Tenant Must Replace Items It Neglected to Maintain

Facts: A tenant purchased the rights to run a dealership that was part of a franchised chain. The dealership was already operating out of a building that housed its showroom and offices, so the tenant decided to stay in that location, leasing the building and the property it was on from its owner. The tenant and owner signed a lease on Dec. 12, 1983, followed by two subsequent leases over the course of several years.

All three leases obligated the tenant to “make all repairs necessary to the demised property and the building… situated thereon in as good order and condition as when delivered to it,” and to notify the owner of any defects within 10 days of signing each lease. The tenant never notified the owner of any defects.

On a March 13, 2003, visit to the property the owner found the basement structural steel to be seriously deteriorated. Although the tenant said that it would take care of the situation, it never did. Nonetheless, the owner and the tenant signed a fourth lease, which was identical to the second and third leases except for a “surrender provision” requiring the tenant to “surrender the premises in as good condition as they were at the beginning of the occupancy.”

After a complete inspection of the property later revealed that the tenant failed to complete any of the repairs or perform any maintenance work as required by the lease, the owner sued the tenant. The trial court ruled in the owner's favor, and the tenant appealed.

Decision: The appeals court upheld the decision of the trial court in favor of the owner.

Reasoning: On appeal, the tenant contended that the repair and maintenance obligations under the leases did not include replacement and restoration of existing structures, fixtures, and mechanicals—the items that allegedly had been neglected.

However, the appeals court noted that all four leases unambiguously obligated the tenant to: (1) take good care of the premises and the fixtures and appurtenances therein; (2) be responsible for the repair and maintenance of heating, plumbing, electrical, and air conditioning equipment and fixtures; and (3) maintain the exterior of the premises including the structural integrity of the building. Because the tenant's continuous failure to perform routine repairs and maintenance resulted in the property falling into such a state of decay as to need major repairs and the replacement of a number of structural elements, the tenant was responsible for the replacement of all the items.

• Brown, et al. v. Spitzer Chevrolet Company, March 2009