Failure to Complete Improvements Is Grounds for Eviction

What Happened: On Jan. 6, an airport authority assigned a lease to a hotel tenant requiring the latter to install a full-service bar, swimming pool, and other improvements and operate under a nationally recognized chain brand name by Dec. 31. But the hotel met neither obligation and the authority sent an eviction notice. The hotel denied that it had defaulted on the lease and continued to send rent payments each month. The Indiana court sided with the authority, and the hotel appealed.

Decision: The Court of Appeal upheld the hotel’s eviction.

Reasoning: The case revolved around two questions:

1. Did the hotel commit a “material” breach justifying eviction? Yes, said the court. The hotel’s duty to complete the renovations and rebrand weren’t just “a few items,” as the tenant claimed but went “to the heart of the lease.” The airport authority’s whole purpose and expectation in assigning the lease was to turn what had become a rundown property into a quality hotel operating under a respectable brand.  
2. Did the authority waive its eviction rights by allowing the hotel to continue paying rent? The court said no. Although the hotel did keep making rent payments for several months after receiving the eviction notice, the lease included a clear clause requiring that all waivers be put into writing. Moreover, the authority took deliberate steps to avoid receiving and accepting the rent payments, including having its attorney send emails marked “CRITICAL” instructing authority personnel not to deposit or cash any of the hotel’s checks.

• Ind. Hotel Equities, LLC v. Indianapolis Airport Auth.: 2019 Ind. App. LEXIS 176, 2019 WL 1716952 (April 2019)