THE LEASING HOTLINE

The tenant injured his back when his foot went through a board in the deck, and he fell. The tenant sued the landlord for breach of contract and negligence. The landlord moved for summary judgment, arguing there was no duty to repair or maintain the deck. The court granted the landlord's motion and the tenant appealed. On appeal, the motion for summary judgment was reversed. The court held that summary judgment could only be granted if there were no triable issues of fact. Even though a landlord is protected by a general rule of non-liability, here, the court held that the language in the parties' lease regarding maintenance of the 'exterior' of the property was vague and ambiguous. Moreover, because the landlord arranged for an employee to inspect and repair the deck, he may have removed himself from the protection of the general rule of non-liability.

NOTICE OF TERMINATION

A tenant is entitled to injunctive relief against a Notice of Termination where the notice fails to state the purpose of the termination and where the tenant will suffer irreparable harm without the injunctive relief. Oriburger, Inc., v. B.W.H.N.V. Associates, No. 367, N.Y. App. Div. 1st Dept., May 22, 2003

The tenant and landlord entered into a 10-year lease agreement in January 1980. In 1981, the parties extended the lease for another 10 years. In the 1981 lease, the parties provided that the landlord was entitled to demolish the leased premises by giving the tenant one year's notice and a payment of $300,000. In 1988, the parties extended the lease to the year 2010. They also amended the demolition clause to provide that if the landlord terminated the lease after August 1, 1991 but before January 30, 2000, the tenant was entitled to a payment of $300,000, but if the landlord terminated the lease after January 30, 2000, the tenant would not receive the payment.

On March 2, 2001, the landlord served the tenant with a Notice of Termination of Lease, stating that the landlord intended to terminate the lease as of March 7, 2002. The Notice of Termination did not state that the landlord intended to demolish the premises. The tenant then commenced an action seeking a declaration that the Notice was void because it contained no notice that the building was to be demolished. The tenant moved for a stay of the Notice. Even though the landlord never answered the tenant's complaint or cross-moved for summary judgment, the trial court issued a judgment and order disposing of the tenant's claims. The tenant appealed and the appellate court reversed. It held that issues of fact existed regarding whether the Notice was sufficient to terminate the tenancy. It considered that no proof was offered that termination of the building was imminent; furthermore, certain facts presented by the tenant indicated that demolition was prohibited until at least the year 2007. The tenant was entitled to a stay of the running of the notice because it showed a probability of success and a danger of irreparable injury if the injunction was not granted.

COUNTERCLAIM

In a commercial summary process action in Massachusetts, a tenant cannot counterclaim for monies owed by the landlord; the proper procedure is to commence a separate action and move to consolidate the two actions based upon the same subject matter. Fafard v. Lincoln Pharmacy of Milford, SJC-08887, Sup. Judicial Court of Massachusetts, June 4, 2003.

The parties entered into a one-year commercial lease in October, 1983. The form lease had certain provisions deleted, including a section regarding the tenant's obligation to pay real estate taxes. In addition, the lease contained an option to purchase the premises, for which the tenant paid a deposit. The tenant also supplied funds toward the construction of an access road from the building to a state road. The tenant made one payment of real estate taxes on the property and thereafter ceased the payments. The tenant discontinued rent payments after April, 1990. The landlord served a Notice to Quit for failure to pay rent in May, 1992, and the tenant vacated the premises on October 15, 1992. Thereafter, the landlord sued the tenant in district court and the tenant answered and counterclaimed for monies the landlord allegedly owed the tenant. The landlord was awarded $8,100, for rent due, less the monies paid by the tenant for the real estate taxes, the deposit for the option to purchase and the cost of the road improvement. The landlord appealed to the superior court, and the superior court reversed and awarded the landlord $82,741.41 without any reduction to the tenant for the monies claimed in the tenant's counterclaim. The tenant appealed the decision of the superior court, and the appellate court affirmed the decision of the superior court. It held that under Massachusetts law, the tenant was not procedurally entitled to counterclaim in a commercial summary process action. It held that the proper procedure was for the tenant to commence his own action and then move to consolidate the actions based upon the same subject matter.

RIGHT TO OUST SQUATTER

A squatter has no rights under a landlord-tenant relationship; however a squatter cannot be subject to forcible conduct to be removed from the landlord's premises. Visken v. Oriole Realty Corp., 2002-04578, N.Y. App. Div. 2d Dept., May 12, 2003.

