The Rental Rate in the Commercial Lease should be Clear

The Rental Rate in the Commercial Lease should be Clear

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Happy New Year! 2017 is going to be a great, and I mean, a great year!!

If I leave you with one thought for the new year, that thought is to make sure the rental rate stated in the commercial lease is clear to avoid any unnecessary ambiguity in the lease. The tenant’s rental obligation should be unambiguous – there is no reason for there to be a dispute as to the amount the tenant owes under the lease.  Regardless of how creative the landlord is with the tenant’s rental rate in the lease, that creativity must be clear!

As an example, in Charbonier Food Services, LLC v. 121 Alhambra Towers, LLC, 2016 WL 5804601 (Fla. 3d DCA 2016), the commercial lease required a restaurant to be responsible for a minimum base rent plus an additional percentage rate based on the restaurant’s gross sales.  Then, in year five of the lease, the additional percentage rate would be reduced by an increase in the fixed base rent. However, the way this paragraph in the commercial lease was written resulted in a dispute in year five of the lease where the commercial landlord claimed the tenant was liable for approximately $10,000+ per month more than the tenant thought it owed.  

The tenant filed a lawsuit for a declaratory judgment relating to its lease amount and the landlord countersued to evict the tenant. The landlord also moved to have the tenant deposit disputed rent into the court’s registry pursuant to Florida Statute s. 83.232. The trial court granted the landlord’s motion requiring the tenant to deposit disputed rent into the court’s registry. The appellate court reversed because the ambiguity in the lease required the trial court to consider extrinsic evidence regarding the intent of the tenant’s rental obligation in the lease:

Upon our de novo review of the lease agreement as a whole, and the provisions of paragraph fifty-one in particular, we conclude that the language is neither clear nor unambiguous. Rather, the language is ambiguous and susceptible to more than one reasonable interpretation. We are unable to ascertain the intent of the parties from the plain language of the agreement, and therefore cannot determine the amount of rent Charbonier [tenant] owed to Alhambra [landlord} under the lease for the relevant time period.

Given this ambiguity, we conclude the trial court must consider extrinsic evidence, not to change or vary the terms of the agreement, but only to “explain, clarify or elucidate” the ambiguity. Through the consideration of extrinsic evidence, the trial court may ascertain the parties’ intent at the time of the formation of the agreement, and thereby properly determine Charbonier’s rental obligation to Alhambra.

Charbonier Food Services, LLC, supra, at *23 (internal citation omitted).

 

 

 

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.