Don't Let Tenant Stop Paying Rent or Terminate Lease Based on Your Violation
As an owner, you want to make sure that your tenants are required to pay their rent and comply with all other lease obligations, even if you violate the lease. Without this requirement, a minor lease violation on your part—say, failing to adequately dispose of the trash—could snowball into a huge problem. Your tenants could retaliate by not paying rent or even by terminating the lease and moving out of the space.
Most owners think that their leases bar a tenant from retaliating in this way. But if your lease is like some we've seen, it may have a loophole that leaves you unprotected from this type of retaliation: That is, it doesn't say that the tenant's lease obligations are “independent” of your lease obligations. So if you fail to perform any of your lease obligations, a tenant could claim—and a court might agree—that the tenant has the right to withhold rent or terminate the lease.
Massachusetts Tenant Can Terminate Lease
For example, when a Massachusetts owner failed to adequately fix a leaky roof, the tenant told the owner it would terminate the lease and move out because of “the serious leakage problem.” The owner sued the tenant for violating the lease. The tenant argued that it had been “constructively evicted” from the space—that is, the owner's actions were tantamount to an eviction.
A Massachusetts appeals court ruled that the tenant could terminate the lease. The court noted that the tenant hadn't been constructively evicted because the leaks weren't so severe that it was unable to operate its business at the space. But the court said that by failing to adequately repair the roof leaks, the owner had deprived the tenant of a “substantial benefit” of the lease—that is, a dry space in which to conduct its “high technology” business. Since the lease didn't say that the parties' lease obligations were independent of each other, the court determined that these obligations must be “dependent.” In addition, the court awarded the tenant $1,063 in relocation costs [Wesson v. Leone Enterprises, Inc.].
Make Tenant's Obligations Independent of Yours
To plug this loophole, make the tenant agree that its lease obligations are independent of your lease obligations, says Philadelphia attorney Richard R. Goldberg. This way, if you violate the lease, the tenant can't retaliate by withholding its rent or terminating the lease, he says.
To get this protection, add the following language to your lease, says Goldberg:
Model Lease Language
Tenant acknowledges and agrees that all of its covenants and obligations contained herein are independent of Landlord's covenants and obligations contained herein. Tenant shall neither be relieved from the performance of any of its covenants and obligations (including, without limitation, the obligation to pay Rent) nor entitled to terminate this Lease, due to a breach or default by Landlord of any of its covenants or obligations, unless expressly permitted by the terms of this Lease.
CLLI Source
Richard R. Goldberg, Esq.: Member, Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market St., 51st Fl., Philadelphia, PA 19103-7599; (215) 665-8500.