Leasing Agent Had No Authority to Terminate Tenant's Lease

April 30, 2002

A shopping center tenant that was having financial problems asked the owner if another store would be interested in taking over its space. The owner told the tenant to call its leasing agent, which it did. The leasing agent told the tenant that the tenant's neighbor wanted to expand and would take over its space. The leasing agent asked the tenant if it could remain in the space through May 31, and it said yes. The tenant stayed and paid rent through June 30, after which time it moved out. Meanwhile, negotiations with the neighboring store had stalled.

A shopping center tenant that was having financial problems asked the owner if another store would be interested in taking over its space. The owner told the tenant to call its leasing agent, which it did. The leasing agent told the tenant that the tenant's neighbor wanted to expand and would take over its space. The leasing agent asked the tenant if it could remain in the space through May 31, and it said yes. The tenant stayed and paid rent through June 30, after which time it moved out. Meanwhile, negotiations with the neighboring store had stalled. The owner sued the tenant for nonpayment of rent. The tenant argued that the leasing agent had terminated its lease on the owner's behalf.

A Texas appeals court ruled that the tenant violated its lease when it moved out and ordered the tenant to pay more than $70,000 in back rent. The court said that the leasing agent had no authority to terminate the tenant's lease on the owner's behalf. The leasing agent's responsibility was to find new tenants, not to terminate leases, the court said. Also, the tenant had asked the leasing agent to find a new tenant, not to terminate its lease, the court added [Regency Realty Corp. v. The Carriage Shop, Inc.].

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