Landlords of commercial space (e.g. malls, shopping centers, office buildings), as well as tenants of commercial space face potential liability for slip and fall accidents, although the liability is not always shared. I will leave the discussion of what facts must be proven to establish premises liability for another day. I focus here on who (landlord or tenant) could be on the hook for a slip and fall at the commercial premises. In analyzing the potential exposure, the issue is whether the area on the commercial premises where the accident occurred is a "leased space" or a "common area." That question must be answered to determine if the accident occurred on "the landlord/property owner's premises." For example, in a standard commercial lease agreement, the sidewalk area is a "common area" that would fall under the landlord/property owner's control. On the other hand, if the fall occurred inside the area that is actually leased by the tenant which is usually the store itself, then it would be the tenant facing potential liability.
Below, I am providing a brief discussion of the law as it relates to a landlord's potential exposure for accidents that occur on a "leased space" versus accidents that occur in a "common area." Generally, a lessor has no duty to tenants or their invitees for dangerous conditions on the leased premises. See Johnson v. Sherriff's Posse v. Endsley, 926 S.W.2d 284, 285 (Tex. 1996). This rule originates from the notion that a lessor relinquishes possession or occupancy of the premises to the lessee. Id. There are three recognized exceptions to this "no duty" rule: (1) the lessor's negligent repairs, (2) concealed defects of which the lessor was aware at the time the premises was leased, and (3) a defect on the portion of the premises that remained under the lessor's control. If one of these exceptions applies, the lessor owes its tenant or tenant's invitees the duty of ordinary care. Parker v. Highland Park, Inc., 565 S.W.2d 512, 514-5 (Tex. 1978)(citing RESTATEMENT (SECOND) OF TORTS 360, 361 (1965)).
Liability under the third exception is based on physical possession of common areas, and the liability question "turns on who had possession of a part of the premises rather than a mere right of re-entry." In other words, the fact that a landlord is allowed to enter the leased storefront to make certain repairs required by the lease does not impose liability. The landlord must have the right to physically possess the space. Certainly, there are few leases that grant the landlord that right to possession in the leased store square footage. Shell Oil Co. v. Khan, 138 S.W.3d 288, 296 (Tex. 2004). In the commercial lease, the issues regarding "control" and "right to possession" are usually spelled out without ambiguity, and they should be. Commercial landlords and tenants should make sure those issues are specifically addressed so that if you are sued for a premises condition that is the responsibility of the other, you can provide the lease agreement to opposing counsel in an effort to remove yourself from the dispute early in the process.
Commercial leases also contain indemnification agreements (coupled with agreements to procure insurance). It is important to ensure that the indemnification language (to the extent that is really what it is) needs to satify certain requirements in Texas to be enforceable. It is always good practice to have a legal professional specializing in business litigation matters to take a look at these lease agreements, and it is just as important to make sure that the insurance policies that the lease requires to be purchased actually meet the contractual obligations imposed by the lease.
Over the years, I have represented a variety of businesses, ranging from the commercial contractor to the large petrochemical plant, in the resolution of insurance coverage and commercial disputes, as well as construction defect claims and general liability suits brought by contractors and employees. At my website, I write a business litigation blog, complete with movie and television references, and I also write an insurance coverage blog. I invite you to read my blogs and comment on any posts that interest you.
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