Spell Out Cure Period Repair Expectations

If you’re like most commercial space owners, you’ve included the commonly used “cure period” in your leases, to give tenants some time to fix any lease defaults. This makes it easier for both parties—it gives the tenant, who might not have even been aware of a violation, the opportunity to resolve things without resorting to lease termination or other remedies. But a problem could arise for you if the tenant thinks it has made adequate repair efforts during its cure period, but you disagree. That’s why it’s crucial to spell out exactly in the lease what both parties’ expectations are when it comes to curing a problem. The owner in a Nebraska case regarding a cure period learned the hard way that its idea of repair efforts were different than the tenant’s. 

In that case, a national pet product retailer received a notice of default and termination from the owner of the space it rented. The owner alleged that the tenant had failed to perform its maintenance obligations under the lease, most notably, failing to fix a large crack in a wall, which entitled the owner to terminate the lease. But the tenant argued that the lease terms allowed a cure period—that is, a period of time after it received the default notice during which it could perform the repairs. The owner and tenant each asked a trial court for a judgment in its favor without a trial.

A Nebraska trial court ruled in favor of the tenant because the owner couldn’t demonstrate that the tenant had defaulted on its obligations and failed to cure its default after notice, which were both necessary for termination. The district court stated that even if, for argument’s sake, the maintenance breach was sufficient to trigger the termination clause, the tenant had, during the cure period after it received the default notice, diligently pursued making repairs. There was evidence that it had created work orders within its own company to fix some items and had hired outside contractors when it was necessary [Petco Animal Supplies Stores, Inc. v. The Five Fifty Two Corporation, January 2016].