Tenant Without Lease Can't Sue Owner for Violating Warranty

Facts: The tenant, while renting space in the owner's building without a lease, experienced property damage from a fire. The tenant then sued the owner, claiming that the owner violated his promise, or warranty, of providing a space suitable for business by failing to safely maintain the electrical and fire systems. The owner argued that because the tenant did not have a lease, there was no warranty.

Decision: A Massachusetts court ruled in favor of the owner.

Reasoning: The court found that the tenant did not have an actual lease. If a warranty to provide a suitable space for business exists, it is usually found in the terms and conditions of the lease. If no lease existed, there was no warranty to violate. Also, the court noted that the facts in the case showed no indication that the fire alarm that was alleged to have led to the damage was defective.

• Commerce Ins. v. Chadwick, October 2007

Editor's Note: The warranty to provide a space suitable for a business (or a residence, in the case of a residential tenant) is more commonly known as the implied warranty of habitability. This warranty does not need to be written into the lease. However, commercial tenants typically negotiate for more specific warranties, which they spell out in their leases, so the implied warranty of habitability rarely applies to commercial leases.