Vacant Commercial Property Owners Face Sidewalk Liability: New Jersey Supreme Court

The New Jersey Supreme Court has ruled 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.

The high court created a new rule that it explained is guided by the principle of fairness and that no longer treats vacant properties differently than those with structures or active businesses.

“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,” the court commented in a 4-3 opinion penned by Justice Fabiana Pierre-Louis.

The majority relied upon a principle expressed in a 1993 ruling: “Whether a person owes a duty of reasonable care toward another turns on whether the imposition of such a duty satisfies an abiding sense of basic fairness under all of the circumstances in light of considerations of public policy.” (Hopkins v. Fox & Lazo Realtors).

In the high court’s view, this guiding principle means that “it matters not that there is no structure or active business being conducted on a commercial property.”

The court said that purchasing a vacant commercial lot is a business decision that embraces the costs and burdens of conducting business and one of those costs includes maintaining the abutting sidewalks so that they are in a reasonably safe condition for innocent passersby.

With its ruling, the high court reversed and remanded back to the appellate court a negligence suit brought against the owners of a vacant property in Camden by a woman who claims she fell on the sidewalk and sustained injuries that required surgery.

The owners of the property purchased it 27 years before plaintiff’s fall in 1992, and later bought an adjacent lot, intending to construct a building, but never did. According to the owners, they never built a structure because “the economic situations were really bad.” One defendant further testified that he did not purchase liability insurance to cover the lot because insurance companies “didn’t really want to insure it.”

The high court cited the history of sidewalk liability law in New Jersey courts, which has evolved from imposing no liability on commercial landowners for maintenance of sidewalks to imposing a duty on commercial but not residential landowners but only if there is a structure or active business on the site. The courts recognized that this imposed an expense on commercial property owners, but that liability insurance would become available, the cost of which owners would absorb as a necessary expense of doing business.

Appellate courts have since exempted some vacant properties from sidewalk liability, reasoning among other things that they lack a capacity to generate income and the capacity to spread the risk of loss.

The Supreme Court maintained that subsequent cases have led to confusion in the area of commercial sidewalk liability law and uncertainty over whether liability should apply to commercial landowners of vacant lots. The court concluded that it should apply because whether a duty exists is ultimately a question of fairness and not whether there is a structure or active business on a commercial property.

“By its essence, a commercial lot exists and is bought and sold for the purpose of making money. Indeed, when someone purchases a vacant commercial lot, that is a business decision that embraces all the attendant costs and burdens of conducting business. 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,” the court stated.

The court rejected suggestions by the defense counsel that it adopt a case-by-case approach or consider if the property is on an “immediate path to profit” to determine when a commercial landowner owes a duty. The court said those analyses would not be practical as they would be based on “nebulous indicators” and they would not make it clear enough where and when a duty is owed.

The ruling notes that the sidewalk liability distinction between commercial and residential properties should remain but it should no longer treat certain types of commercial properties differently.

The majority opines that the “bright-line rule” that all commercial property owners owe a duty to maintain abutting sidewalks in reasonably good condition will ensure “fairness, consistency, and predictability” in the state’s courts going forward.

The opinion also notes that the court has in the past urged the state Legislature to clarify the law on sidewalk liability but that has not happened.

Topics Commercial Lines Business Insurance New Jersey Property