Legal landscape note: This article was originally published in 2015 and describes the law as it stood at that time. New Jersey law changes frequently.
You tour a bank-owned house with your real estate agent, and a hazard the bank never bothered to fix sends you to the emergency room. Does the bank answer for that, even though no one from the bank has set foot in the property for months? A U.S. Magistrate Judge in New Jersey said yes: Wells Fargo, as the owner of a foreclosed home it was marketing for sale, had a duty to guard visitors against dangerous conditions. The bank argued that its inventory of foreclosed properties was too large to inspect each day, and the judge accepted that daily visits were impractical -- but held that the bank was still the homeowner, with a homeowner's duty to protect the people it invites onto the property.
Defendant Wells Fargo argued that it had no relationship with the homebuyer, that it had no knowledge of the broken glass that was said to have caused the accident and that requiring owners of foreclosed properties to conduct daily inspections would set a dangerous precedent.
But U.S. Magistrate Judge Michael Hammer of the District of New Jersey rejected the bank's argument, finding it had a duty of care.
Lenders taking possession of a residential property in foreclosure assume the owner's nondelegable duty to protect business invitees from reasonably foreseeable injuries due to dangerous conditions, Hammer said. The claim that the bank had no relationship to the plaintiffs is unavailing because Wells Fargo derived a benefit from marketing the house for sale and inviting plaintiffs onto the property, the judge said.
Hammer also rejected Wells Fargo's argument that the broken glass was not a foreseeable condition. According to Hammer, police in South Orange, N.J., reported roughly a month before the accident that a squatter had broken in and was living in the house. Therefore, it was reasonably foreseeable that the vacant property was vulnerable to damage that could harm an invitee, Hammer said.
U.S. District Judge Faith Hochberg of the District of New Jersey had referred the motions to Hammer, and his ruling will stand unless a party asks the district judge to review it.
Plaintiff Anna Charlton struck her face and body and suffered serious and permanent injuries in the fall in a second-floor bathroom at the house, according to Hammer's opinion. The glass apparently came from a broken light fixture, according to court documents. Charlton's husband, Gary Francione, was also present when the accident took place, in August 2010. Francione is a professor and Charlton an adjunct professor at Rutgers School of Law-Newark.
Wells Fargo claimed the real estate agent's failure to inspect the property before showing it and failure to correct the alleged hazard constituted a superseding intervening cause of the plaintiff's injury, which absolved Wells Fargo of any liability.
Hammer recognized that Wells Fargo could not visit all of its foreclosed properties every day, but said that does not provide a bar to an owner's duty to exercise reasonable care. The bank could have exercised care by hiring a third party to perform regular inspections, Hammer said.
"Certainly, even a vacant owner is in a superior position to ensure the property is adequately maintained than the invitee, who has neither the ability nor the duty to ensure there was no dangerous condition on the property," Hammer said.
Henry Furst of Furst & Lurie in Montclair, N.J., who represented the plaintiffs, said discovery is complete and the case is ready for trial in light of Hammer's ruling.