February 16, 2010
The Virginia Supreme Court recently addressed the issue of landlord liability under a retail lease for damages to the tenant’s inventory caused by a leaking roof when the tenant carried insurance on its inventory. As a result of this decision, landlords and tenants in Virginia need to pay particular attention to the language in a commercial lease that governs their respective obligations for roof repair and maintenance.
In Landmark HHH, LLC v. GI HWA Park, 277 Va. 50 (2009), the lease obligated the landlord to keep the roof in good repair. The roof leaked on multiple occasions, and pursuant to its lease obligation, the landlord had the leaking roof replaced.
However, without the landlord’s knowledge, the roof was replaced improperly and continued to leak, thereby damaging the tenant’s inventory. Although the tenant carried insurance on its inventory, it sued the landlord for breach of duty to maintain the roof.
In rejecting the landlord’s argument that the lease prevented recovery because the lease required the tenant to maintain insurance on the inventory, the Virginia Supreme Court construed the lease strictly and held that the insurance provision did not release the landlord from liability for breach of the landlord’s principal obligation to maintain the roof.
According to the court, the landlord, as the drafter of the lease, could have drafted the lease to impose an express limitation on its liability under the circumstances. Because the landlord failed to do so, the court would not read such limitation into the lease.
McGuireWoods real estate attorneys are prepared to help you draft leases to protect your rights. Please contact us if you have concerns or questions. For more information, visit our Greater Washington-Baltimore Region Transactional Real Estate practice.
Sarah H. Cohn is the principal author of this alert.