Non-Monetary Defaults in Commercial Leases: A Difficult Eviction

Where such person holds over without permission after failing to cure a material breach of the lease or oral agreement, other than nonpayment of rent, and when 15 days' written notice requiring the cure of such breach or the possession of the premises has been served on the tenant. This subsection applies only when the lease is silent on the matter or when the tenancy is an oral one at will. The notice may give a longer time period for cure of the breach or surrender of the premises. In the absence of a lease provision prescribing the method for serving notices, service must be by mail, hand delivery, or, if the tenant is absent from the rental premises or the address designated by the lease, by posting.

There are two notable items in this provision.

Written Notice

First, the landlord must give the tenant written notice to cure the non-monetary default prior to initiating an eviction proceeding. This notice provision is crucial. Not only is the notice a condition precedent, but landlords can use this notice to show the court that they are reasonable, that they gave the tenant a fair opportunity to cure the default and the necessity that the tenant be evicted. Accordingly, the time frame of the notice, the contents of the notice and the manner of service should be scrutinized.

• How much time should be given: The statute provides that if the lease is silent as to a notice provision, then the landlord must give the tenant at least 15-days written notice. The parties may contractually provide a shorter notice provision, but many landlords opt to provide 15 days to keep in line with what the statute suggests. Landlords should review the default provisions of their Florida leases to ensure that they are expressly addressing the notice provision in the event of a non-monetary default.
• The contents of the notice: The statute requires that the notice must provide a time frame in which the tenant must either cure the default or deliver possession of the premises. The landlord should also state what provision(s) of the lease the tenant is breaching, how the tenant is breaching those provisions, and how the landlord expects the tenant to cure this breach. By including this detailed information, the landlord will be able to show the court that the tenant was adequately informed of the breach. Also, because courts are reluctant to evict tenants for non-monetary defaults, the landlord should state in the notice how the tenant's breach is damaging the landlord. Finally, the landlord should avoid the term "surrender" in this notice when referencing delivery of the premises. We will come back to this later.
• Serving the notice: Service must be made by mail, hand delivery or posting. The landlord must prove that the tenant was informed of the default and given adequate time to cure. Notably, landlords must comply with the lease, therefore, the place and manner of service, as described in the lease, must be scrutinized. If the lease's notice provision is not clear, the landlord should consider taking additional steps. For example, landlords should consider having a process server deliver the notice to the leased premises and also mail the notice, in a trackable manner, to the notice address provided in the lease, to the guarantors if any, and to the registered agent of the tenant if it is an entity rather than an individual.

Materiality of Breach

Second, to evict for a non-monetary default, the tenant's breach must be material. The statute offers no guidance as to what constitutes a material breach. The definition of a material breach turns on general contract principles. A material breach must go to the essence of the lease and it must be the type of breach that would discharge the injured party from further contractual duty. Covelli Family, L.P. v. ABG5, L.L.C., 977 So. 2d 749, 753 (Fla. 4th DCA 2008); JF &LN, LLC v. Royal Oldsmobile-GMC Trucks Company, 2020 WL 961580 (Fla. 2d DCA Feb. 28 2020). The failure to perform some minor part of the lease will not be considered a material breach. Id. Because non-monetary defaults are generally viewed unfavorably by courts as the basis for eviction, it is best practice for the landlord to ensure that the lease states which provisions will be considered material; however, there is no guarantee that courts will agree with the landlord's enumeration.

Even if the lease states which provisions are material, the landlord will likely still be required to rely on precedent to determine whether the tenant has breached a material term. Florida law is severely lacking in cases describing non-monetary material defaults. A survey of Florida case law reveals what some courts have determined to be material breaches based on the specific factual circumstances present in those cases. For example:

• Assigning a lease without the landlord's consent or approval, where such consent or approval is required by the lease. See, El Prado Restaurant, Inc. v Weaver, 268 So. 2d 382 (Fla. 3d DCA 1972).
• If a lease provides that the tenant must operate a particular business in the premises, then the failure to operate that particular business may be considered a material breach. See, Floste Corp. v. Marlemes, 53 So. 2d 538 (Fla. 1951) (explaining that it is the court's opinion that the continued use of the premises in the manner in which the landlord intended for the premises to be used must be at least an implied obligation within the lease). If, however, there is no provision in the lease requiring the operation of a particular business, the tenant's failure to utilize the space for its intended purpose may not be a material breach. ("the lessee is under no obligation, in the absence of specific provision therefor, to occupy or use, or continue to use, the leased premises for the particular purpose to which they seem to be adapted or for which they seem to be constructed even though the lessee or lessor, or both, expected or intended that they be used for such particular purpose.").
• A tenant's failure to operate the premises during the hours required by the lease may be considered a material breach when the hourly requirements are tied to payment of rent. See, Lincoln Tower Corp. v. Richter's Jewelry Co., 152 Fla. 542, 12 So. 2d 452 (1943).
• Altering the premises without the landlord's consent may be considered a material breach, unless such alterations are necessary and the landlord is aware of the need for the alterations. See, Sabema Corp. v. Sunaid Food Products, Inc., 309 So. 2d 620 (Fla. 3d DCA 1975).

