'Premises' Included Only Interior Space

April 30, 2005

A lease described the rented space as “the space being more particularly shown on the attached floor plan designated Exhibit ‘A’ (hereinafter called the ‘premises’) consisting in the aggregate of 113,400 gross square feet in two buildings … situated on real property … and a Water Tower and appurtenances.” When the tenant learned that its underground storage tank had contaminated the soil and groundwater outside the buildings, it tried to clean up the contamination.

A lease described the rented space as “the space being more particularly shown on the attached floor plan designated Exhibit ‘A’ (hereinafter called the ‘premises’) consisting in the aggregate of 113,400 gross square feet in two buildings … situated on real property … and a Water Tower and appurtenances.” When the tenant learned that its underground storage tank had contaminated the soil and groundwater outside the buildings, it tried to clean up the contamination. The owner sued the tenant for violating the lease by not returning the “premises” in “good order and condition” because the “premises” included the land surrounding the buildings.

New York's top court dismissed the owner's lawsuit. The court said that “the term ‘premises’ was intended to include only the interior portions of the buildings.” The court pointed out that the lease said the “premises” was the space shown on a floor plan consisting of a certain number of square feet in buildings. And the lease repeatedly mentioned the “premises” separately from the water tower, appurtenances, land, parking lot, and building. If the term “premises” was supposed to include the interior space and the land, the language in these provisions would be meaningless, said the court. Since the owner didn't claim that the tenant failed to return the interior space in good order and condition, the tenant didn't violate the lease [South Rd. Assocs., LLC v. IBM Corp.].

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