Who is on the Hook? A common question that we receive is whether the owner (landlord) of a commercial property can be held liable for damages to a third party that are caused by the actions of a tenant. As with most anything in the law the answer to this question will depend on the particular facts and circumstances surrounding the situation.
Who Did What? However, a very general starting point is that in Indiana, a landlord is NOT responsible for a tenant’s actions, whether those actions are deemed a nuisance, a trespass or some sort of tort. Again very generally, someone seeking to recover from a landlord, for the alleged conduct of a tenant, must showthat the landlord has actual knowledge of the tenant’s actions and either consented to those actions or assisted or participated in causing the harm to the third party. In fact, the law at this time is while a landlord is liable for injuries resulting from the condition of the property at the time of the execution of a lease, and from nuisances that exist at that time, it is the tenant who is liable for the negligent use of the property and for defects in the property arising after the tenant assumes control and possession of the property.
Recent Affirmation of these Principles. A recent case from the Indiana Court of Appeals reaffirmed these general principles and held that an owner of a commercial property where a tenant operated a dry cleaning company could not be held responsible for damages allegedly caused by that dry cleaner to the neighboring property. In that case the damages were the alleged decrease in the value of the neighboring property.
You should note that this case was decided under current Indiana law, and the Indiana Court of Appeals was asked to look at the laws of other States that have expanded the circumstances under which a landlord has been held liable for a tenant’s actions. However, the Indiana Court refused to deviate from the existing Indiana law.
Check Your Policies. On a practical level, this issue between the landlord and the tenant as to who is responsible is one that can and should be addressed not only in the lease, but also in the relevant liability insurance policies, which both the landlord and tenant should carry. A landlord typically will ask to be named as an additional insured under a tenant’s policy. Meanwhile, the tenant should try to negotiate a mutual waiver with the landlord for any claims that are covered by insurance, and a waiver of subrogation rights as part of the lease. We can address some of that in greater detail at a later time.
