The commonwealth’s courts have recognized an implied warranty of habitability for residential leases since 1973. Residential landlords must maintain dwellings in a livable condition. However, while courts in some states, such as New Jersey and Texas, have imposed an implied warranty of habitability or suitability on commercial landlords, Massachusetts courts have been reluctant to follow suit.
Ancient landlord-tenant law developed during agrarian times, when tenants were presumed capable of repairing buildings without landlord assistance. The parties’ lease obligations were independent of each other. When landlords breached leases, tenants remained obligated to pay rent nonetheless. The industrial revolution and urban growth changed this relationship. More tenants came to reside in multifamily dwellings, where landlords were expected to keep roofs from leaking and plumbing from failing. Landlord-tenant law adapted accordingly. In 1973, the Supreme Judicial Court decided Boston Housing Authority v. Hemingway, holding that landlords’ and tenants’ obligations under residential leases are not independent, but dependent on each other, thus allowing residential tenants to terminate leases if the landlord materially breaches. The Hemingway court also ruled that residential leases have an “implied warranty of habitability” requiring landlords to maintain dwellings in livable condition.
Sixteen years after Hemingway, the SJC was asked to extend the implied warranty to commercial leases in Chausse v. Coz. James Chausse worked for a commercial tenant that used powdered aluminum, an explosive material that becomes more volatile if ambient humidity drops below 60 percent. Injured in an explosion, the plaintiff sued the landlord for allowing the humidity to drop to a dangerous level. He claimed that the landlord was responsible for maintaining higher humidity in the leased premises. The SJC held that low humidity was not a defect that justified extending the implied warranty of habitability to commercial leases, but it did not negate the possibility of doing so under different circumstances.
Beyond As-Is
In 2002, the SJC again considered implied warranties in commercial leases in Wesson v. Leone Enterprises, where a commercial tenant vacated its premises and stopped paying rent because of a leaky roof. The tenant argued that its lease obligations were dependent on the landlord maintaining the roof. The landlord took the traditional position that his lease obligations were independent of the tenant’s obligation to pay rent. The SJC sided with the tenant, discarding the independent covenant doctrine and ruling that, unless the parties agree otherwise, if a landlord fails to perform a significant obligation in a commercial lease, the tenant can terminate the lease. However, the SJC declined to extend the implied warranty of habitability to commercial leases, stating that such extension was “not necessary to the adoption of a dependent covenants rule.”
Reading between the lines of the Chausse and Wesson decisions, landlords should anticipate that Massachusetts courts will eventually imply a covenant of habitability in commercial leases. The SJC avoided doing so in Chausse because of doubts that low humidity was a defect for which landlords should be responsible. The SJC declined again in Wesson because it could achieve its desired result based solely on the doctrine of dependent covenants. Given the tenor of those decisions, it seems likely that the SJC will adopt the implied warranty for commercial leases when presented with circumstances justifying it, such as a multi-tenanted property where the landlord is expected to provide a high level of services. Shopping center and office leases are most likely to create this opportunity.
Many sophisticated landlords and tenants are aware of this issue. However, the Greater Boston Real Estate Board’s standard commercial lease form only stipulates that tenants accept their premises in “as-is” condition, and does not otherwise disclaim or limit implied warranties. Concerned landlords should revise their commercial leases to restrict implied warranties to the extent permissible, as well as allow themselves time after notice to rectify problems, and limit tenants’ remedies.
Christopher R. Vaccaro is a partner at Looney & Grossman LLP in Boston. His email address is cvaccaro@lgllp.com.
