Don’t Count on Your Out-of-Possession Status to Shield You From Premises Liability

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On October 24 of 2019, the State of New York Court of Appeals rendered a decision on Xiang Fu He v. Troon. It is vital for anyone who leases out commercial real estate to pay close attention to this verdict, which stated out-of-possession landlords could be held liable for slips and falls on icy sidewalks.

It is common for landlords to be “out-of-possession,” especially when leasing space to retailers. Legally, the term means you do not retain control of the premises or occupy it, and, unless the lease creates a contractual obligation, you’re not obligated to make repairs.

This definition can run afoul of local laws, as it did in the Xiang Fu He case. In 2003, Section 7-210 of the Administrative Code of the City of New York went into effect. 

The plain language of the code states:

  • It shall be the duty of the owner of real property abutting any sidewalk, including, but not limited to, the intersection quadrant for corner property, to maintain such sidewalk in a reasonably safe condition.
  • Notwithstanding any other provision of law, the owner of real property abutting any sidewalk, including, but not limited to, the intersection quadrant for corner property, shall be liable for any injury to property or personal injury to property or personal injury, including death, proximately caused by the failure of such owner to maintain such sidewalk in a reasonably safe condition. Failure to maintain such sidewalk in a reasonably safe condition shall include, but not be limited to, the negligent failure to install, construct, reconstruct, repave, repair, or replace defective sidewalk flags and the negligent failure to remove snow, ice, dirt, or other material from the sidewalk. This subdivision shall not apply to one-, two- or three-family residential property that is (i) in whole or in part, owner occupied, and (ii) used exclusively for residential purposes.

In writing his opinion, Judge Rivera stated:

“Section 7-210 applies to every owner of real property abutting any sidewalk and makes no distinction for those who are out of possession. The fact that this section expressly excludes certain owner-occupied properties from its reach demonstrates that defendant’s reading is untenable because, if the City Council meant to exclude a class of owners, it knew how to do so.”

The judge also made it clear that under the law, snow and ice removal is a non-delegable duty.

“While an owner can shift the work of maintaining the sidewalk to another, the owner cannot shift the duty, nor exposure and liability, for injuries caused by negligent maintenance.”

In other words, you’re welcome to put a clause in your lease which shifts the work of sidewalk maintenance to your tenant, but if you do you’d best send someone out to inspect that work whenever snow and ice are an issue. While you may be able to take your tenant to court for breach of contract, you nevertheless will end up shouldering the liability for any accidents that occur. In many cases, you’ll be better served by taking care of the sidewalks yourself.

These decisions are backed by quite a bit of existing case law in which the out-of-possession status failed to shield landlords, including (but not limited to) the 2009 case James v. Blackmon, the 2009 case Litkenhaus v. 1158 Hylan Blvd., and the 2011 case Reyderman v. Meyer Bedford Trust. 

Thus, it’s unwise to rely on out-of-possession status alone when attempting to limit your liability. Instead, work closely with your attorney to identify any local laws which might impact a premises liability case, and take steps to reduce and control factors which could result in a lawsuit. 

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