Avoiding Liability by Giving Tenant 'Complete Control of Space'

Q: My company has owned commercial property for many years and prefers to lease to larger tenants. The standard lease that I use with tenants gives “complete and exclusive possession and control” of the space to these tenants. They’re also permitted to alter, add to, and improve the space with my written approval. Some of the spaces have been leased by the same tenant for decades. During that time, regulators have become increasingly concerned with safety in the workplace. One of my tenants is a national home improvement retailer that uses heavy equipment and high shelves to stock items. The nature of its business makes it more likely that an accident will occur. If someone were to get hurt, would I be liable for injuries?

A: It depends not only on the circumstances of each individual case, but also the state in which your property is located. It’s important to note that the language of the lease agreements with your tenants may shift responsibility for certain injuries from you to tenants, and vice-versa.

Even if you’ve given “complete and exclusive possession and control” of the space to the tenant, and the tenant could modify the space only with your written approval, a court might refuse to dismiss the employee’s lawsuit, noting that your ability to prevent the tenant from altering the space meant that you actually hadn’t given complete possession and control to the tenant. As a result, you may be liable to the tenant’s employee.

However, you can ensure that your company limits its liability where possible by consulting with an attorney for aid in drafting the appropriate language that would require tenants to indemnify, or reimburse, you for any injuries.