Lower risk of being targetted for lawsuit in commercial RE

[Howard Yang]

Trying to evaluate the benefits of NNN single tenant investments so have a few questions:

1. Are landlords of commercial real estate (especially single tenant NNN lease) less likely to be a target of lawsuits? I'm guessing since the tenant profile are completely different (corporate/businesses vs regular residents) can one assume it's a lower risk in general?

2. Related but different topic, say you bought a property and rented out (NNN) to KFC. If a KFC customer slipped on the property and wanted to sue everyone, would the landlord be just as vulnerable to be judged at fault vs if the property is a multi-family instead (assuming the same cause of injury)? Would the injured customer's attorney try to target KFC first since that's where they can extract the most benefits?

Thanks in advance!

[Jessica Zolotorofe]

1) no one is immune from lawsuits, sadly, but there is usually a waiver of subrogation and an indemnification provision in true NNN leases so that the landlord's costs and defense are handled by the tenant. If it's not a NNN property, or the landlord has any common area maintenance obligations, they obviously have liability for insuring and maintaining those areas, so any injury that happens on the common area is the landlord's issue.

2) Same answer, really. Depends on who in the lease is responsible for the maintenance of the property. In a KFC lease, tenant most likely is responsible for sidewalks and parking lots, etc. in a multifamily, you are likely liable for anything that happens in the common areas.