Subletting Space Didn't Excuse Tenant from Lease Responsibilities

Facts: A lease, entered into in January 2004 between the tenant and the owner, allowed for early termination by the tenant after one year if the tenant chose to close its fitness center. Exercising this right required the tenant to provide 90 days’ written notice of the termination and remain liable for the rent for up to 12 months after those 90 days, unless the owner leased the space to a new tenant within that period.

The tenant closed its fitness center before the end of the lease term and got permission to sublet the space to a new tenant. In January 2005, the tenant exercised the early termination option, provided the required 90 days’ notice, and acknowledged the potential liability for rent for one more year. The sublease between the tenant and the subtenant ended in November 2005, and the tenant stopped paying rent in March 2006.

The owner then sued the tenant for the rent through November 2006, claiming that because the tenant continued to sublet the space until November 2005 and the owner did not find another tenant, the tenant should be responsible for rent until November 2006.

The trial court granted the owner's request for a judgment without a trial, and the tenant appealed.

Decision: A Georgia appeals court ruled in favor of the owner.

Reasoning: The appeals court agreed that the owner was entitled to a judgment without a trial because the subtenant did not vacate the space after the tenant provided the notice of its intent to exercise the early termination option. Therefore, that notice was ineffective.

• Valugym v. PTC Properties, March 2008