REPAIRS, RENT AND SECURITY!

Consider the following lease provision frequently found in commercial leases regarding repairs and maintenance:

“Tenant shall maintain at his sole expense and without contribution from Landlord, the Premises in good and safe condition, including, but not limited to, the roof, plate glass, electrical wiring, plumbing and heating installation.”

Does such a provision require the tenant to replace the roof if it has become so run-down that it cannot be repaired?

This past year, a California court considered this question.  In reviewing the facts of the case, the court noted that a prior owner of the building entered into an amendment to a lease with the tenant providing the tenant with a $500 reduction of monthly rent for the remainder of the lease term.  The amendment to the lease also contained the above provision regarding repairs and maintenance.

Approximately three years after the tenant entered into this amendment, the prior owner sold the premises to the current landlord.  After conducting a roof inspection, the landlord sent the tenant a letter demanding that the tenant undertake certain maintenance and repairs within 60 days.  Subsequently, the landlord sent the tenant a three-day notice demanding that the tenant complete repairs or quit possession of the premises.

During the course of an unlawful detainer action, it was determined that the roof was placed upon the building in 1978, that the life expectancy at the outside was 15 years which would take the life expectancy of the roof to 1993, that the lease with the tenant was not entered into until 1997, and the amendment was entered into in 2000.

In reviewing the law on the subject of contracts, the court noted that “The purpose of the law of contracts is to protect the reasonable expectations of the parties.”  The court also noted that “interpretation of contract ‘must be fair and reasonable, not leading to absurd conclusions.’”

The court observed that the tenant’s duty of maintenance under the lease and amendment could be reasonably construed as only requiring the tenant to maintain the roof in its condition at the time the agreements were executed in 1997 and 2000, i.e., in its then-dilapidated condition) and that had the parties intended the tenant to assume the obligation to replace the roof, one would reasonably expect the written agreements to expressly so state rather than merely requiring the tenant to maintain the roof.

The court continues to maintain that a tenant is not obligated to restore the premises to his landlord in a better condition than it existed at the beginning of the lease.

Assume you are in a partnership and the sole asset of the partnership is a building that has been converted from a residence into offices.  May your  partner lease an office of the building to a friend at below fair market rent?

In reviewing the nature of the relationship between partners, a court recently noted that a partnership is a fiduciary relationship and partners are essentially held to the standard of a trustee in their dealings with one another.  In view of the existence of a fiduciary relationship, the court concluded that partners may not take advantage for themselves at the expense of the partnership and thus could not lease partnership property for a sum less than could be obtained on the open market.

 

Finally, we consider the issue of security.  Not the security of money that a landlord customarily requires of a tenant by way of lease deposit, but rather, a tenant’s need for security or protection from harm.

In another recent California case, a plaintiff was injured by a stray bullet during a gang fight at a trailer park where he lived.  Understandably upset, he sued the landlord, claiming negligence in failing to take adequate security precautions.

In this situation, plaintiff presented evidence to the court that the landlord was aware that spaces in the mobile park were being rented to gang members and that there had been a variety of gang-related criminal activity occurring on or near the park.

It was also noted that, in addition to a lack of security, there was a lack of lighting in the park.  An expert on the subject of security testified that the park had become a fertile ground for gang “turf wars,” and that gangs tended to congregate in the “shadows” for the purpose of carrying out their gang activity in the dark to avoid identification.

In view of these circumstances, the court determined that the landlord had a duty to undertake additional security measures to protect the residents in the park from potential violence.

The moral of the story?  Standard lease provisions regarding repairs and maintenance, rent and security can prove to be fertile territory for litigation!

[This column is intended to provide general information only  and
is  not intended to provide specific legal advice; if you have  a
specific  question  regarding the  law,  you  should  contact  an
attorney  of your choice.  Suggestions for topics to be discussed
in this column are welcome.]


Reprinted from The Journal
Myles M. Mattenson © 2006