Tenant Entitled to Early Termination for Space Converted to Housing

Facts: An office building tenant moved out of its space, but continued to fulfill its lease obligations until the property manager notified it that several previous subcontractors hired by the owner were occupying the space. The subcontractors, all of whom were unauthorized to be on the property, had converted a maintenance closet into a working shower and some office space into bedrooms. The property manager had the subcontractors and their belongings removed from the tenant's space.

The tenant then notified the property manager that it would no longer be occupying the space and that it would not be responsible for the costs associated with removing the alterations made by the subcontractors. The owner sued the tenant, but the court ruled in the tenant's favor, stating that it had been constructively evicted from the space because the subcontractors had taken it over. The owner appealed.

Decision: The appeals court upheld the trial court's decision.

Reasoning: On appeal, the owner claimed that the court improperly concluded that the tenant: (1) was constructively evicted; and (2) was not obligated to comply with the terms of the lease because of the constructive eviction. But the appeals court concluded that the owner was entitled to recover payment for use and occupancy from the subcontractors because they had converted the office from commercial to residential space, but not from the tenant, because the presence of the subcontractors violated the tenant's lease right to quiet enjoyment of the space, constructively evicting it from the office.

• Wallingford Turnpike, LLC v. Webster Insurance, Inc., August 2010