The Leasing Hotline

The landlord moved for summary judgment, and the motion was granted.

Humphrey appealed, and the appellate court affirmed. It held that typically a commercial tenant is responsible for all maintenance under a lease except for common areas or other areas appurtenant to the leased area. It further held that a small commercial tenant is no different from a larger commercial tenant. Moreover, unlike a residential tenant, a small commercial tenant is not entitled to heightened protection under its lease. It held that even a small commercial tenant has a financial interest in the property it leases for commercial purposes and should have an incentive to maintain or improve the property.

Landlord Did Not Waive Right to Holdover Rate

A landlord did not waive its right to collect a higher holdover rental rate by billing the tenant at a lower rate. Elite Gold, Inc. v. TT Jewelry Outlet Corp. et al., 8073, 8074, Index No. 108707/04, Supreme Court of New York, Appel-late Division, First Department, July 27, 2006.

The tenant rented a booth from the landlord from May 1, 2002 through April 30, 2003, at a monthly rate of $6500. The lease provided that if the tenant continued the lease, the rent would increase by 5%, but if the tenant continued to occupy the space as a holdover tenant, the landlord would be entitled to collect rent at a rate of one and one-half times the original rent.

After the expiration of the lease, no renewal lease was tendered, but the tenant continued to occupy the space as a month-to-month tenant. The landlord sent the bill at a rate of one and one-half times the original rent, but the tenant paid rent at an increased 5% rate rather than the higher rate.

After another 12 months, the landlord notified the tenant that because it had stayed on at the reduced rate, a lease was assumed and the landlord was entitled to rent for another 12 months. Alternatively, the landlord notified the tenant that it was entitled to rent at the higher rate. The landlord then commenced an action against the tenant to recover unpaid rent.

The court held that the landlord did not waive its right to collect the higher holdover rate by billing the tenant at the lower rate.

Tenant Need Not Operate in Two Locations to Violate Radius Restriction

A tenant who moves out of a shopping center complex can violate its radius restriction by opening a store at another location. Wells Fargo Bank Minnesota, N.A. v. Diamond Point Plaza L.P. ET AL., No. 1663, September Term, 2005, Court of Special Appeals of Maryland, Sept. 29, 2006.

The trustee represented the holders of the commercial mortgage for the landlord's loan. The tenant moved out of the shopping center complex, which caused the landlord to default. The landlord sued the trustee, alleging breach of contract based on a mortgage loan default, fraud, and misrepresentation regarding the loan, and conversion of funds. The trustee sued the tenant for breach of its lease.

The appellate court found that the trial court erred in granting the tenant's motion for summary judgment and determining that the tenant did not violate the radius restriction contained in the lease when it opened another location at another mall, which was within seven miles of the landlord's store. The court found that the trial judge had misconstrued the language in the lease by concluding that the restriction required the doors of both locations to be open for business. It also found that the lease was ambiguous, and that genuine issues of material fact existed in regard to whether the opening or closing of a store constituted a violation of the restriction. Moreover, the court found that the trial court erred in finding that the tenant was not liable to the trustee for attorneys' fees because the lease permitted recovery by the prevailing party.

Small Commercial Tenant Not Entitled to Extra Lease Protection

A small commercial tenant is not entitled to heightened protection under a lease. Humphrey v. Byron, SJC-09449, Supreme Judicial Court of Massachusetts, July 21, 2006.

Humphrey was injured while walking down a flight of stairs in premises rented for commercial purposes. The injury occurred 15 months after Humphrey had leased the premises. Humphrey then commenced an action against the landlord, claiming the landlord had a duty to maintain the leased premises, and that the landlord knew or should have known that the stairs were defective and created an unreasonable danger.

The landlord moved for summary judgment, and the motion was granted.

Humphrey appealed, and the appellate court affirmed. It held that typically a commercial tenant is responsible for all maintenance under a lease except for common areas or other areas appurtenant to the leased area. It further held that a small commercial tenant is no different from a larger commercial tenant. Moreover, unlike a residential tenant, a small commercial tenant is not entitled to heightened protection under its lease. It held that even a small commercial tenant has a financial interest in the property it leases for commercial purposes and should have an incentive to maintain or improve the property.

Landlord Did Not Waive Right to Holdover Rate

A landlord did not waive its right to collect a higher holdover rental rate by billing the tenant at a lower rate. Elite Gold, Inc. v. TT Jewelry Outlet Corp. et al., 8073, 8074, Index No. 108707/04, Supreme Court of New York, Appel-late Division, First Department, July 27, 2006.

The tenant rented a booth from the landlord from May 1, 2002 through April 30, 2003, at a monthly rate of $6500. The lease provided that if the tenant continued the lease, the rent would increase by 5%, but if the tenant continued to occupy the space as a holdover tenant, the landlord would be entitled to collect rent at a rate of one and one-half times the original rent.

After the expiration of the lease, no renewal lease was tendered, but the tenant continued to occupy the space as a month-to-month tenant. The landlord sent the bill at a rate of one and one-half times the original rent, but the tenant paid rent at an increased 5% rate rather than the higher rate.

After another 12 months, the landlord notified the tenant that because it had stayed on at the reduced rate, a lease was assumed and the landlord was entitled to rent for another 12 months. Alternatively, the landlord notified the tenant that it was entitled to rent at the higher rate. The landlord then commenced an action against the tenant to recover unpaid rent.

The court held that the landlord did not waive its right to collect the higher holdover rate by billing the tenant at the lower rate.

Tenant Need Not Operate in Two Locations to Violate Radius Restriction

A tenant who moves out of a shopping center complex can violate its radius restriction by opening a store at another location. Wells Fargo Bank Minnesota, N.A. v. Diamond Point Plaza L.P. ET AL., No. 1663, September Term, 2005, Court of Special Appeals of Maryland, Sept. 29, 2006.

The trustee represented the holders of the commercial mortgage for the landlord's loan. The tenant moved out of the shopping center complex, which caused the landlord to default. The landlord sued the trustee, alleging breach of contract based on a mortgage loan default, fraud, and misrepresentation regarding the loan, and conversion of funds. The trustee sued the tenant for breach of its lease.

The appellate court found that the trial court erred in granting the tenant's motion for summary judgment and determining that the tenant did not violate the radius restriction contained in the lease when it opened another location at another mall, which was within seven miles of the landlord's store. The court found that the trial judge had misconstrued the language in the lease by concluding that the restriction required the doors of both locations to be open for business. It also found that the lease was ambiguous, and that genuine issues of material fact existed in regard to whether the opening or closing of a store constituted a violation of the restriction. Moreover, the court found that the trial court erred in finding that the tenant was not liable to the trustee for attorneys' fees because the lease permitted recovery by the prevailing party.