On November 1, 1993, the prime month-to-month commercial tenant vacated the premises and the subtenant took over the leased space. The provisions of the original lease, which provided that the landlord could re-enter the premises upon nonpayment of rent 'by force or otherwise,' were binding on the prime tenant as a holdover month-to-month tenant and also on the subtenant. The subtenant claimed that after the prime tenant vacated the premises, the landlord permitted her to use the premises rent-free until June 1994. The landlord then denied the subtenant's request to stay until September 1994. Thereafter, the subtenant claimed that the superintendent of the building harassed her, including spraying the subtenant with mace and locking her in the building. The subtenant sued for illegal eviction. The trial court granted the landlord's motion for summary judgment, dismissing the complaint and the appellate court reversed in part. It held that there was no landlord-tenant relationship between the landlord and the subtenant. Therefore, the landlord had a common-law right as an owner to oust the subtenant as a squatter. However, because the subtenant alleged forcible conduct by the superintendent of the building, issues of fact existed as to whether the superintendent was an employee of the landlord or an independent contractor and whether the superintendent was acting within the scope of his employment when he allegedly engaged in the forcible conduct.

WAIVER

A landlord waived its right to receive annual financial statements and to object to unauthorized alterations. Langdon v. United Restaurants, Inc., WD#60707, Ct. of App. of Missouri, May 30, 2003

The landlord owned commercial property upon which a restaurant, Stanford & Sons, was situated. Throughout the 1970s and 1980s, the landlord leased the property to a tenant who operated Stanford & Sons. In 1990, the landlord negotiated a lease with United Restaurants to operate Stanford & Sons. The lease provided for a fixed minimum monthly rental for the property for a period of five years. The lease also provided that United Restaurants would pay the landlord a percentage rent in 'a sum equal to six (6) percent of the annual gross receipts, as hereafter provided, in excess of the sum of One Million Dollars ($1,000,000).' Annual gross receipts were defined as 'receipts from gross sales of United and of all licensees, concessionaires and tenants of United, from all businesses conducted upon or from the leased premises by United.' United was also obligated to provide the landlord with annual financial statements within 30 days after each calendar year, and United had the option to extend the lease for three additional five-year terms. In 1993, United leased additional adjoining space from a different landlord and utilized the space as a dance hall and dining club. In 1994, United leased another adjoining space for a billiard hall and built an entrance so that patrons could access the billiard hall from the restaurant. In 1996, United leased a third adjoining space and created a comedy club. United failed to provide annual financial statements and also failed to pay the percentage rent to the landlord. The landlord filed a petition against United for failure to pay rent and provide the financial statements and for making unauthorized alterations to the leased premises. The court found in favor of United. It held that no percentage rent was due because the gross receipts from the restaurant alone did not exceed $1 million. It further held that because the landlord took no action from 1991 to 1996 regarding United's failure to provide financial statements and because it took no action when United altered the property, the landlord had waived those provisions in the lease. In affirming the decision of the trial court, the appellate court considered that at the time the lease agreement was drafted, the landlord was aware that Standford & Sons had been expanded into the other leased spaces and could have included its intention regarding the calculation of percentage rent. The appellate court further considered that the landlord waived the obligation of United to provide financial statements when it continued to accept rent payments even though United failed to comply with the lease terms regarding the submission of financial statements.

TERMINATION

A lease is effectively terminated when a landlord fails to make necessary repairs and remedy problems, including insects and rodents, in a timely fashion; no formal notice is required if the tenant effectively notifies the landlord of the problems with the leased space. Glimcher Partners v. The Board of the State Teachers Retirement System of Ohio, No 02AP1115; Ct. App. Ohio, Tenth App. Dist., Franklin Co., May 20, 2003.

The parties entered into a lease agreement for prime office space. After the plaintiff-tenant moved into the office space, the employees of the tenant began to detect and complain of various problems with the leased space, including water damage and leakage, elevator malfunctions, insects, rodents and odors. The landlord failed to make the necessary repairs in a timely manner, and the tenant filed a lawsuit seeking a declaration that the lease was effectively terminated. The trial court determined that the lease between the parties was effectively terminated because all of the prerequisites for effective termination had been proven. The appellate court affirmed, finding that the problems cited by the tenant were not immaterial breaches of the contract, that the landlord failed to cure the breaches in a timely fashion, and failed to pursue remedies to cure its default diligently. The appellate court also considered that the tenant did not waive its rights under the lease and, in fact, had repeatedly requested that the landlord make all necessary repairs and remedies. In addition, the tenant was not obligated to refer to any specific lease provision in its notice to terminate because the tenant had sufficiently advised the landlord in various letters of its breaches and defaults under the lease.

