Daily Development for Monday, November 1, 1999

Daily Development for Wednesday, November 17, 1999

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

LANDLORD AND TENANT; BREACH OF LEASE: Where a commercial lease contains a provision that the landlord will maintain a parking lot in good repair in exchange for additional rent, the tenant is allowed to terminate the lease for violation of this provision without proving substantial damage to its business.

Decade 80I, Ltd. v. PDQ Food Stores, Inc., 593 N.W.2d 94 (Wis. Ct. App. 1999).

The case arose in a shopping center context. When the tenant complained about the parking lot, the landlord responded that it would fix the lot after a nearby McDonald's under construction was completed. But the lease said that the tenant could terminate the lease thirty days after notice to the landlord of landlord's default, and that's just what the tenant did.

The landlord cited three cases involving problems with parking lot repairs in which the tenant was unable to make out a case for constructive eviction. But the court here pointed out that the lease was very specific as to the landlord's duty to maintain the parking lot and as to the tenant's right to terminate the lease on 30 days notice as a consequence of landlord's breach. (The default clause was not specific to the parking lot covenant.)

The court does not necessarily say that a tenant can vacate whimsically even for technical defaults. Rather, the court says that it is quite possible that a tenant would have a legitimate business concern about a potholed parking lot based upon aesthetics or good will or other reasons, even if it had not suffered any immediate loss in revenue. Consequently, the case likely does not stand for the proposition that a tenant could vacate for an inconsequential breach only that the parties may define through their agreement what is consequential. Here, where they addressed parking lot repairs specifically in the lease, and where potholes abounded, the tenant had a case.

Comment 1: The case is useful for the collection of the other parking lot cases as well, so it's one for the data base.

Comment 2: It is not clear whether the court rested its conclusion entirely on the default clause, or also on the special provisions of the lease indicating that the tenant was paying extra rent for parking lot repair. But this may not make much difference, since in most of the cases involving parking lot maintenance, the tenant likely is paying an "additional rent" to the landlord proportionate to the landlord's maintenance costs for such common areas. Thus, the typical shopping center or office lease probably does fit within the type of lease addressed here, at least as to landlord's duty.

Comment 3: The editor supposes that leases that give the tenant the right to vacate following thirty days' notice of landlord's default probably are much more rare. Lenders likely would not happily approve such leases.

Readers are urged to respond, comment, and argue with the daily development or the editor's comments about it.

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