New York’s Court of Appeals recently affirmed the dismissal of a personal injury lawsuit against a commercial property owner, based on that owner’s status as an out-of-possession landlord. In reaching this result, the Court acknowledged certain contractual provisions or agreements that obligated the owner to be responsible for maintaining the premises. The decision represents a potentially significant win for property owners who retain some contractual responsibility for maintaining premises, while leasing those premises to responsible tenants who primarily undertake the duty to repair.
In Henry v. Hamilton Equities, Inc., 2019 NY Slip Op 07642 (2019), the plaintiff was allegedly injured when she slipped and fell as a result of a leak in the roof of a nursing home owned by the defendant landlord, and rented by Grand Manor Nursing and Rehabilitation Center.The original lease disclaimed any responsibilityof the landlord for the premises, and imposed the duty to make repairs on the tenant.The lease was later amended to incorporate regulatory agreements contained in an agreement between the landlord and the U.S. Department of Housing and Urban Development (HUD).The regulatory agreement required the defendant to “maintain the mortgaged premises, accommodations and the grounds … in good repair and condition.”The amended lease provided that any conflict between the contract’s terms and the regulatory requirements would be resolved in favor of the terms of the regulatory agreement.Notwithstanding the regulatory agreement, it was undisputed that only the tenant, and not the owner, made repairs to the roof in question.
On appeal, the court considered the scope of an exception to the out-of-possession landlord doctrine for landlords who covenant to make repairs. That exception was cemented by the Court of Appeals in Putnam v. Stout, 38 N.Y.2d 607, 618 (1976), where it held that “a landlord may be liable for injuries to persons coming onto his land with the consent of his lessee solely on the basis of his contract or covenant to keep the premises in repair.”
In Henry, however, the Court of Appeals held that “the regulatory agreement at issue here is not such a covenant.”The court reasoned that the HUD agreement, while imposing a duty on the landlord to make repairs, did not conflict with (and therefore did not supersede) the tenant’s obligation to make repairs contained in the original lease.Given the “absence of a conflict” on the issue of the tenant’s duty to repair, the court held that the agreement was not a “covenant that could be said to displace Grand Manor’s duties.”
The court buttressed this argument by highlighting a policy consideration underlying the exception to the general rule.The purpose of the exception was to protect tenants who are induced “to forego repair efforts” in response to the owners’ covenant.In Henry, because the tenant made all the repairs to the roof, the underlying policy would not be furthered by applying the exception.
Henry is notable in its apparent methodological departure from the court’s earlier decision in Putnam.The Putnam court emphasized the terms of the contract, whereas the Henry court appeared to look beyond the contract to the conduct of the landlord and tenant as definitive.Nevertheless, the Henry decision may also be seen as reaffirming the exercise of actual control to be the controlling inquiry, which comports with long-standing New York law.