LEASES

A personal guaranty terminated when the tenant held over on a month-to-month basis; the statute of limitations barred the landlord from recovering rent from the tenant. Tartsinis v. Porter, CV020078127, Conn.Super.Ct., May 1, 2003.

The plaintiff-landlord and defendant-tenant entered into one-year lease in a shopping center with an option to extend for an additional two years. At the end of the first three-year period, the parties entered into a second lease for a period of two years, with an option to extend the lease for an additional three years. The leases required the tenant to personally guarantee payment of rent. After the second lease extension period expired, the tenant continued to occupy the premises on a month-to-month basis as provided for in the second lease. Three years after the expiration of the second lease extension, the landlord notified the tenant that there would be an increase in rent. The tenant continued to pay the original rent, but not the increased rent as requested by the landlord. The tenant argued that there was no personal guaranty on the rent once the second lease extension expired. The landlord sued, claiming breach of contract and unjust enrichment. The court determined that whether the personal guaranty extended beyond the termination of the second lease extension depended on the language of the lease and the intent of the parties. Because the lease only provided for a guaranty during the time of the lease and not the holdover month-to-month tenancy, the court could not find that there was a personal guaranty by the tenant for the period after the second lease expired. Although the lease did state that the guaranty would cover an 'extension of time' as provided by the landlord, the language in the lease was unambiguous and only covered the three-year optional period remaining on the lease after the expiration of the two-year term of the second lease. The court then turned to the tenant's statute of limitations defense. It held that because the guaranty expired at the time the extension period of the second lease ended, it was from that point that the statute of limitations began to run against the landlord. Because the time limit to commence a contract action against the tenant was six years, and the landlord had waited 10 years to commence the action, the court dismissed the action and declined to hear the other claims of the parties.

DUTY TO REPAIR

A commercial landlord may create a duty to repair where an employee of the landlord undertakes maintenance on the property's exterior and where 'exterior' is ambiguously defined in the lease. Denton v. Pennington, CA02-1033, Ct. of App. of Arkansas, Division 4, May 14, 2003.

A lease for office space provided that the landlord was responsible for maintaining the 'exterior' of the leased space. Outside the tenant's office space there was a wooden deck. An employee of the landlord would inspect and repair nails that were protruding from the deck.

The tenant injured his back when his foot went through a board in the deck, and he fell. The tenant sued the landlord for breach of contract and negligence. The landlord moved for summary judgment, arguing there was no duty to repair or maintain the deck. The court granted the landlord's motion and the tenant appealed. On appeal, the motion for summary judgment was reversed. The court held that summary judgment could only be granted if there were no triable issues of fact. Even though a landlord is protected by a general rule of non-liability, here, the court held that the language in the parties' lease regarding maintenance of the 'exterior' of the property was vague and ambiguous. Moreover, because the landlord arranged for an employee to inspect and repair the deck, he may have removed himself from the protection of the general rule of non-liability.

NOTICE OF TERMINATION

A tenant is entitled to injunctive relief against a Notice of Termination where the notice fails to state the purpose of the termination and where the tenant will suffer irreparable harm without the injunctive relief. Oriburger, Inc., v. B.W.H.N.V. Associates, No. 367, N.Y. App. Div. 1st Dept., May 22, 2003

The tenant and landlord entered into a 10-year lease agreement in January 1980. In 1981, the parties extended the lease for another 10 years. In the 1981 lease, the parties provided that the landlord was entitled to demolish the leased premises by giving the tenant one year's notice and a payment of $300,000. In 1988, the parties extended the lease to the year 2010. They also amended the demolition clause to provide that if the landlord terminated the lease after August 1, 1991 but before January 30, 2000, the tenant was entitled to a payment of $300,000, but if the landlord terminated the lease after January 30, 2000, the tenant would not receive the payment.

