Daily Development for Monday, March 9, 2009
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Husch Blackwell Sanders
Kansas City, Missouri

LANDLORD LIABILITY; INJURY TO TENANTS; SHORT-TERM LEASES: In a short-term lease arrangement, a lessor owes a duty to a lessee if: (a) the lessee does not know or have reason to know of the condition or risk involved; and (b) the lessor knows or has reason to know of the condition, and realizes or should realize the risk involved, and has reason to expect that the lessee will not discover the condition or realize the risk.

 Reyes v. Egner, 962 A.2d 542 (N.J. Super. Ct. App. Div. 2009).

This case makes a subtle, but important, change in the law of landlord liability, at least in New Jersey.  Note, preliminarily that the case might have been solved under the implied warranty of habitability if the jurisdiction recognized the doctrine for short term residential rentals (most do) and if it imposed on the landlord a responsibility to inspect to insure that the premises are reasonably safe at the outset of the lease (some do). 

The lessee obtained a short-term lease of a beach house.  While on vacation, the lessee’s elderly father (the plaintiff) fell when he lost his balance while stepping onto an outside wooden platform.  The platform was adjacent to the sliding glass door leading from the master bedroom to a rear deck.  Both the platform and deck had several structural problems that allegedly contributed to the plaintiff’s fall.  As a result of the fall, he suffered permanent injuries to his back.  The plaintiff filed a complaint alleging, among other things, that the lessor was negligent in failing to correct or warn about the dangerous condition.

The trial court entered summary judgment in favor of the lessor, finding that no duty can attach unless the lessor actively or fraudulently concealed the dangerous condition.  The court ruled that the dangerous condition - lack of a handrail and a significant drop to the platform - was patent - obvious to anyone. 

On appeal, the Appellate Division reversed the entry of summary judgment. The decision began by discussing the long-established approach under which a landlord owes no duty to a tenant for dangerous conditions unless he or she had actual knowledge of the hazard and the lessee was ignorant of it.   The court then stated a new approach for short-term leases: a lessor owes a duty to a lessee if the lessee does not have reason to know of the risk and the lessor has reason to know of the risk. 

The court detailed the special circumstances that accompany short-term leases.  Renters in this situation are not apt to perform a thorough inspection of the premises.  The distance between the vacation property and the tenant’s permanent residence often can make it inconvenient for the tenant to inspect the property before signing a lease.  In the court’s view, these special circumstances justified this new approach to premises liability for short-term leases.

The court relied extensively on the Restatement (2nd) of Torts, which puts tenant’s family members within the zone of protection of the tenant.  The Restatement does not limit the landlord’s duty to short term leases, but the court felt constrained to make such a limitation here to escape the limitations of some precedent cases in New Jersey. 

Comment 1: Anyone interested in whether this case applies to a given situation is urged to study it carefully.  The editor acknowledges some confusion as to why the defects in the platform “should have been discovered” by the owner (who acquired the property for rental purposes eight years after the platform was built), but should not haAve been discovered by the plaintiff (who had been in the premises three days before the accident happened.

Comment 2: Whether this decision will spread- as the Restatement would have it - to all residential rentals, is certainly worth pondering.  As suggested, in many jurisdictions, tort liability resulting from breaches of the implied warranty of habitability might already lead to the same result. Friedman on Leases has a chart of the state of the implied warranty state by state, identifying which of the states has used the doctrine as a basis for tort liability. 

But this case supplies an alternate basis for liability.  The landlord has a duty to inspect and to identify defects that the tenant might not discover.  Here, the defect was found to be patent, but still undiscoverable.  If the duty of inspection is extended to latent defects, unknown to the landlord, there will be a significant shift if liability and likely in insurance premiums. 

Comment 3: In another interesting aspect of the case, the court absolved the broker from liability, holding that the broker, for its small fee, should not be expected to pore over “every nook and cranny” of the premises looking for defects.  Apparently, the landlord is so required.

Comment 4:  The defect apparently was a violation of the building code, but the court didn't appear to make much of that fact.

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