Lease Liability of Commercial Landlords

Recent decisions from the Supreme Judicial Court illustrate the importance of lease provisions and notices on the liability of commercial landlords. 

The lease is important in defining the scope of the landlord’s obligations. Under Massachusetts law, “a lessor of commercial premises is liable in tort for personal injuries only if either (1) he contracted to make repairs and made them negligently, or (2) the defect that caused the injury was in a ‘common area,’ or other area appurtenant to the leased area, over which the lessor had some control.” Humphrey v. Byron, 447 Mass. 322, 328-329 (2006).   The lease will contain provisions that will define the scope of the landlord’s obligations under this rule.  

In certain circumstances, however, a Massachusetts statute imposes liability on landlords for injuries caused by defects in the leased premises even if the lease did not require the landlord to repair the premises. Under G.L. c. 186, § 19, a landlord can be liable if (1) the landlord receives written notice from the tenant via certified or registered mail of the defect in a portion of the premises controlled by the tenant, (2) the landlord fails to exercise reasonable care to correct the defect, and (3) someone rightfully on the premises is injured as a result of the defect.  The Supreme Judicial Court has now held that this statute applies to commercial tenancies as well as residential premises. See Bishop v. TES Realty Trust, 459 Mass. 9 (2011). Obviously, landlords must be careful to respond to notices they receive regarding defects in the leased premises.

Leases often contain indemnity and insurance provisions.  A Massachusetts statute, G.L. c. 186, § 15, invalidates any lease provision which indemnifies the landlord or protects the landlord from liability arising from any negligence or other misconduct of the landlord on or about the leased premises or “on or about any elevators, stairways, hallways or other appurtenance used in connection therewith.”  The Supreme Judicial Court has held that this statute applies to commercial tenancies, as well as residential tenancies. See Norfolk & Dedham Mut. Fire Ins. Co. v. Morrison, 456 Mass. 463 (2010).

As a result, indemnity provisions in commercial leases are invalid if they apply to cases where the landlord was negligent.  An indemnity provision which applies only when the landlord is not negligent or otherwise at fault has limited utility since a landlord’s liability usually arises from its negligence.  These provisions may be useful, however, if the landlord Is exonerated from liability, because the landlord may then invoke the provision to recover the attorneys’ fees incurred in defending the case.

The Supreme Judicial Court also held in Morrison that G.L. c. 186, § 15 does not invalidate insurance provisions in leases. As a result, it is important to examine the lease and determine whether the tenant was required to obtain insurance for the landlord. If so, you should then examine the tenant’s insurance policy to see whether it provides coverage to the landlord, either through an endorsement that insures lessors or through a blanket additional insured provision that applies whenever the insured agrees in a written contract to obtain insurance for someone.

 

Photo Credit: Falmouth Public Library