On March 2, 2001, the landlord served the tenant with a Notice of Termination of Lease, stating that the landlord intended to terminate the lease as of March 7, 2002. The Notice of Termination did not state that the landlord intended to demolish the premises. The tenant then commenced an action seeking a declaration that the Notice was void because it contained no notice that the building was to be demolished. The tenant moved for a stay of the Notice. Even though the landlord never answered the tenant's complaint or cross-moved for summary judgment, the trial court issued a judgment and order disposing of the tenant's claims. The tenant appealed and the appellate court reversed. It held that issues of fact existed regarding whether the Notice was sufficient to terminate the tenancy. It considered that no proof was offered that termination of the building was imminent; furthermore, certain facts presented by the tenant indicated that demolition was prohibited until at least the year 2007. The tenant was entitled to a stay of the running of the notice because it showed a probability of success and a danger of irreparable injury if the injunction was not granted.

COUNTERCLAIM

In a commercial summary process action in Massachusetts, a tenant cannot counterclaim for monies owed by the landlord; the proper procedure is to commence a separate action and move to consolidate the two actions based upon the same subject matter. Fafard v. Lincoln Pharmacy of Milford, SJC-08887, Sup. Judicial Court of Massachusetts, June 4, 2003.

The parties entered into a one-year commercial lease in October, 1983. The form lease had certain provisions deleted, including a section regarding the tenant's obligation to pay real estate taxes. In addition, the lease contained an option to purchase the premises, for which the tenant paid a deposit. The tenant also supplied funds toward the construction of an access road from the building to a state road. The tenant made one payment of real estate taxes on the property and thereafter ceased the payments. The tenant discontinued rent payments after April, 1990. The landlord served a Notice to Quit for failure to pay rent in May, 1992, and the tenant vacated the premises on October 15, 1992. Thereafter, the landlord sued the tenant in district court and the tenant answered and counterclaimed for monies the landlord allegedly owed the tenant. The landlord was awarded $8,100, for rent due, less the monies paid by the tenant for the real estate taxes, the deposit for the option to purchase and the cost of the road improvement. The landlord appealed to the superior court, and the superior court reversed and awarded the landlord $82,741.41 without any reduction to the tenant for the monies claimed in the tenant's counterclaim. The tenant appealed the decision of the superior court, and the appellate court affirmed the decision of the superior court. It held that under Massachusetts law, the tenant was not procedurally entitled to counterclaim in a commercial summary process action. It held that the proper procedure was for the tenant to commence his own action and then move to consolidate the actions based upon the same subject matter.

RIGHT TO OUST SQUATTER

A squatter has no rights under a landlord-tenant relationship; however a squatter cannot be subject to forcible conduct to be removed from the landlord's premises. Visken v. Oriole Realty Corp., 2002-04578, N.Y. App. Div. 2d Dept., May 12, 2003.

On November 1, 1993, the prime month-to-month commercial tenant vacated the premises and the subtenant took over the leased space. The provisions of the original lease, which provided that the landlord could re-enter the premises upon nonpayment of rent 'by force or otherwise,' were binding on the prime tenant as a holdover month-to-month tenant and also on the subtenant. The subtenant claimed that after the prime tenant vacated the premises, the landlord permitted her to use the premises rent-free until June 1994. The landlord then denied the subtenant's request to stay until September 1994. Thereafter, the subtenant claimed that the superintendent of the building harassed her, including spraying the subtenant with mace and locking her in the building. The subtenant sued for illegal eviction. The trial court granted the landlord's motion for summary judgment, dismissing the complaint and the appellate court reversed in part. It held that there was no landlord-tenant relationship between the landlord and the subtenant. Therefore, the landlord had a common-law right as an owner to oust the subtenant as a squatter. However, because the subtenant alleged forcible conduct by the superintendent of the building, issues of fact existed as to whether the superintendent was an employee of the landlord or an independent contractor and whether the superintendent was acting within the scope of his employment when he allegedly engaged in the forcible conduct.

WAIVER

A landlord waived its right to receive annual financial statements and to object to unauthorized alterations. Langdon v. United Restaurants, Inc., WD#60707, Ct. of App. of Missouri, May 30, 2003

