September 17, 2007

Kenneth Neale authors article "Landlord's Liability for Defective Conditions on Leased Premises"

Arnold & Porter Article

By Kenneth A. Neale

California Real Estate Journal
September 17, 2007

In an exception to the general rule, a recent court decision has held that a commercial landlord has a duty to inspect the leased premises on entry of a judgment of possession in an unlawful detainer (eviction) action. Moreover, the rationale behind the decision suggests that the landlord's duty to inspect could be expanded to other situations, such as where a tenant is in default.

In Stone v. Center Trust Retail Properties Inc., the plaintiff brought a claim against the landlord based on injuries she sustained after slipping on a wet dance floor located in a restaurant leased to the landlord's tenant. A few days before the accident, the landlord obtained a writ of possession against the restaurant tenant, although the tenant apparently was occupying the premises at the time of the injury.

The plaintiff argued that the landlord had a duty to inspect the premises and that, had it done so, it would have discovered the defective condition (leak). If the landlord had discovered the dangerous condition, under established law, it would have been required either to warn of the defect or to correct it.

In general, a landlord is not liable for injuries to tenants or guests caused by a condition on the premises that arises after the tenant has taken possession, unless the landlord has actual knowledge of the dangerous condition and the right and ability to cure it.

A corollary to that rule is that the landlord generally has no obligation to inspect the premises once it is leased unless it has reason to know of a dangerous condition.

In Stone, however, the Court of Appeal held that the landlord had a duty to inspect the premises on entry of a judgment of possession in an unlawful-detainer action, including reasonable periodic inspections thereafter. The court reasoned that, once an entry of judgment of possession occurs, the tenant has less incentive to maintain the property. Furthermore, the court stated, a landlord should know that a defaulting tenant sometimes neglects property. Therefore, the court concluded, a landlord had a greater responsibility under these circumstances, and an exception to the general rule was warranted.

Based on this case, a commercial landlord must promptly inspect the premises of a tenant against whom it has obtained a judgment for possession. This inspection should occur before the actual execution of that judgment (that is, the sheriff eviction process), which often can occur days or weeks after a judgment is entered.

In addition to post-judgment inspections, a commercial landlord should consider inspecting premises upon the onset of the eviction process or even after a default occurs under the lease because, based on the rationale in Stone, under those circumstances a tenant is more likely to neglect the premises. Before doing so, however, the landlord should check the particular terms of its lease to determine whether such an inspection is permitted.

Most commercial leases allow a landlord to inspect the premises on reasonable notice, particularly in the event of a default. Interestingly, such a provision, while essential to most commercial landlords, would tend to support a broader duty to inspect the premises than might otherwise be the case without such a provision.

Kenneth A. Neale is a director in the real estate group at Howard Rice Nemerovski Canady Falk & Rabkin.

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