Many commercial landlords want their tenants to be solely responsible for all building maintenance. This was especially true this past winter, with roof collapses a common event. In theory, with a properly crafted lease, other than collecting monthly rent checks, a landlord should be able to place all costs and responsibilities on the tenant and forget about the property until the lease term expires. In the past, landlords believed that they could enjoy this rosy scenario so long as their leases obligated their tenants to:
- Acknowledge that the leased premises were in good order and repair at the inception of the lease,
- Maintain the premises in good condition, and
- Make all necessary repairs and replacements.
Similarly, in return for such an arrangement, tenants enjoyed a lower monthly rent and control of their expenses where they had the obligation to repair and maintain the leased premises. Both landlords and tenants have reasonably believed that courts would uphold their expectations regarding maintenance obligations where their leases, negotiated by sophisticated parties, and drafted by counsel, assigned those obligations to the tenant. After all, one would expect a court to enforce the expressed intentions of the parties to a lease.
Based on the recent decision of the Supreme Judicial Court in Bishop v. TES Realty Trust, Massachusetts commercial landlords should no longer believe that their leases protect them from maintenance obligations, regardless of what those leases say regarding maintenance. As a result of the Bishop decision, it is simply not possible to enter into a Massachusetts commercial lease that shifts all maintenance obligations to the tenant. In Bishop, the commercial landlord and tenant entered into a lease where the tenant acknowledged that the premises were in good order and repair, agreed to maintain the premises in good condition, and agreed to make all repairs and replacements at the tenant’s expense. During the lease term, the tenant sent the landlord a letter stating that the roof was leaking. The tenant put a bucket under the leak to catch the water. When she looked up at the leak, plaster fell from the roof into her eye, causing her to fall backward, trip over the bucket and injure herself. The tenant sued the landlord for her injuries, despite the lease provision requiring the tenant to perform all maintenance.
The trial court held that because this was a commercial lease, and as the lease provided that repairs were the tenant’s obligation, the landlord owed no duty to repair the roof and, therefore, had no liability to the tenant. On direct appellate review, the Supreme Judicial Court overturned the trial court, and held the landlord responsible for maintenance of the leased premises notwithstanding the terms of the lease. The Supreme Judicial Court predicated its decision upon a statute, G.L. c. 186 §19, which it had not previously construed. That statute provides that any, “…landlord of real property (except an owner-occupied two or three-family dwelling) shall within a reasonable time following receipt of a written notice from a tenant…of an unsafe condition, not caused by the tenant… exercise reasonable care to correct the unsafe condition…except that such notice need not be given for unsafe conditions in that portion of the premises not under the control of the tenant…Any waiver of this provision in any lease or other rental agreement shall be void and unenforceable….”
The Court specifically held that this statute applies to commercial leases. In other words, regardless of the business sophistication and intent of the parties, under Massachusetts law, they cannot agree to have a tenant be solely responsible for maintenance. Massachusetts courts will not enforce any provision to the contrary. The Court did note, however, that if a lease does provide that the tenant has the duty of repair, but the tenant still gives a landlord written notice of an unsafe condition, the landlord may bill the tenant for the cost of the repairs it performs.
Regardless of what a Massachusetts lease says, the landlord has at least initial responsibility for an unsafe condition once the tenant provides written notice. It is now incumbent upon commercial landlords to review their leases and insurance coverage in light of this decision. Additionally, even though the Court requires written notice from a tenant for the imposition of liability, it is prudent practice for commercial landlords to inspect their premises to assure the absence of unsafe conditions, as well as conditions that may soon become unsafe – not knowing how broadly the statute may ultimately be interpreted and in the hope that earlier detection will mean lower repair costs. Landlords should account for the risks and costs imposed upon them by this decision in determining their rental rates. Those risks include not only the initial cost of repair, but also potential liability to tenants and every other person rightfully on the leased premises. A tenant, on the other hand, may still want to correct the unsafe condition itself if it wants to control the cost and/ or quality of the repairs