Daily Development for Monday, May 3, 2004
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
dirt@umkc.edu <mailto:dirt@umkc.edu>
LANDLORD/TENANT; TENANT’S RESPONSIBILITIES; MAINTENANCE: A requirement in a
lease whereby the tenant has to return the “premises” in good order and
condition will be construed to apply only to the interior of the building, if
the lease otherwise defines premises as interior space, even though it was the
clear intent of the parties that surrounding ground was also part of the lease.
South Road Associates, LLC v. IBM, 770 N.Y.S.2d 126 (A.D. 2 Dept. 2003).
A long term lease required that the tenant return the premises in “good order
and condition.” The tenant suffered a leak on an underground storage tank on the
ground that had been leased along with the building. Although remediation work
continued for almost two decades, when the tenant ultimately ended the lease, a
small amount of the property required continued pumping and monitoring
supervised by the state environmental agency. The landlord alleged that the
value of the property was adversely affected as a consequence of this condition,
and claimed that the property had not been returned “in good order and
condition.”
The court here affirmed summary judgment for the tenant, but with a strong
dissent. The majority noted that the definitions section of the lease defined
“premises” as “the space being more particulasrly shown on the attached floor
plan” consisting of a certain number of square feet in buildings situated on
“land.” The majority concluded that it was unavoidable that “premises” as
defined in the lease included only the interior space and not the exterior.
Since the lease language was clear, no extraneous evidence could be brought
forward. Thus, when the tenant returned the property with environmental
contamination of the grounds, the tenant did not violate the terms of its lease.
The dissent maintained that the court should give meaning to the overall
instrument in determining the intent of the parties. “The meaning of a writing
may be distorted where undue force is given to single words or phrases.” The
dissent argued that it was clear that the parties intended that the tenant would
occupy all the property - land and buildings, and it only made sense that they
intended that the entire property be yielded up in good condition.
Comment: A classic conundrum. The dissenting judge may very well be correct that
the lawyer who wrote (or inserted) the language in the “yield up” clause was not
thinking about the more restrictive definition of the word “premises” appearing
elsewhere in the lease. If that lawyer did not think of it, none of the
laypersons reading the lease would ever catch the problem. Thus, it is quite
likely that the parties signing the lease many decades ago in fact expected that
the tenant had the responsibility to return the whole property in good
condition.
But these were sophisticated parties represented undoubtedly by people whom they
trusted for their competence in the lease negotiations, and the best interests
of the marketplace usually are served by requiring parties to live with the
outcome of the language that they select. There are devices that expensive
lawyers doing important documents often use to test that a defined term is
properly used throughout the document. Often this seems like needless overkill,
but the investment is appropriate to avoid consequences such as those occurring
here.
Items reported here and in the ABA publications
are for general information purposes only and
should not be relied upon in the course of
representation or in the forming of decisions in
legal matters. The same is true of all
commentary provided by contributors to the DIRT
list. Accuracy of data and opinions expressed
are the sole responsibility of the DIRT editor
and are in no sense the publication of the ABA.
Parties posting messages to DIRT are posting to a
source that is readily accessible by members of
the general public, and should take that fact
into account in evaluating confidentiality
issues.
ABOUT DIRT:
DIRT is an internet discussion group for serious
real estate professionals. Message volume varies,
but commonly runs 5 15 messages per work day.
Daily Developments are posted every work day. To
subscribe, send the message
subscribe Dirt [your name]
to
listserv@listserv.umkc.edu
To cancel your subscription, send the message
signoff DIRT to the address:
listserv@listserv.umkc.edu
for information on other commands, send the message
Help to the listserv address.
DIRT has an alternate, more extensive coverage that includes not only
commercial and general real estate matters but also focuses specifically upon
residential real estate matters. Because real estate brokers generally find
this service more valuable, it is named “BrokerDIRT.” But residential
specialist attorneys, title insurers, lenders and others interested in the
residential market will want to subscribe to this alternative list. If you
subscribe to BrokerDIRT, it is not necessary also to subscribe to DIRT, as
BrokerDIRT carries all DIRT traffic in addition to the residential discussions.
To subscribe to BrokerDIRT, send the message
subscribe BrokerDIRT [your name]
to
listserv@listserv.umkc.edu
To cancel your subscription to BrokerDIRT, send the message
signoff BrokerDIRT to the address:
listserv@listserv.umkc.edu
DIRT is a service of the American Bar Association
Section on Real Property, Probate & Trust Law and
the University of Missouri, Kansas City, School
of Law. Daily Developments are copyrighted by
Patrick A. Randolph, Jr., Professor of Law, UMKC
School of Law, but Professor Randolph grants
permission for copying or distribution of Daily
Developments for educational purposes, including
professional continuing education, provided that
no charge is imposed for such distribution and
that appropriate credit is given to Professor
Randolph, DIRT, and its sponsors.
DIRT has a WebPage at:
http://cctr.umkc.edu/dept/dirt/