Under the Court of Appeals’ decision in Putnam v. Stout, 38 N.Y.2d 607 (1976), an out-of-possession property owner is not liable for injuries sustained on its property unless it (1) is contractually obligated by lease or otherwise to make repairs or maintain the premises, or (2) has a contractual right to re-enter, inspect and make needed repairs, and liability is based on a significant structural or design defect that is contrary to a specific statutory safety provision.
The question in this case is whether an out-of-possession property owner satisfies this standard by agreeing to maintain the property in “good repair and condition” in an agreement with someone other than the lessee.
In this case, plaintiff was injured on the job working at a nursing home operated by the Grand Manor Nursing & Rehabilitation Center in a facility that it leased from defendant Hamilton Equities. Hamilton Equites obtained a mortgage to build the facility, as well as a mortgage guarantee from the U.S. Department of Housing and Urban Development (HUD), in which Hamilton Equities agreed to maintain the mortgaged premises in “good repair and condition.” In litigation to recover for her injuries, plaintiff argued that this provision of the mortgage guarantee constituted a contractual obligation to maintain the facility depriving out-of-possession owner Hamilton Equities of its general immunity from suit under Putnam.
Supreme Court disagreed and granted defendant summary judgment dismissing plaintiff’s claims. The First Department affirmed, noting that the provision in the HUD guarantee was not intended to benefit injured third parties and that Putnam’s rationale applied only where an out-of-possession owner had a contractual maintenance obligation directly with the lessor.
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