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IN THIS SIDEWALK SLIP AND FALL CASE, THE MASTER LEASE VIOLATED GENERAL OBLIGATIONS LAW 5-321 WHICH PROHIBITS A LEASE AGREEMENT FROM PROVIDING THE LANDLORD BE INDEMNIFIED FOR LIABILITY FOR THE LANDLORD’S OWN NEGLIGENCE (FIRST DEPT). ​

The First Department, in this sidewalk slip and fall case, in a decision too complex to fairly summarize here, determined a provision of the master lease violated General Obligations Law 5-321:

General Obligations Law § 5-321 states that “[e]very covenant, agreement or understanding in or in connection with or collateral to any lease of real property exempting the lessor from liability for damages for injuries to person or property caused by or resulting from the negligence of the lessor, his agents, servants or employees, in the operation or maintenance of the demised premises or the real property containing the demised premises shall be deemed to be void as against public policy and wholly unenforceable.”

The Court of Appeals, in Hogeland v Sibley, Lindsay & Curr Co. (42 NY2d 153 [1977]) and Great N. Ins. Co. v Interior Constr. Corp. (7 NY3d 412 [2006]), established an exception to General Obligations Law § 5-321. Parties to a lease agreement may execute a provision requiring the tenant to indemnify the landlord from the landlord’s own negligence. However, the lease must also contain an insurance provision “allocating the risk of liability to third parties” because “[c]ourts do not, as a general matter, look unfavorably on agreements which, by requiring parties to carry insurance, afford protection to the public” … . Accordingly, the Court of Appeals reasoned that when an indemnity clause is coupled with an insurance procurement provision, a tenant is obligated to indemnify the landlord for its share of liability, and such agreement does not exempt the landlord from liability to the plaintiff, but allocates the risk to a third party through insurance … . Insurance procured by the tenant in satisfaction of the indemnity clause provides the injured plaintiff with adequate recourse for the damages suffered … .

… Article 13 of the master lease requires Regent [the landlord] to be indemnified for all claims “provided however that the same shall not arise from the willful acts of Landlord during the term of this Lease.” On its face, we find that this provision violates General Obligations Law § 5-321. Bessios v Regent Assoc., Inc., 2023 NY Slip Op 01583, First Dept 3-23-23

Practice Point: A lease which requires the landlord to be indemnified for its own negligence violates General Obligations Law 5-321 unless the lease also requires the tenant to procure insurance which will compensate the injured party for the landlord’s negligence.

 

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