A case recently handed down by the Massachusetts Supreme Judicial Court could have a big impact on commercial landlords and building managers, increasing their liability for accidents and injuries even if the incidents occur in a part of the property leased by a tenant.

“Does it change things from a liability perspective? Yes,” said Greg Vasil, president of the Greater Boston Real Estate Board. “Does it go out and give a landlord more things to worry about? Yes, absolutely.”

The case, Mary Bishop vs. TES Realty Trust, concerned a leaking roof at a small tanning salon in Swampscott. Bishop, the salon’s owner, had sent a certified letter to landlord TES alerting them to the leaking roof, and TES had attempted to repair it on at least one occasion. The roof continued to leak, however, and one day plaster falling from the roof got in Bishop’s eye, blinding her and causing her to trip and fall, injuring her shoulder.

Bishop sued the landlord on the basis that they had failed to repair an unsafe condition after being notified of it. A lower court judge ruled in TES’ favor, but when Bishop appealed, the Supreme Judicial Court took up the case, ruling that a landlord is liable for failing to repair an unsafe condition if notified of it.

Residential Precedent

The ruling greatly expands commercial landlords’ liability. The SJC had previously held that residential landlords, if notified of an unsafe condition in a tenant’s premises, were liable to repair it. But until now, that ruling had not been applied to commercial landlords.

Under most commercial leases, tenants are responsible for the interior maintenance of the property they’re leasing.

“Most of us who do commercial leases assume[d] that if a tenant is responsible for the interior maintenance of the demised premises, that if there is an unsafe condition, it’s probably due to the fault of the tenant,” said Ed Bloom, president of the Real Estate Bar Association and a partner at Boston-based law firm Sherin and Lodgen.

But the SJC specifically rejected this reasoning in its decision, saying “if a lease provision making the tenant responsible for all repairs meant that the tenant could not, through the required notice, impose on the landlord a duty to repair an unsafe condition…the lease provision would effectively constitute a waiver of the landlord’s obligations under [the law], which is not permitted.”

The ruling in the Bishop case raises the possibility that a tenant may simply notify the landlord of an unsafe condition and thereby abrogate their own liability for any injuries that may result, even if the condition is wholly or partly due to their own actions, Bloom said.

That’s troubling because unlike a residential lease, where it may be reasonable to assume that the landlord has greater expertise about the condition of the property than the tenant, that is less likely to be the case in a commercial setting.

“[With] a commercial lease, you could have an infinite number of uses – it could be a restaurant, it could be a manufacturing plant, it could be a warehouse, it can be an office, R&D – most landlords aren’t necessarily going to know what might be an unsafe condition,” said Bloom. “The tenants would be in a much better position to know what OSHA, for instance, requires for a safe working environment.”

The shift will force commercial landlords to re-evaluate all their current leases.

“The landlord has to change his practice altogether,” Vasil said. “What they’re going to have to do is, whenever they get notice from a tenant, they’re going to have to go in and do the work and look to bill the tenant for [the repairs].”

Though ultimately, changes in premiums will depend on whether the ruling produces an increasing number of successful claims, landlords are already consulting with insurers to determine if they need to alter their coverage. And that’s “an added cost that may not be covered in this year’s budget,” said Vasil.

The American Insurance Association declined to comment on the impact of the case.