Sticking to Rent Payment Dates in Lease

Q: In my lease with a new tenant at my shopping center, I agreed to waive rent payments until I completed tenant improvements that had been negotiated. But I’m having financial difficulties and would like to start charging the tenant rent to compensate. If the tenant balks at this, what are my odds of prevailing if it becomes a legal battle?

A: You most likely wouldn’t be able to start charging the tenant before the point that it had agreed to pay rent. A recent Florida case highlights why. There, a marine supply store signed a lease for retail space. Under the lease, the owner of the space needed to complete improvements to the property before delivering possession. The lease included the following in its definition of “delivery”: “Landlord shall be deemed to have delivered possession of the Premises to Tenant when Landlord has given Tenant ten (10) days’ written notice that Landlord has substantially completed . . . the required improvements.” That section of the lease also provided that “rent shall be waived for the period between the Effective Date and the date on which Landlord delivers possession of the Premises to Tenant.”

At some point before the improvements were made, the owner demanded that the tenant begin paying rent. After a series of legal proceedings, the tenant was required to deposit rent payments into the court registry. It appealed that order, arguing that the trial court erred in ordering it to deposit rent pursuant to state statutes, because there is no rent due under the applicable lease due to the fact that the commercial lease agreement at issue included a provision waiving rent payments until the completion of certain improvements. A Florida appeals court reversed.

The appeals court noted that the language of the lease agreement is clear and unambiguous, and therefore must be enforced based on its plain language. It is undisputed that the owner waived required rent payments until it completed the improvements provided for in the lease, the appeals court said. Further, it is undisputed that it did not complete those improvements. Thus, there were no rent payments due under the lease agreement and, according to the appeals court, the trial court erred in ordering the tenant to deposit payments into the court registry [Custom Marine Sales v. Boywic Farms, April 2018].