The Leasing Hotline

Assignment of Lease

Where a landlord fails to consent to an assignment of the lease, the assignees may still be responsible for payment of rent under the terms of the assigned lease. Fifty Liberty Street, LLC, v. Eureka Petroleum, Inc., Tibarom, Inc., Peanut Oil, LLC, Samuel E. Pearson, III and Deborah Pickett, 07-CV-20-JTC, United States District Court for the Western District of New York, Aug. 6, 2008.

The plaintiff-landlord purchased the subject property. Thereafter, the tenants Eureka and Tibarom assigned its lease, including but not limited to the obligation to pay rent, to Peanut Oil, Pearson and Pickett. After the assignment, the landlord sent Eureka a series of letters advising that it objected to the “proposed assignment” and requested information to show that certain specific requirements were met in order for the assignment to be considered effective. The landlord did not receive that information but began to accept rent from Peanut Oil for use and occupancy without waiving any of its rights against Eureka and Tibarom. Thereafter, Peanut Oil failed to pay rent for three months, and the landlord commenced an action against Eureka, Tibarom, Peanut Oil, Pearson and Pickett, seeking unpaid rent. They moved for summary judgment, seeking a ruling that the defendants Pearson and Pickett were liable for the breach of the lease. The court granted the motion, holding that the assignment of the lease between Eureka/Tibarom and Peanut Oil, Pearson and Pickett caused the assignee to be liable to the lessor for their performance under the lease. It held that the fact that the landlord did not give prior written consent to the assignment did not release them from liability under the assignment because commercial leases containing a restriction of assignment provision are regularly construed as protection for the landlord, not the protection of the tenant or the assignee.

Formal Execution of Lease

In Florida, a lease for a period of more than one year executed by a Limited Liability Corporation (LLC) is valid even if it is not executed in the presence of two witnesses. Skylake Insurance Agency v. NMB Plaza, LLC, No. 3D07-454, Court of Appeal of Florida, Third District, Sept. 17, 2008.

The landlord and tenant entered into a ten-year lease for occupancy of a building under construction. The lease was scheduled to begin 90 days after completion of the construction. As the building neared completion, the landlord repudiated the lease, claiming there were no witnesses to the signatures. The tenant brought an action for, inter alia, specific performance of the lease. The landlord argued that because the lease was for a term of more than one year, the lease was required to be executed in the presence of witnesses, which did not occur. The trial court found in favor of the landlord, but the appellate court reversed. It held that the statute relied upon by the landlord applied to corporations, and the landlord was not a corporation but a Limited Liability Corporation (LLC).

Assignment of Lease

Where a landlord fails to consent to an assignment of the lease, the assignees may still be responsible for payment of rent under the terms of the assigned lease. Fifty Liberty Street, LLC, v. Eureka Petroleum, Inc., Tibarom, Inc., Peanut Oil, LLC, Samuel E. Pearson, III and Deborah Pickett, 07-CV-20-JTC, United States District Court for the Western District of New York, Aug. 6, 2008.

The plaintiff-landlord purchased the subject property. Thereafter, the tenants Eureka and Tibarom assigned its lease, including but not limited to the obligation to pay rent, to Peanut Oil, Pearson and Pickett. After the assignment, the landlord sent Eureka a series of letters advising that it objected to the “proposed assignment” and requested information to show that certain specific requirements were met in order for the assignment to be considered effective. The landlord did not receive that information but began to accept rent from Peanut Oil for use and occupancy without waiving any of its rights against Eureka and Tibarom. Thereafter, Peanut Oil failed to pay rent for three months, and the landlord commenced an action against Eureka, Tibarom, Peanut Oil, Pearson and Pickett, seeking unpaid rent. They moved for summary judgment, seeking a ruling that the defendants Pearson and Pickett were liable for the breach of the lease. The court granted the motion, holding that the assignment of the lease between Eureka/Tibarom and Peanut Oil, Pearson and Pickett caused the assignee to be liable to the lessor for their performance under the lease. It held that the fact that the landlord did not give prior written consent to the assignment did not release them from liability under the assignment because commercial leases containing a restriction of assignment provision are regularly construed as protection for the landlord, not the protection of the tenant or the assignee.

Formal Execution of Lease

In Florida, a lease for a period of more than one year executed by a Limited Liability Corporation (LLC) is valid even if it is not executed in the presence of two witnesses. Skylake Insurance Agency v. NMB Plaza, LLC, No. 3D07-454, Court of Appeal of Florida, Third District, Sept. 17, 2008.

The landlord and tenant entered into a ten-year lease for occupancy of a building under construction. The lease was scheduled to begin 90 days after completion of the construction. As the building neared completion, the landlord repudiated the lease, claiming there were no witnesses to the signatures. The tenant brought an action for, inter alia, specific performance of the lease. The landlord argued that because the lease was for a term of more than one year, the lease was required to be executed in the presence of witnesses, which did not occur. The trial court found in favor of the landlord, but the appellate court reversed. It held that the statute relied upon by the landlord applied to corporations, and the landlord was not a corporation but a Limited Liability Corporation (LLC).