Because of the lack of guidance in Florida, Florida courts may look to other jurisdictions for guidance. See, Hogan v. Tavzel, 660 So. 2d 350, 352 (Fla. 5th DCA) (explaining that when Florida courts lack precedent, it is appropriate for the court to look to other jurisdictions for guidance). A survey of other jurisdictions shows that:

• A tenant's refusal or failure to fulfill a lease-imposed obligation to furnish information or install equipment to aid the landlord in calculating rent may be a material breach. Caranas v. Morgan Hosts-Harry Hines Boulevard, Inc., 460 SW 2d 225 (Tex. Civ. App. 1970) (it was a material breach for the tenant to fail to install special cash registers required by the lease for the purpose of rent calculation); Gulf States Theatres v. Hayes, 534 SW 2d 406 (Tex. Civ. App. 1976) (failing to show the best motion pictures available in a theatre leased on a percentage rate basis was a material breach warranting cancellation of the lease).
• Where a lease requires a tenant to maintain the premises in good condition by taking responsibility for all maintenance and repairs, it may be a material breach for the tenant to allow the premises to deteriorate or fail to make repairs where such damage causes danger to patrons. See, 1985 Robert Street Associates v. Menard, Inc., 403 NW 2d 900 (Minn. App. 1987); Ivy Hill Park Apartments v. GNB Parking Corp., 566 A.2d 565 (1989).
• A tenant's failure to adhere to all laws applicable to the leased premises may be a material breach. See, , Inc. v. Jones, 708 P. 2d 836 (Hw. App. 1985); Lewis v. Clothes Shack, Inc., 62 Misc. 2d 767 (1970).

These examples are not a comprehensive list of all potential material breaches and not all acts are viewed the same. Courts look at the unique circumstances surrounding each breach, including the specific language of the lease, to determine whether the breach is in fact material. See, Covelli Family, L.P., 977 So. 2d at 753. Accordingly, it is important for landlords to consult with experienced counsel to help determine whether the non-monetary breach in question is material.

Options After Notice Is Sent and Materiality Determined

After determining that the tenant has in fact materially breached the lease and sending the written notice of default described above, the landlord will then have to wait to see what choice the tenant makes. The tenant may cure the default, in which case there are no further steps to take. The tenant may choose to do nothing. If the tenant chooses to do nothing, the landlord will need to take legal action against the tenant for eviction and for damages, including future rent and possibly additional damages. Finally, instead of curing the breach, the tenant may deliver possession of the premises to the landlord. When this happens, the landlord will have three options: 1) treat the lease as terminated and retake possession for the landlord's purposes; 2) take possession for the tenant's account, in which case the tenant may be responsible for any difference between its rent obligations and the amounts the landlord recovers by reletting the premises; or 3) do nothing and sue the tenant as each installment of rent matures, or sue for all rent due when the lease expires. See, Holiday Furniture Factory Outlet Corp. v. State, Dept. of Corrections, 852 So. 2d 926 (Fla. 1st DCA 2003).

The first option is the easiest, but choosing it may deprive the landlord of certain rights and benefits still available under the lease. See, Geiger Mut. Agency, Inc. v. Wright, 233 So. 2d 444, 447 (Fla. 4th DCA 1970) (explaining that when the landlord retakes possession for his own account, he cannot recover the rent due under the remaining term of the lease because her has selected ejectment as his remedy). The third option, although theoretically available, may not be the best option because it may result in a finding that the landlord failed to mitigate its damages. Therefore, the second option is generally the landlord's best choice.

If the landlord chooses to take possession on the tenant's account, it should send the tenant a notice of no surrender. See, Hudson Pest Control, Inc. v, Westford Asset Management, Inc., 622 So. 2d 546, fn. 7 (Fla. 5th DCA 1993) ("Express intent not to accept a surrender is an important factor in finding no surrender occurred."); Kanter v. Safran, 68 So. 2d 553 (Fla. 1953) (explaining that a surrender will not be implied where it was manifestly not intended by the parties). Remember above how it was important to avoid the term "surrender?" This is why. The notice of no surrender should inform the tenant that the landlord is retaking possession of the premises on behalf of the tenant, that the landlord does not accept a surrender of the premises, and that the lease is not terminated. This is necessary because courts will often construe the surrender of the premises as a termination of the landlord's rights under the lease. See, Babsdon Co. v. Thrifty Parking Co., 149 So. 2d 566 (Fla. 3d DCA 1963). By taking possession on the tenant's account, the landlord can attempt to relet the premises, thereby mitigating its damages as required, but will also be entitled to continue to receive rent from the tenant for the duration of the lease, or until the premises is relet. See, Williams v. Aeroland Oil Co., 155 Fla. 114, 118-19 (Fla. 1944).

Conclusion

As you have likely gathered, after sending the notice of default, seeking eviction for a non-monetary breach requires the same steps as seeking an eviction for failure to pay rent, but eviction will be less likely. Landlords must take extra precautions to increase the likelihood of a successful eviction for non-monetary breaches. Commercial landlords should ensure that their leases are sufficiently specific as to the tenant's rights, the landlord's rights, and the material non-monetary provisions. Before taking any action against a tenant, moreover, the landlord must review its lease to ensure that it is actually entitled to take such an action. Finally, landlord/tenant law is not one size fits all. Each non-monetary breach, and the consequent ability to evict the tenant, will hinge on the language of the lease, the seriousness of the breach, and the surrounding circumstances.

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Ashlyn Robinson Banks is an attorney at Trenam Law in Tampa, FL, where she practices in the firm's Commercial Litigation and Bankruptcy & Creditors' Rights groups. She may be reached at [email protected].