Commercial Leasing: Responding to a Notice of Public Nuisance
Owners of leased commercial properties face the risk of being held responsible for the manner in which a tenant uses the property. Oftentimes, these risks are addressed through mandated insurance coverage and contractual provisions requiring the tenant to indemnify the landlord for specified liabilities. One common example can be found in provisions addressing the owner’s liability in the event the tenant’s customer is injured by a fall on the premises. For certain uses, however, there is another form of risk that is not always anticipated or provided for contractually – if the tenant uses the property in a manner that public authorities allege to constitute a public nuisance, then the owner is at risk of having its property seized, or having permanent or temporary restrictions imposed judicially on the use of the property. In addition, North Carolina’s public nuisance laws allow for civil penalties (including payment of costs and attorneys’ fees) to be imposed, liens to be attached, leases to be invalidated, and restraining orders and injunctions to be issued.
A public nuisance is broadly defined in Chapter 19 of the North Carolina General Statutes and applies to property that is owned, leased, or used for the purpose of a wide variety of activities including, but not limited to, prostitution, gambling, and illegal possession or sale of alcoholic beverages and/or controlled substances. A public nuisance can also occur when a “breach of the peace” repeatedly occurs in or on the property. A breach of the peace can include fights, assaults, shootings, communicating threats, and unlawful possession of dangerous or deadly weapons. Based on these criteria, properties used for nightclubs and sexually-oriented businesses are most at risk for becoming the subject of a public nuisance abatement action. Commercial landlords are accordingly advised to proceed with caution when leasing property for one of these uses, or when entering into a lease with a broad use clause that fails to rule out these uses.
North Carolina law gives the Attorney General, district attorneys, local governments, and even private citizens the right to seek court action to abate or stop public nuisances. A commercial landlord will generally receive notice of a public nuisance before any civil action is commenced. The notice of public nuisance will likely have a request or demand that the activities complained about cease and/or be eliminated by a certain date. If the landlord is able to bring an end to the alleged public nuisance, then the complaining party may refrain from filing a court action; however, the abatement of a nuisance does not preclude anyone from recovering damages for any past nuisances that existed on the property. And if the tenant refuses to cooperate, the owner may be faced with an unpleasant choice between bringing legal action against its tenant or defending a nuisance abatement action brought against it by governmental authorities.
North Carolina’s public nuisance laws are fairly broad and susceptible to varying interpretations from one local jurisdiction to another, which can place commercial landlords in a difficult position. Some jurisdictions have a track record of aggressively invoking the public nuisance laws whereas others are reticent to do so. One thing is certain, however: A public nuisance proceeding (whether threatened or actually initiated) must be taken seriously because it can result in judicial orders and injunctions capable of having a major detrimental impact on the landlord’s business interests. A commercial landlord in receipt of notice of a threatened or actual public nuisance abatement action targeting its property should immediately seek legal advice from an attorney experienced in land use litigation, commercial leasing, and zoning law to ensure that his or her rights are protected.