Considering the current state of affairs and the imminent expiration of Nebraska’s Temporary Residential Eviction Relief Executive Order, it is important for landlords and tenants to become informed of their duties and the potential for additional exposure to new claims on the horizon arising from circumstances surrounding COVID-19. This article is not meant to be an exhaustive discussion in that regard. Rather, I wish to provide an illustrative list of some of those duties and issues surrounding them which could be affected by the anticipated post-pandemic changes to the commercial real estate market.
It is well founded in Nebraska law that landlords have a duty to mitigate damages following an abandonment, or any other breach of the lease which leads to a vacant unit in order to maximize their recovery of damages. See Hilliard v. Robertson, 253 Neb. 232, 570 N.W.2d 180 (1997). The satisfaction or not of this duty is fact dependent, but proof of the affirmative defense for breaching tenants does not currently require expert evidence, and even in cases where the landlord has erected marketing signage to relet the premises, Nebraska courts have held that such was insufficient to meet this common law duty. Id. In light of the expected shifts in the commercial real estate market due to the growth of implementing work-from-home strategies, and the eventual corrections likely to follow the sunset of governmental lending and grant programs, this duty and the issues tangential to it should be expected to be litigated frequently. Both landlords and tenants should pay close attention to that litigation as there are likely to be arguments which could alter the proof requirements as well as the duty itself in the coming months to account for a more volatile and shifting market space.
Nebraska courts have also long held that commercial tenants have a duty to protect lawful entrants to the premises from foreseeable dangers in arrangement and use of his premises. Hansen v. First Westside Bank, 182 Neb. 664, 156 N.W.2d 790. Provided further, in some circumstances, liability for a patron’s injuries can even be extended to commercial landlords. See Reicheneker v. Seward, 203 Neb. 68, 277 N.W.2d 539 (1979). In particular, if a lease is not artfully crafted, or if a landlord fails to address issues that he is put on notice of by his tenant and which create an unreasonable risk of harm to patrons, then liability can be extended to the landlord as well as his tenant for injuries which occurred as a result of those issues. Id. But what does this mean regarding the potential for exposure to tenants and landlords with regard to claims based on contracting COVID-19?
If landlords had no duty to protect their tenants or their tenant’s patrons, then they could save time and resources by demonstrating a hands-off management approach. Alex J. Schnepf, A Covid-19 Heavyweight Bout Tenant Safety Versus Discrimination, 35 Prob. & Prop., 24, 25 (2021). However, the absence of a duty to keep tenants safe is not a reality in many states because of the implied warranty of habitability. Id.
In Nebraska, the implied warranty of habitability creates a duty for landlords to maintain habitable conditions on their rental properties by ensuring the premises be safe for the health of the tenants. For example, landlords must “do whatever is necessary, after written or actual notice, to put and keep the premises in a fit and habitable condition.” Neb. Rev. Stat. Ann. § 76-1419 (West 2001). The implied warranty of habitability and limited circumstances for the imputation of premises liability discussed above could theoretically create exposure for landlords who fail to reduce the spread of COVID-19 throughout their rental properties. See Schnepf, Safety Versus Discrimination, supra; see also Reicheneker, Supra.
It is foreseeable the assurances of the implied warranty of habitability and limited circumstances of imputation of premises liability may be extended to encompass protecting tenants and their patrons from spreading COVID-19 because the virus presents a direct threat to public health and safety. It follows that an outbreak of the virus on rental properties could render a property uninhabitable and poses the real threat of substantial lawsuits amongst and against tenants and landlords alike. What steps should landlords take to ensure the safety of their tenants and the habitability of their rental properties?
Should landlords of commercial rental properties require their employees to receive vaccinations to mitigate the spread of COVID-19? The Equal Employment Opportunity Commission states that employers may implicate vaccination policies as a qualification for employment. The Occupational Safety and Health Administration suggests employers have the vaccine available to eligible employees, either at no or low cost, and supplemental information about the vaccines. See ABA, COVID-19 Vaccines Prompt Different Questions for Employers and Employees (Feb. 20, 2021), available at https://www.americanbar.org/news/abanews/aba-news-archives/2021/02/covid-19-vaccines-prompt-different-questions-for-employers-and-e/.
Who is exempt from an employee mandated vaccine? Employers must engage in a process that considers reasonable accommodations for individuals with disability, those that are susceptible to the vaccine, or someone who has a religious objection. If an employer is unable to make a reasonable accommodation to an employee, they should consider granting leave to the employee. In doing so, employers should consider the following: Can the employee be granted a period of leave until the threat of COVID ceases? Is the employee eligible for leave under the Family Medical Leave Act? Does the employer have generally applicable workplace leave policies that could be used to allow the employee to take leave until the situation in the country changes? Id.
The impact of COVID-19 has created a less than favorable housing situation for tenants and landlords alike. Nebraska’s Temporary Residential Eviction Relief Executive Order, acting as a moratorium on evictions, is set to expire on May 31, 2021. Further, the Center for Disease Control’s eviction moratorium shall expire after June 30, 2021. When these moratoriums lapse, an influx of evictions is likely because of COVID-19’s impact on employment, health, and the overall economy. See Claire Corea, Tenants’ Right: The Law on Paper Versus the Law in Practice, 47 Rutgers L. Rec. 226, 254 (2020). Likewise, as the funds from governmental programs which have subsidized the market begin to run out, and as more companies continue to implement work-from-home strategies, it could reasonably be expected that the availability of replacement commercial tenants to fill those spaces would be less abundant than in recent years. Therefore, it is important for landlords and tenants alike to be aware of not only the market shifts, but also the changes in their duties and potential exposure to liability stemming from the resulting litigation.