There is an interesting case of a commercial eviction brewing in South Florida that showcases how important it is to clearly understand the provisions in your lease.
In November, a family-owned bakery sued its landlord, a national company that purchased the property recently, claiming its landlord had fraudulently evicted the company and effectively shut down the business.
It comes from the developer’s desire to renovate the property. In this case, the landlord had an engineering report performed on the property and the report came back that the building was unsafe for occupation.
This triggered the eviction.
In the case, found here, the landlord specifically pointed to two clauses in the lease as justification of the eviction.
Those clauses were:
- Use of Premises: Tenants shall only use the Premises for the Permitted Uses. Tenants will not use or permit the use of the Premises or any part thereof for any other purpose or for any unlawful purpose and will not do or permit any act or thing which would materially impair the value or usefulness of the Premises or any part thereof, or which would constitute a public or private nuisance or waster or which would be a nuisance or annoyance or damage to Landlord or Landlord’s other tenants, or which would invalidate any policies of insurance or increase the premiums thereof, now or hereafter written on the building and/or Premises. Tenant represents to Landlord that the Permitted Uses conforms with the Applicable Zoning, and Tenant’s obligation to pay Rent under this Lease is not contingent upon the Permitted Use conforming to the Applicable Zoning or other laws, regulations or ordinances governing the use of the Premises. Tenant shall maintain at its sole cost and expense any and all licenses, permits and approvals by all authorities having jurisdiction over the operation of Tenant’s business at the Premises.
- Tenants Obligations. Tenant shall, at its expense, throughout the term of this Lease, take good care of the Premises, the fixtures and appurtenances therein and Tenant’s Property. Landlord acknowledges that at the time of Tenant’s taking possession of the premises, there exists certain cracking in slab under and around the non-operating freezer. Landlord agrees to hold Tenant harmless from any and all damages related to this condition absent personal injury to the Tenant or their employees, agents or assigns, caused either directly or indirectly by the cracked slab described herein. Accordingly, the Tenant will take every reasonable measure including the posting of signage to prevent any further damage to both person and property.
It’s interesting that neither of those clauses specifically mentions how the landlord has the right to evict if the building is determined to be unsafe. As it’s not clearly stated, the tenant of the space may have a defense against the landlord.
And the bakery is using another section of the lease as its defense, claiming that if the building is unsafe for occupation, it is the landlord who broke the lease.
- Landlord’s Obligations. Landlord agrees to repair and maintain the property, to maintain said property in good order and condition, including painting the exterior of the building on an as needed basis to be determined by Landlord. Specifically, the landlord will maintain the roof, including the awning, in good order and condition and repair said leaks in the building.
As you can see with these specific clauses in the lease contract, when it comes to commercial leases, the wording of the lease is extremely important.
The attorneys at The Orlando Law Group can help you protect your investment in commercial real estate. Our firm clearly understands how your lease should be written to allow for any capacity.
The lease is key to everything
This case in South Florida is unique with a lot of different angles for the bakery to use in a lawsuit.
While much of the dispute is over lease terms, the bakery is claiming the engineering report declaring the building uninhabitable was flawed and paid for a different engineering report with different results.
But, getting into the lease terms being important, one of the key parts of the bakery’s case is the lease expressly says the tenants would have right of first refusal on any sale of the property the bakery was operating out of.
Specifically, the lawsuit cites this clause:
- Right of First Refusal. Tenant acknowledges and understands that Landlord may list the Premises for sale at any time, including during the duration of the Lease Term. During the Lease Term, Tenant has the right to match any purchase offers submitted to and accepted by Landlord from a third party. Landlord shall notify all prospective purchasers of Tenant’s right of first refusal. Landlord’s acceptance of any purchase offers submitted by a third party shall be subject to Tenant’s right of first refusal. Within three (3) business days of Landlord’s receipt of a purchase offer which Landlord intends to accept, Landlord shall notify Tenant in writing of the price and terms of the purchase offer. Tenant shall have five (5) business days from the date of receipt of Landlord’s, notice to submit to Landlord a written purchase offer which matches the price and terms of the third party offer. If Landlord timely receives a written purchase offer from Tenant which matches the price and terms of the third party offer, Landlord shall proceed with the sale of the Premises to Tenant. However, should Landlord not timely receive a written purchase offer from Tenant which matches the price and terms of the third party offer, Landlord shall be free to sell the property to the third party at the same price and terms only.
According to the suit, the company that owned the building when the bakery signed the lease did not give the right of first refusal on only its property, rather giving the right of first refusal on a larger deal that included other properties.
While the lease did not have a specific clause saying what happened if the building was uninhabitable, it did have specific instructions on what happens in the event of a sale.
It will be up to the courts to determine whether the lease was followed, but if that clause was not followed, there could be significant issues for the landlord.
What can be put into a commercial lease?
As a lease is a contract between two private parties, anything could be negotiated into a lease. However, most leases are very similar and include clauses that cover the following and more:
- Lease payments
- Maintenance
- Insurance
- Use of the property
- Utilities
- Quiet enjoyment
In one case The Orlando Law Group worked with a landlord whose Tenant failed to report the presence of mold in a rented space. The tenant’s inaction violated the lease terms and induced further mold growth. Since this was in breach of the lease terms specifically dealing with mold, the judge quickly ruled in favor of our clients and restored possession to the Landlord.
Best to ensure your leases have the right covenants
While you hope you never have to evict a tenant, it is prudent to write your lease agreements to cover most issues that can be brought up if the relationship must end.
There are a lot of issues in the bakery case with a lease that may not have been as specific as was needed. While it’s impossible to see the future on every issue that might come up, working with attorneys at The Orlando Law Group can help you be prepared.
The attorneys at The Orlando Law Group can help commercial property owners with evictions and other tenant issues in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout Central Florida.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.
Last Updated on March 5, 2024 by The Orlando Law Group
