Lease Required Owner to Make Major Repairs to Property

Facts: A tenant that operated a printing business signed a 15-year lease for space. The owner of the building later demanded that the tenant replace the aging heating and air conditioning (HVAC) system and parking lot. The tenant claimed that was the owner’s responsibility. The owner sued the tenant. A district court ordered the tenant to replace the HVAC system and parking lot. The tenant appealed.

Decision: An Iowa appeals court reversed the lower court’s decision.

Reasoning: The tenant maintained that the lease required the owner to replace the HVAC system and parking lot. It also claimed that the district court erred by ordering it to pay the owner’s attorney’s fees.

The appeals court determined that the language of the lease didn’t require the tenant to replace the HVAC system and parking lot. Furthermore, because it concluded that it was reasonable to imply a duty to make major repairs or replace the HVAC system and the parking lot upon the owner, and that these obligations were indispensable to the purpose of the lease between the owner and tenant, the appeals court sent the case back to the lower court with directions to enter an order obligating the owner to make such repairs or replacements as they become necessary. The appeals court also ordered the district court to determine whether the tenant could recover breach-of-contract damages for reimbursement for repairs that it had already made to the HVAC system. It also reversed the district court’s award of attorney’s fees to the owner.

• Printer, Inc. v. Benskin Bros., Inc., March 2014