Put Three Protections in Lease to Prevent Constructive Eviction Claims

“Constructive eviction” happens when a landlord commits a lease violation so egregious that it effectively forces the tenant out. Result: The tenant is free of all obligations and, in many cases, entitled to damages. And while constructive eviction cases used to be somewhat rare, recent rulings in favor of tenants have fueled a resurgence of new claims. Bottom Line: You need to be on guard against constructive eviction liability risks. Here’s what you need to know and do to protect yourself.

The Law of Constructive Eviction

Constructive eviction is a legal doctrine created by courts to protect tenants against landlords that neglect their property and the tenants that lease it.

Constructive eviction law 101: Every lease includes a “right of quiet enjoyment”—that is, an express or implied covenant by the landlord guaranteeing the tenant’s right to possess and use the property for its intended purpose without undue disturbance. If the landlord violates the covenant and the premises become untenantable, the tenant is entitled to “surrender”—that is, leave the premises and be free of the lease. Violating the covenant of quiet enjoyment, in other words, is the legal equivalent of evicting the tenant. The term “constructive eviction” is somewhat misleading because it’s the tenant that actually exercises the initiative in ending the lease.

What’s at Stake: The Practical Dangers

For a landlord, the real trap is committing constructive eviction inadvertently. Typical scenario: Upon finding the space vacated, you think the tenant is a deadbeat and sue for breach of lease. The tenant counter-claims for constructive eviction and demands massive damages. It’s only when the court sides with the tenant that you realize you committed constructive eviction.

Claim Must Meet Five Conditions

Constructive eviction is a double-edge sword. Tenants can use it as a defense if you sue them for abandonment; they can also use it offensively as a basis for suing you. But a tenant’s constructive eviction claim will succeed only under the following conditions:

1. Tenant must prove it. In either case, tenants have the burden of proving that the landlord committed constructive eviction. And that’s not easy. But experts tell the Insider that recent cases (especially the Sears case discussed below) have lowered the bar and made tenants much more aggressive.  

2. Tenant must vacate. Constructive eviction is a last resort that tenants can use only if and when they vacate the premises. So tenants can’t rely on constructive eviction as a justification for withholding rent or extracting rent cuts and other lease concessions that they could only accrue by continuing to occupy the space.

3. Breach must be egregious. Even if tenants move out, there’s no guarantee that they’ll win their constructive eviction case. For starters, it takes a pretty serious breach to violate a tenant’s covenant of quiet enjoyment. Common examples include:

• Locking the tenant out;
• Blocking access to the premises;
•  Failing to provide heat/air conditioning, elevator, plumbing, and other essential building services; and
• Creating or allowing substantial nuisances like noise, smoke, or infestation.  

Factors courts consider in deciding if a problem rises to the level of constructive eviction include how long the problem lasts and the nature of the tenant’s business. So, for example, noxious odors and pest infestations may cross the line for a restaurant tenant but not for a chemical warehouse. (See "Avoid Seven Traps that Trigger Constructive Eviction Claims" for more.)

Note, though, that little breaches may add up to constructive eviction. In a significant 2015 case, Sears, Roebuck & Co. v. 69th Street Retail Mall, L.P, the court ruled that constructive eviction can be triggered by not only big problems but the cumulative effect of smaller ones that wouldn’t alone cross the line. The key is whether those little problems persist and remain unremedied. Although the Sears case is from Pennsylvania, it’s proven influential in other states and, as a result, made it easier for tenants in many parts of the U.S. to prove constructive eviction.

4. Landlord must be at fault. The tenant must also be able to show that the untenantable condition was caused by the failure of the landlord (or its agent) to meet its duties under the lease.

Example 1: Tennessee court says no constructive eviction because landlord wasn’t responsible for roof damage done by tenant’s own contractor [Marshalls of Nashville, Inc. v. Harding Mall Associates, Ltd.];

Example 2: Criminal activity at mall not grounds for constructive eviction where lease doesn’t require landlord to protect the tenant from third parties, rules North Carolina court [Charlotte Eastland Mall, LLC v. Sole Survivor, Inc.].

5. Tenant must give landlord chance to cure. Some states require tenants to notify landlords of breaches and give them a reasonable period of time (up to 30 days, depending on the state) to cure. The tenant’s right to vacate and claim constructive eviction arises only if the landlord doesn’t adequately fix the problem during the cure period. Of course, many leases—as should yours—provide for notification and cure even if it’s not expressly required by the state’s law.

The Three Lease Protections You Need

Constructive eviction was supposed to be a drastic remedy to protect tenants against crummy and neglectful landlords. But thanks to recent legal changes, including the Sears case noted above, you can get burned even if you’re diligent in maintaining your property and tenants’ welfare. That’s why you need to insert a lease clause, like our Model Lease Clause: Set Limits on Tenant’s Rights of Constructive Eviction, which sets three key limits on tenants’ rights:

Right to notice and time to cure. Require the tenant to notify you of any condition it believes constitutes grounds for a constructive eviction and give you a specific period to cure it [Clause, par. a];

Provision for temporary service interruptions. Specify that temporary service interruptions are likely to arise and that they don’t constitute a violation of the covenant of quiet enjoyment or grounds for constructive eviction [Clause, par. b]; and

Provision for temporary construction inconveniences. Add language protecting you against liability for temporary obstructions, noise, and other conditions associated with construction that may interfere with the tenant’s business [Clause, par. c].