The landlord owned commercial property upon which a restaurant, Stanford & Sons, was situated. Throughout the 1970s and 1980s, the landlord leased the property to a tenant who operated Stanford & Sons. In 1990, the landlord negotiated a lease with United Restaurants to operate Stanford & Sons. The lease provided for a fixed minimum monthly rental for the property for a period of five years. The lease also provided that United Restaurants would pay the landlord a percentage rent in 'a sum equal to six (6) percent of the annual gross receipts, as hereafter provided, in excess of the sum of One Million Dollars ($1,000,000).' Annual gross receipts were defined as 'receipts from gross sales of United and of all licensees, concessionaires and tenants of United, from all businesses conducted upon or from the leased premises by United.' United was also obligated to provide the landlord with annual financial statements within 30 days after each calendar year, and United had the option to extend the lease for three additional five-year terms. In 1993, United leased additional adjoining space from a different landlord and utilized the space as a dance hall and dining club. In 1994, United leased another adjoining space for a billiard hall and built an entrance so that patrons could access the billiard hall from the restaurant. In 1996, United leased a third adjoining space and created a comedy club. United failed to provide annual financial statements and also failed to pay the percentage rent to the landlord. The landlord filed a petition against United for failure to pay rent and provide the financial statements and for making unauthorized alterations to the leased premises. The court found in favor of United. It held that no percentage rent was due because the gross receipts from the restaurant alone did not exceed $1 million. It further held that because the landlord took no action from 1991 to 1996 regarding United's failure to provide financial statements and because it took no action when United altered the property, the landlord had waived those provisions in the lease. In affirming the decision of the trial court, the appellate court considered that at the time the lease agreement was drafted, the landlord was aware that Standford & Sons had been expanded into the other leased spaces and could have included its intention regarding the calculation of percentage rent. The appellate court further considered that the landlord waived the obligation of United to provide financial statements when it continued to accept rent payments even though United failed to comply with the lease terms regarding the submission of financial statements.

TERMINATION

A lease is effectively terminated when a landlord fails to make necessary repairs and remedy problems, including insects and rodents, in a timely fashion; no formal notice is required if the tenant effectively notifies the landlord of the problems with the leased space. Glimcher Partners v. The Board of the State Teachers Retirement System of Ohio, No 02AP1115; Ct. App. Ohio, Tenth App. Dist., Franklin Co., May 20, 2003.

The parties entered into a lease agreement for prime office space. After the plaintiff-tenant moved into the office space, the employees of the tenant began to detect and complain of various problems with the leased space, including water damage and leakage, elevator malfunctions, insects, rodents and odors. The landlord failed to make the necessary repairs in a timely manner, and the tenant filed a lawsuit seeking a declaration that the lease was effectively terminated. The trial court determined that the lease between the parties was effectively terminated because all of the prerequisites for effective termination had been proven. The appellate court affirmed, finding that the problems cited by the tenant were not immaterial breaches of the contract, that the landlord failed to cure the breaches in a timely fashion, and failed to pursue remedies to cure its default diligently. The appellate court also considered that the tenant did not waive its rights under the lease and, in fact, had repeatedly requested that the landlord make all necessary repairs and remedies. In addition, the tenant was not obligated to refer to any specific lease provision in its notice to terminate because the tenant had sufficiently advised the landlord in various letters of its breaches and defaults under the lease.

LEASES

A personal guaranty terminated when the tenant held over on a month-to-month basis; the statute of limitations barred the landlord from recovering rent from the tenant. Tartsinis v. Porter, CV020078127, Conn.Super.Ct., May 1, 2003.

The plaintiff-landlord and defendant-tenant entered into one-year lease in a shopping center with an option to extend for an additional two years. At the end of the first three-year period, the parties entered into a second lease for a period of two years, with an option to extend the lease for an additional three years. The leases required the tenant to personally guarantee payment of rent. After the second lease extension period expired, the tenant continued to occupy the premises on a month-to-month basis as provided for in the second lease. Three years after the expiration of the second lease extension, the landlord notified the tenant that there would be an increase in rent. The tenant continued to pay the original rent, but not the increased rent as requested by the landlord. The tenant argued that there was no personal guaranty on the rent once the second lease extension expired. The landlord sued, claiming breach of contract and unjust enrichment. The court determined that whether the personal guaranty extended beyond the termination of the second lease extension depended on the language of the lease and the intent of the parties. Because the lease only provided for a guaranty during the time of the lease and not the holdover month-to-month tenancy, the court could not find that there was a personal guaranty by the tenant for the period after the second lease expired. Although the lease did state that the guaranty would cover an 'extension of time' as provided by the landlord, the language in the lease was unambiguous and only covered the three-year optional period remaining on the lease after the expiration of the two-year term of the second lease. The court then turned to the tenant's statute of limitations defense. It held that because the guaranty expired at the time the extension period of the second lease ended, it was from that point that the statute of limitations began to run against the landlord. Because the time limit to commence a contract action against the tenant was six years, and the landlord had waited 10 years to commence the action, the court dismissed the action and declined to hear the other claims of the parties.