Language Matters in Commercial Leases

Language Matters in Commercial Leases

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The language used in a commercial lease, or any document for that matter, is very important when it comes to interpreting the intention of the contracting parties. Language matters…in all walks of life. Language definitely matters in commercial leases.

An example of “language matters” can be found in the case of 1700 Rinehart, LLC v. Advance America, 51 So.3d 535 (Fla. 5th DCA 2010). Here, a commercial landlord and tenant entered into a commercial lease on May 16, 2007. The sole purpose of the tenant’s business was a cash advance store. Because the landlord and tenant were aware that the city may not allow a cash advance store at the premises, the parties entered into an August 13, 2007 amendment that made the tenant solely responsible for confirming the zoning compatible with the tenant’s use as a cash advance store. The amendment further included the following provision:

In the event Tenant, after using best efforts, is unable to obtain all permits and approvals necessary for Tenant to open and operate its business in the Premises within ninety (90) days from the mutual execution of this Lease, Tenant shall have the right, upon written notice to Landlord, to terminate the Lease….

On January 14, 2008, the city denied the tenant’s application to operate a cash advance store. The next day, January 15, 2008, the tenant notified the landlord that it was exercising its right to terminate the lease in accordance with the above provision.

The landlord took the position that the termination letter was too late because it was not sent within 90 days from either the lease or the amendment. However, a closer look at the termination provision does not require the termination letter to be sent within this 90-day window. As the Fifth District expressed: “Its clear language, reinforced by the comma inserted after the word “lease,” shows that the ninety day post-lease period refers to the lessee’s ability to lawfully conduct its business on the premises—and not as, the appellant says, to its ability to terminate the lease. While the parties could have provided that if they wished, they did not do.” 1700 Rinehart, supra, at 539.   In other words, if the landlord wanted the termination notification only to occur within 90 days from entering into the commercial lease, it should have used language in the commercial lease differently.

Further, although the amendment was silent as to when the tenant must notify the landlord of the termination of the lease, the Fifth District held that the law infers a reasonable period of time. 1700 Rinehart, supra, at 540. (“The law is clear in Florida and elsewhere, that when a contract fails to specify a particular period, the law implies a reasonable time under the circumstances.”)  The Court found that the tenant exercised its right to terminate the lease reasonably when it notified the landlord the day after it learned it could not operate a cash advance store.

Language matters. If an issue is important to you, make sure the lease precisely addresses the issue. Otherwise, the language utilized may be used against you even if it is contrary to your intent.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.