Lease Renewal Doesn't Waive Tenant's Right to Rent Abatement for Anchor's Departure

July 27, 2023

What Happened: A shopping center lease required the landlord to notify a clothing retail tenant and abate its rent if the anchor tenant, TJ Maxx, ceased to be “Open for Business” for three consecutive months. TJ Maxx moved out, and it took six months for the landlord to find a new tenant, Ollies Bargain Outlet, for the space. The landlord didn’t provide the required notice after TJ Maxx vacated, but the tenant kept its mouth shut and continued paying full rent.

What Happened: A shopping center lease required the landlord to notify a clothing retail tenant and abate its rent if the anchor tenant, TJ Maxx, ceased to be “Open for Business” for three consecutive months. TJ Maxx moved out, and it took six months for the landlord to find a new tenant, Ollies Bargain Outlet, for the space. The landlord didn’t provide the required notice after TJ Maxx vacated, but the tenant kept its mouth shut and continued paying full rent.

A couple of years later, the tenant asked the landlord for a rent reduction. The landlord refused, but the tenant still decided to renew, while advising the landlord that it had no intention “to waive any rights that it has or may have pursuant to the Lease.” When COVID hit, it paid reduced rent declaring its intention to continue doing so until it recouped the abatement to which it was entitled for the departure of TJ Maxx. The landlord then sued for unpaid rent and eviction.

Ruling: The Tennessee appeals court upheld a ruling in the tenant’s favor.

Reasoning: The landlord insisted that the tenant had waived any right to abatement under the lease related to TJ Maxx’s departure when it renewed the agreement. The court begged to differ, brushing aside the landlord’s contention that the renewal constituted a brand-new lease. Moreover, the tenant specifically stated at the time of renewal that it wasn’t waiving any of its lease rights.

The final nail in the coffin was the provision in the lease specifically stating that “no waiver by either party of any term, covenant or condition (‘Provision’) under this Lease by the other party will be effective or binding upon such party unless given in the form of a written instrument signed by such party, and no such waiver will be implied from any omission by such party to take action with respect to such Provision.” There was no such written waiver in this case.

  • Madison Holdings, LLC v. Cato Corp., 2023 Tenn. App. LEXIS 253, 2023 WL 4103130

 

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