The Leasing Hotline

WITHOLDING OF RENT

A tenant's obligation to pay rent is an independent obligation absent a set-off clause in the lease. Green 440 Ninth LLC v. Duane Reade, NY County Clerk's No. 570308/04, Supreme Court of New York, Appellate Term, First Department, Dec. 1, 2005.

The tenant occupied three floors of the landlord's premises and also occupied other space in the building, including the basement, under a sublease agreement. A pipe burst in the portion of the premises covered by the main lease, and the tenant began to withhold rent. After other proceedings initiated by the tenant, the landlord commenced a nonpayment proceeding, and the tenant asserted that it was entitled to damages because it was the landlord's negligence that caused the pipe to burst.

The landlord moved for summary judgment, arguing that the tenant's defense was barred by the rule of independent covenants, and absent a set-off clause in the lease, the tenant was not entitled to withhold rent. The court held that the tenant's withholding of rent while in possession of the premises was a violation of a fundamental covenant of the lease, regardless of any breach by the landlord. Furthermore, the tenant failed to raise an issue of fact as to whether it was partially evicted ' constructively and/or actually ' from any of the space rented under the main lease.

GUARANTY OF LEASE

A guaranty is unenforceable if it is made subsequent to the original lease and unsupported by new consideration or if amendments to the lease are executed without the guarantor's knowledge or consent. Birts v. Mott, Civil Action No. SA-03-CA-1127-XR, U.S. District Court for the Western District of Texas, San Antonio Division, Feb. 6, 2006.

The landlord and tenant executed a 20-year lease for the tenant to operate a restaurant on the landlord's property. Thereafter, the landlord and tenant entered into a series of amendments to the lease. In addition, Levenson and others guaranteed complete and prompt payment of the rent; however, the guaranties were not executed simultaneously with the lease agreement. Thereafter, the tenant breached the lease by failing to make rental payments, and the landlord commenced an action against all the guarantors, including Levenson. The claims against the other guarantors were dismissed, but the landlord claimed that Levenson, under the initial lease, had given his personal guaranty for 50% of the obligations for a period of 7 years from the commencement date of the lease. Levenson moved for summary judgment, arguing that the guaranty was made subsequent to the original lease, was unsupported by any additional consideration, and had been amended several times without his consent after it was executed.

The court granted summary judgment. It held that if the promise of the guarantor is entered into independently of the transaction that creates the primary debt (here, the lease) then the guaranty must be supported by consideration distinct from that of the primary debt. Furthermore, even if the guaranty had been executed simultaneously with the lease, summary judgment was appropriate because Levenson never approved ' and was not even aware ' of the amendments to the original lease.

WITHOLDING OF RENT

A tenant's obligation to pay rent is an independent obligation absent a set-off clause in the lease. Green 440 Ninth LLC v. Duane Reade, NY County Clerk's No. 570308/04, Supreme Court of New York, Appellate Term, First Department, Dec. 1, 2005.

The tenant occupied three floors of the landlord's premises and also occupied other space in the building, including the basement, under a sublease agreement. A pipe burst in the portion of the premises covered by the main lease, and the tenant began to withhold rent. After other proceedings initiated by the tenant, the landlord commenced a nonpayment proceeding, and the tenant asserted that it was entitled to damages because it was the landlord's negligence that caused the pipe to burst.

The landlord moved for summary judgment, arguing that the tenant's defense was barred by the rule of independent covenants, and absent a set-off clause in the lease, the tenant was not entitled to withhold rent. The court held that the tenant's withholding of rent while in possession of the premises was a violation of a fundamental covenant of the lease, regardless of any breach by the landlord. Furthermore, the tenant failed to raise an issue of fact as to whether it was partially evicted ' constructively and/or actually ' from any of the space rented under the main lease.

GUARANTY OF LEASE

A guaranty is unenforceable if it is made subsequent to the original lease and unsupported by new consideration or if amendments to the lease are executed without the guarantor's knowledge or consent. Birts v. Mott, Civil Action No. SA-03-CA-1127-XR, U.S. District Court for the Western District of Texas, San Antonio Division, Feb. 6, 2006.

The landlord and tenant executed a 20-year lease for the tenant to operate a restaurant on the landlord's property. Thereafter, the landlord and tenant entered into a series of amendments to the lease. In addition, Levenson and others guaranteed complete and prompt payment of the rent; however, the guaranties were not executed simultaneously with the lease agreement. Thereafter, the tenant breached the lease by failing to make rental payments, and the landlord commenced an action against all the guarantors, including Levenson. The claims against the other guarantors were dismissed, but the landlord claimed that Levenson, under the initial lease, had given his personal guaranty for 50% of the obligations for a period of 7 years from the commencement date of the lease. Levenson moved for summary judgment, arguing that the guaranty was made subsequent to the original lease, was unsupported by any additional consideration, and had been amended several times without his consent after it was executed.

The court granted summary judgment. It held that if the promise of the guarantor is entered into independently of the transaction that creates the primary debt (here, the lease) then the guaranty must be supported by consideration distinct from that of the primary debt. Furthermore, even if the guaranty had been executed simultaneously with the lease, summary judgment was appropriate because Levenson never approved ' and was not even aware ' of the amendments to the original lease.