Related Articles: Commercial Landlord


Replacing v. Repairing (Seone v. Drug Emporium (1995))

Facts
In the Lease, the Landlord guarantees the equipment and fixtures for 3 years. In addition, the Landlord agreed to maintain and repair the exterior of the building, including the roof.

Tenant notified the Landlord that it intended to undertake expensive leasehold improvements and expected the Landlord to replace the roof and the HVAC system because they were in "serious disrepair". Landlord refused to comply with the requests. Thereupon, the Tenant replaced the roof and HVAC system, and withheld monthly rent totaling $141,243 for reimbursement.

Landlord sued for possession and accrued rent. Tenant defended the suit by arguing that the leasee imposed a repair obligation on the Landlord, which required replacement as "commercially reasonable". Tenant argued against the eviction that, even if its interpretation of the lease was wrong, Tenant only delayed payment of the rent.

Court Ruling
"Replacement" is not the equivalent of "repair". Replacement is improvement of an article. The Lease only required the Landlord to maintain, not replace.

Landlord is entitled to possession for non-payment of rent, even if Tenant's default is only a delay in paying the rent.

Lease Drafting Tips
Do not obligate Landlord to replacement of equipment, exterior/interior features or mechanical elements of the building. Require prior written approval of all Tenant improvements. Have clear default provisions for non-payment of rent.

Action Advice
Do not consent to escrow of rent. Never waive by act or writing Tenant's failure to comply with each and every term of the Lease.