Daily Development for Monday, August 19.2002

By: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

LANDLORD/TENANT; WASTE; DAMAGES: Where a landlord leases commercial property to a tenant who commits waste thereon, the landlord is entitled to treble damages, even though the agreement between the landlord and tenant contains a liquidated damages provision.

Brizendine v. Conrad, 71 S.W.3d 587 (Mo. 2002).

In this case, the landlord leased a "low-income apartment-office-storage complex building" to a tenant. The agreement between the landlord and tenant contemplated that the tenant would purchase the building at the end of the lease term. When the tenant informed the landlord that the tenant would not be purchasing the building, the landlord sold the building to another buyer and sued the tenant for waste under Section

537.420, which provides for treble damages.

The tenant argued that the liquidated damages provision in the agreement between the landlord and tenant precluded the landlord from seeking damages under Section 537.420. That provision said, "In the event Lessor shall perform his part of this agreement or shall tender performance thereof, and Lessee fail to perform her part, then the sum of Fifteen Thousand Dollars ($15,000) paid herewith shall be retained by Lessor as liquidated damages, it being agreed that actual damages are difficult, if not impossible, to ascertain. However, Lessor reserves the right to seek specific performance of this agreement."

the Missouri Supreme Court disagreed with the tenant, holding that the landlord could pursue an action against the tenant under Section 537.420, unless the tenant could show that the liquidated damage provision constituted a "special license in writing" to commit waste. The Court found to the contrary, noting that the liquidated damage provision did not even mention waste, and citing to other provisions in the agreement obligating the tenant to repair and maintain the premises and to return the property in the same condition as received in the absence of a sale.

Comment: Hard to dodge this result, as the statute is quite specific that it applies to the landlord/tenant situation - a "tenant for life or years," but provides an exception is a "special license" to commit waste. Such a license, for instance, might apply if it was the intent of the parties that tenant would be permitted to tear down buildings, extract minerals, or otherwise alter the premises in ways that would amount to common law waste. The court was correct that a general provision in a lease/purchase agreement liquidating damages in the event of default ought not to be interpreted as a license to waste.

The liquidated damages provision here was in the exact amount of the deposit paid at the outset of the agreement, and was earnest money to secure the purchase obligation.

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