On Nov 25, 7:35 am, "Will" <westes-...@noemail.nospam> wrote:
> I am interested in knowing how to avoid a transfer of liability - away from
> the landlord and to the tenant - for building improvements done by the
> tenant with the landlord's approval.
I'm not a CA lawyer. The following comments are just points for discussion. If you are either the landlord or the tenant in this situation, get a real, live CA lawyer versed in construction law ASAP to represent your interests _before_ signing a contract, or if it's too late for that and someone already got injured, to represent you in the pending or possible suit.
IMO you've got your "transfer of liability" terminology backwards. The person who actually does the work, of designing and building the allegedly defective improvement that causes injury to someone, is always the one _primarily_ liable. In your example, that would be the tenant, if the tenant is actually the one who built the improvement. Nobody has to "transfer" liability away from the landlord and to the tenant -- the tenant is liable already because he's the primary tortfeasor.
Now, in many states the owner of property is presumptively liable for injuries to social guests or business invitees (those whom he invites onto the property to conduct mutually beneficial business) or licensees (those whom he permits to enter for their own purposes) caused by dangerous defects in property that the landlord knew or should have known about. Absent any agreement ot the contrary, however, imposition of such landlord liability is secondary to, and simply intended to provide a known deep pocket for the injured victim to sue in lieu of, the person actually responsible for causing the defect, if frex that person is beyond the jurisdiction of the court, or his identity cannot be determined. If the landlord, after being sued, can find and identify the actual builder of the defective improvement, the landlord is entitled to claim indemnity from him, on the grounds that the landlord's liability is one imposed by law in lieu of the liability of the truly responsible person, who should therefore be obligated to reimburse the secondarily liable defendant landlord for the damages imposed and/or (depending on state law) for the costs of defending the suit.
Often, in actual practice, the victim's lawyer will sue both the landlord, and the tenant, and the builder (if it is a separate company the tenant hired to do the work -- chances are that a white-collar company renting an office would not be having its own employees building a walkway to their own building) and also the management or maintenance company that either the landlord or the tenant or both hired to do their day-to-day tasks in managing the building, and anyone else potentially liable for the negligence that led to the injury, and then leave it up to the jury, and to the law of indemnification which the various defendants may cross-claim among themselves, to sort out who should actually be required to pay the damages. If the victim sues only the landlord, the landlord can file a "third-party claim" to bring in the other responsible parties and demand indemnification from them, either as part of the original suit, or in a separate suit after being found liable for the victim's injuries. And if the tenant company actually hired a construction company to do the work instead of doing it itself, the tenant can _also_ claim indemnification, from the actual builder. It can get pretty complicated.
So, to summarize, the primary liability is that of the builder, and the law imposes secondary liability on the landlord just because he is the owner, and on the tenant just because he is the occupier of the land, while allowing the owner or occupier to claim indemnification from the truly responsible, negligent builder.
If the parties (landlord and tenant) want to shift some of that responsibility _as_between_themselves_ as a matter of contract, they are generally free to do so, if both are sophisticated business entities legally considered to be of equal bargaining strength, and the law will generally uphold whatever alternative arrangements they make as to transfer of liability, such as by eliminating the landlord's right of indemnity, or even by making the landlord have to indemnify the tenant if the tenant gets sued. But none of those agreements can legally affect the victim, who is still free to sue whomever the law makes liable, directly or vicariously, for causing his injury.
> As an example: a California based business renting space in a commercial
> building requests that the landlord construct a walkway on the side of the
> building,
Unless there's something in the lease that requires this, the landlord is under no obligation to provide additional improvements to a commercial tenant. The lease may provide that the tenant company is free to make its own improvements and may or may not provide that once it does, they become the property of the landlord and the tenant has to leave them there when it vacates the tenancy.
> Landlord
> refuses to do this job but asks tenant to pay the cost
I doubt Landlord actually _asked_ tenant to pay anything, if by that you mean to imply that landlord originated such a request, since this was tenant's idea, not landlords, and the landlord is not _asking_ tenant to do anything one way or the other. I am also pretty sure that's not exactly the language the landlord used, if this is something the landlord is not obligated to do. Probably more along the lines of, "I don't have to do that. If you want it done, go ahead and do it yourself and pay for it yourself."
> and to construct a
> path using stepping stones and techniques that could be done at lower cost.
I don't see why the tenant was not free to construct a safer, more expensive concrete walkway if tenant desired to do so. I find it hard to imagine that landlord cared one way or the other what kind of walkway tenant chose to build for tenant's own purposes.
> If at a later time someone is injured using the lower cost walkway, landlord
> or the injured party might be able to sue the tenant for the improvement
> done by the tenant.
Yes, on that part at least you are correct.
> How can this transfer of liability to the tenant be
> prevented?
See above re: improper assumptions at the heart of your question.
What the responsible tenant ought to do, as I hoped would go without saying, is to carry INSURANCE against its own potential liability to those injured by tenant's defectively constructed walkway. They should also, of course, insist that the builder they hire to actually build the walkway (if they are smart about how they go about this, and don't just make the accounting and HR departments go out to the lawn and carry flagstones on their backs in their T-shirts to build this walkway) also provide a certificate of insurance covering _its_ liability, and include an indemnification clause in the tenant's construction contract with the builder. Insurance is simply a normal cost of doing business and is IMO a duty of any responsible business citizen, as well as a good way to make sure the managers of the tenant company can sleep at night without having to worry about whether their company will be forced into bankruptcy by a lawsuit from someone they negligently injure.
> In this particular case, should tenant ask the landlord to sign an agreement
> that offsets tenant's agreement to absorb costs of the improvement in
> exchange for landlord's agreement to absorb all liabilities from usage of
> the improvement?
If this is a real situation, hire yourself a CA lawyer and ask him that question. The actual "which approach is better?" answer depends on both any quirks of local law, and even more so on a full understanding of all the facts and circumstances which you have only begun to provide in what, for lack of precision, I can only assume is a pure hypothetical. Absent complete details, which I am _not_ asking you to provide here, the answer is, as usual, "it depends."
> Agreement would set forth landlord's request for tenant
> to construct pathway.
Um, earlier in your post you said the _tenant_ originally requested the _landlord_ to construct a walkway.
> In exchange for an agreement to implement
> improvement and absorb part or all of the cost of this improvement, tenant
> stipulates in the agreement that landlord agrees to indemnify the tenant for
> all liability associated with construction or use of the improvement.
What possible motivation would the landlord have to agree to THAT?
The walkway is for the tenant's benefit, not landlord's. Landlord presumably doesn't care one way or the other whether tenant builds this walkway, and already has a lease in place on which tenant is paying rent. Would you sign such an agreement if you were the landlord?
> Would such an agreement be:
>
> a) advisable
I have no idea. See above.
> b) enforceable (in California)
I have no idea. See above.
> c) the only agreement required to insulate the tenant from future liability
> for use of the walkway?
As to that, I do have an idea. IMO such an agreement, standing alone, is NOT sufficient to fully insulate tenant from future liability. I don't even know if such insulation is possible, or enforceable, in CA or anywhere else if tenant is in fact the primary tortfeasor as stated in your hypo. Tenant by all means ought to consult a local lawyer NOW if this is a real situation and not a flight of fancy, and tenant also ought to check its insurance coverage with its insurance broker to make sure it has adequate coverage for this new liability.
--
This posting is for discussion purposes, not professional advice.
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For confidential professional advice, consult your own lawyer in a private communication.
Mike Jacobs
LAW OFFICE OF W. MICHAEL JACOBS
10440 Little Patuxent Pkwy #300
Columbia, MD 21044
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