Lease Doesn't Make Tenant Responsible for Real Estate Tax Increases

What Happened: A nonprofit landlord leased property to a for-profit utility to operate a solar-powered electric-generating facility. The lease required the tenant to:

• “Pay directly to the town any incremental real property taxes, if any (stemming from the addition of the System)”;
• Pay any charges “imposed by any public authority due to [the tenant’s] occupancy and use of the leased premises”; and
• “Pay, on demand, any real estate property tax increases to the premises that are the direct result of the [tenant’s] personal property being affixed to the leased premises.”  

The town raised the real estate taxes upon learning of the transaction. The landlord demanded that the tenant pay the increase. After losing in Superior Court, the landlord appealed.

Ruling: The Massachusetts court upheld the lower court’s judgment in the tenant’s favor.  

Reasoning: The real estate tax increase didn’t “stem” from any of the contingencies listed in the clause. It occurred because of the property’s transfer from a non-profit to a for-profit utility. Moreover, it occurred two months before the parties even executed the lease. The lease language was clear and unambiguous, said the court. Had the parties intended “to require the plaintiff to pay real estate taxes imposed on the property, it would have been a simple matter to include language in the lease expressly saying so.”  

• LSE Corona Borealis LLC v. Fairgrounds Realty LLC, 2022 Mass. App. Unpub. LEXIS 513