person managing the warehouse as the primary tenant will be hit the hardest.
It’s highly likely that the property owner, the man who leased the building and allegedly sublet it to others, and the promoter of the event will face criminal charges that could include misdemeanor code violations on up to wrongful death charges. That means they could face 36 counts of manslaughter. The top prosecutor overseeing a criminal investigation of the fire said charges might even include murder.
What can Real Estate Investors Learn from this Horrible Situation?
- Make sure your properties are up to code. Code violations could leave you liable if your tenants get hurt. If you are not up to date on codes, find someone who is.
- Unpermitted areas may be a great way to add space to your home, and may help you create a rental property or an extra room for Airbnb. But if anything tragic like this happens, then you would be liable. Always get permits for properties you intend to lease out.
- Ignorance is not bliss. Supposedly the property owner did not know what was happening inside the property. That will not hold up in court. You need to know what’s going on in your properties, especially if there’s illegal activity. Regular inspections are imperative.
- This probably wouldn’t help in this situation, but the property owner apparently held title in the family’s personal name. It’s best to remain anonymous and hold property in an LLC or Trust. It’s highly likely that lawyers have already looked up other properties owned in order to go after those assets.
- Know the landlord laws or hire someone who does. Had this property been under professional property management, this situation would likely never have happened.
- Make sure your lease agreements are drafted by a professional. A review of the lease agreement in this case could be quite revealing.
The bottom line is that you can get creative with your real estate if what you’re doing is permitted and legal. Otherwise, you put yourself at tremendous risk.
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Image Credit: Janna487 [CC BY-SA 4.0], via Wikimedia Commons
About the Author
Kathy Fettke is the founder and co-CEO of Real Wealth Network, a passive real estate investing club with more than 24,000 members. She’s also the author of “Retire Rich with Rentals” and host of “The Real Wealth Show,” a featured podcast on iTunes with listeners in 27 different countries. Kathy is passionate about understanding real estate cycles so she and her members can invest in the best markets and best deals available today. She is frequently invited to share her expertise on CNN, CNBC, Fox News, NPR, CBS MarketWatch and in the Wall Street Journal. Kathy received her BA in Broadcast Communications from San Francisco State University and worked in the newsrooms of CNN, FOX, CTV and ABC-7. She’s past-president of American Women in Radio & Television. Kathy loves the freedom that real estate investing can bring. She lives in Malibu, California, with her husband and two daughters and enjoys traveling, hiking, rock climbing, skiing, figure skating and surfing.
Thank you for writing this article. Horrible tragedy that we should all learn from. I intend to post this article to a few places.