Defaulting Tenant's Closure Doesn’t Justify Landlord's Changing the Locks

February 20, 2022

What Happened: After warning that its business was struggling, a restaurant tenant paid only half the rent on June 1. Two weeks later, it closed the restaurant. When its demands for full rent went unheeded, the landlord changed the locks and re-entered the premises on June 24. Both sides accused the other of lease violations.

Ruling: The Iowa court ruled for the tenant, and the appeals court upheld the decision.

What Happened: After warning that its business was struggling, a restaurant tenant paid only half the rent on June 1. Two weeks later, it closed the restaurant. When its demands for full rent went unheeded, the landlord changed the locks and re-entered the premises on June 24. Both sides accused the other of lease violations.

Ruling: The Iowa court ruled for the tenant, and the appeals court upheld the decision.

Reasoning: The tenant breached first on June 1 by not paying full rent, the court acknowledged. However, it wasn’t a material breach justifying the landlord’s right to re-enter, the court continued, citing provisions in the lease that gave the tenant the right to cure in such contingencies. So, the landlord committed the first material breach by changing the locks without giving the tenant the opportunity to cure. The court also rejected the landlord’s reliance on the clause allowing for re-entry in the “event of an emergency,” since the clause didn’t define what kind of “emergency” justified re-entry.   

  • Dolly Invs., LLC v. MMG Sioux City, LLC, 2021 Iowa App. LEXIS 1040

Topics

More like this