Determining Liability for Third-Party Damage
Q: I recently hired an independent contractor to work at my shopping center. Now, a tenant claims that its business has been damaged by the worker. Can it justifiably terminate its lease under a breach of contract or some other claim? Does it have any other remedy?
A: Any breach of contract case will hinge on what the lease says. Many leases provide that the tenant must give the owner notice if its space is damaged, and then the owner has an opportunity to cure.
A lease may also include self-help provisions providing that a tenant has the right to make the repairs under certain circumstances and offset the costs against the rent due.
Some leases may also give the tenant the right to abate rent if it’s prevented from operating its business for an agreed-upon number of days.
Insurance provisions also could apply. A tenant would certainly make a claim with the owner’s insurance carrier for any damages caused to its property unless the lease provided that the tenant take out insurance to cover the loss.
Factors such as whether the independent contractor was in the tenant’s space when the damage occurred may also determine liability. If so, and it didn’t have the tenant’s permission to be there, the tenant could have a trespass claim against both the owner and independent contractor. But again, the lease would reveal whether the owner had the right to access the premises. (Keep in mind, however, that owners generally are permitted to have access to a tenant’s premises to make certain repairs.)
In the absence of any lease provisions dealing with damage caused by independent contractors, state laws may apply, so check with your attorney to see how those would affect you.