In a lease, parties can allocate risk as they choose – and often do. Risk need not follow fault, though it often does. So, the question is: how should allocating the risk of environmental liability work as between a landlord and its tenant?

For simplicity, we’ll assume that the landlord we’re talking about owns the property in question. We’ll also assume that we’re not speaking of a ground lease or similar arrangement, though many of our thoughts are equally applicable to such arrangements.

When it comes to allocating the risk of environmental liability between a landlord and its tenant, Ruminations thinks risk (call that: responsibility) should follow fault. We’ve said “between a landlord and its tenant” a couple of times because our thoughts certainly won’t change the way the law allocates such responsibility. [Read more…]