Lake is being sued for allegedly making a HUGE mistake with some flammable heating oil ... and causing the fire that burned down the Malibu beach house she was renting back in 2010.
According to the lawsuit filed by the owner of the home ... Lake was refilling a portable space heater when she spilled the oil on the hot heating coils -- and the oil burst into flames. The fire quickly ripped through the entire property.
In the lawsuit, filed Monday in L.A. County Superior Court, the owner, Hovsep Kousouyan, claims Lake spoke with emergency personnel who responded to the fire -- and she admitted the whole thing was her fault.
Kousouyan says his beach house was completely destroyed in the blaze -- and wants Lake to pay for all of the damages ... which could be in the millions.
Calls to Lake's rep have not been returned.