Tenant Required to Pay for Parking Spaces on 'Must-Take' Basis

Facts: A retail tenant’s lease provided that a certain number of parking spaces would be available outside the space it rented. The lease provisions specified that the tenant would let the owner know at the beginning of each month how many parking spots it would need. The owner would charge the tenant accordingly. Thus, the parking spots were used by the tenant on “as-needed” basis.

A new owner later renegotiated the lease with the tenant. The parking provisions in the new lease stated that the tenant “shall lease” 34 parking spaces. When the tenant tried to let the owner know how many spaces it would need for the upcoming month, the owner asserted that the tenant was required to take all 34 parking spaces. The tenant argued that its obligation was the same as under its last lease; it “shall have the right, but not an obligation” to take 34 parking spots. The owner sued the tenant. A trial court ruled in favor of the tenant. The owner appealed.

Decision: A Washington appeals court reversed the lower court’s decision.

Reasoning: The tenant asserted that the parking payment obligation in the lease agreement was variable, covering only the number of spaces it needed to use in any given month. But the appeals court concluded that the owner agreed to provide parking on a “must take” rather than an “as needed” basis. It noted that the plain language of the agreement obligated the tenant to pay for a certain number of spaces every month whether or not the tenant actually would need them, so that the effect was to pass on to the tenant “a proportionate share of the owner’s cost of renting those spaces from the Port of Seattle.” Moreover, nowhere in the lease did it provide for how the tenant would notify the owner each month of its parking needs, and the method by which the cost would be calculated under such an arrangement.

• Pacific Market International, LLC v. TCAM Core Property Fund Operating LP, April 2015