New Jersey commercial property owners and developers should be aware that the New Jersey Supreme recently adopted a new “bright-line rule” that requires owners of vacant commercial property to maintain abutting sidewalks in reasonably good condition. In a significant legal change, this rule applies to all vacant commercial properties, regardless of whether the property is capable of producing income.
Premises Liability Risks of Commercial Property Owners
Someone getting seriously injured on your property is one of the biggest legal risks for owners of commercial properties. Following an injury, the person may pursue a premises liability lawsuit seeking financial compensation. The key legal issues in a premises liability suit include the property owner's duty of care and whether they breached it
Under New Jersey's premises liability laws, commercial property owners have a duty to keep sidewalks abutting the property safe for members of the public. The specific legal standard is that the owner of commercial property must “exercise reasonable care” to see to it that the condition of the abutting sidewalk is reasonably safe and does not subject pedestrians to an unreasonable risk of harm. Accordingly, failing to take steps to address disrepair, as well as the accumulation of snow and ice, can lead to liability.
Notably, the owners of residential property are not subject to the same duty. A residential property owner owes no duty to the public to repair a sidewalk which is in a state of disrepair by reason of normal wear and tear or by reason of the elements such as rain, snow, and frost. Additionally, prior to the New Jersey's recent decision, not all owners of vacant properties were not subject to the same requirements, which made it challenging for property owners, insurers, and the courts.
Dispute Over Duty to Maintain Abutting Sidewalks
In Padilla v. Young Il An(A-43-22) (June 13, 2024), plaintiff Alejandra Padilla allegedly tripped, fell, and suffered injuries on the sidewalk abutting a vacant commercial lot in Camden. At the time of plaintiff's fall, defendants Young Il An and Myo Soon An owned the subject lot, which they had purchased in 1992, intending to construct a building there. According to their testimony, they never built a structure on that lot or on the adjacent lot they also owned because “the economic situations [were] really bad,” and they did not purchase liability insurance to cover the lot because insurance companies “didn't really want to insure it.”
Padilla's suit alleged that the defendants' negligence in failing to reasonably maintain the sidewalk abutting the subject lot caused her fall and resulted in injuries. The trial court granted the defendants' motion for summary, holding they did not owe a duty of care to the plaintiff. In reaching its decision, the court relied heavily on Abraham v. Gupta, 281 N.J. Super. 81 (App. Div. 1995), which held that the liability imposed on commercial property owners to reasonably maintain abutting sidewalks only applied to commercial properties with the “capacity to generate income.” The Appellate Division affirmed.
NJ Supreme Court Rules Owners of Vacant Commercial Property
A divided New Jersey Supreme Court reversed. It held that all commercial landowners — including owners of vacant commercial lots — have a duty to maintain the public sidewalks abutting their property in reasonably good condition and are liable to pedestrians injured as a result of their negligent failure to do so.
In reaching its decision, the New Jersey Supreme Court emphasized that whether a duty exists is ultimately a question of fairness. “There is something profoundly unfair about commercial property owners purchasing vacant lots and having no responsibility whatsoever for maintaining the area where the general public traverses,” Justice Fabiana Pierre-Louis wrote.
The New Jersey Supreme Court further reasoned that purchasing a vacant commercial lot is a business decision that embraces the attendant costs and burdens of conducting business. “Indeed, when someone purchases a vacant commercial lot, that is a business decision that embraces all the attendant costs and burdens of conducting business,” Justice Pierre-Louis wrote. “We conclude that one of those costs necessarily includes maintaining the abutting sidewalks so that they are in a reasonably safe condition for innocent passersby.”
Additionally, the majority found that the defendants' argument to base liability on profitability or a path to profitability to be an “unworkable approach that will only further confuse our commercial sidewalk liability law, lead to inconsistent results, and unfairly harm the public.” It further determined that bright-line rule that all commercial property owners owe a duty is the “most workable rule to protect the general public and ensure consistency in our courts.”
To the extent that Abraham conflicts with its decision, the Court held that it is overruled. Finally, Justice Pierre-Louis called on the New Jersey Legislature to address the issue of commercial sidewalk liability.
Key Takeaway for New Jersey Commercial Property Owners
The New Jersey Supreme Court's decision in Padilla v. Young Il An represents a significant change to the state's premises liability law. The new bright-line rule subjects all commercial property owners to the same duty to maintain abutting sidewalks.
To avoid potential liability, we encourage commercial property owners to be proactive in both inspecting and maintaining sidewalks. If you own a vacant lot that is impacted by the new rule, we encourage you to determine whether liability insurance is available and establish procedures for reducing the risk of a premises liability lawsuit. For guidance, we encourage you to contact a member of Scarinci Hollenbeck's Commercial Real Estate practice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.