A recent Appellate Division decision has contributed to the ever-expanding volume of NJ sidewalk liability law. Before we delve into the case, let us quickly review the law. In the landmark case, Stewart v. 104 Wallace St., Inc., the NJ Supreme Court held that commercial property owners owe a duty to pedestrians to maintain their sidewalks in reasonably good condition. In Stewart, the Court left the traditional ?no liability rule? for residential property owners undisturbed. According to the ?no liability rule,? a residential property owner is not liable for sidewalk injuries unless the he or his predecessor in title participated in the creation or continuance of the defective sidewalk.

In the recent case Grijalba v. Floro, the appellate court dealt with the often litigated issue of what qualifies as a ?commercial property? under Stewart. In Grijalba, the plaintiff claimed to have fallen on an ice-covered sidewalk abutting a two-family home. The NJ case law is fairly well-settled, that an owner-occupied two-unit residential house will be deemed ?residential? for purposes of sidewalk liability. However, the Grijalba?case was slightly different and dealt with a situation where the owner was living in the basement and rented both main units on the first and second floor (essentially an owner-occupied three family home).

The trial court found essentially no difference between an owner-occupied two or three family home and dismissed the case. The plaintiff appealed and as with all these cases emphasized that,

The theme emerging from our decisions in such matters is whether a properties predominant use has the capacity to generate income, regardless of whether an actual profit is obtained through its use.

The appellate court declined to adopt a ?bright line? rule that owner-occupied two and three family homes are always residential. Instead the court stated that the decision must be made by the trial court on a case-by-case basis. The appellate court then concluded that it did not have enough information to determine whether the property should be properly classified as commercial or residential and sent the case back to the trial court for further development of the record.

The Appellate Division did, however, give some guidance as to what type of information was lacking, including (a) whether the owner is occupying the home consistently, (b) whether the property is owned for an investment or business purpose, and (c) ?whether the property has a capacity to generate income.

A fair reading of the opinion would suggest that the Appellate Division did not intend to upset the normal order, i.e., that a two-family, owner-occupied home would generally be considered residential. The tipping point, in terms of units, therefore, seems to be three. When the structure contains three units, even if one is owner-occupied, a more substantive analysis of the use of the premises will be required before the court can dismiss the case.

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