Tenant Entitled to Rent Abatement

January 1, 2003

A lease provided that, if one of the anchor tenants left, the tenant was entitled to a rent abatement in the amount of one-half of the monthly fixed rent for as long as the anchor's space was vacant. The lease also required the owner to replace the anchor with a tenant “operating a similar type and size business.” When the grocery store anchor moved out, the tenant began paying the abated rent amount. The owner told the tenant that a home improvement store was taking over the anchor's space, so that, beginning in September, the tenant should resume making full rent payments.

A lease provided that, if one of the anchor tenants left, the tenant was entitled to a rent abatement in the amount of one-half of the monthly fixed rent for as long as the anchor's space was vacant. The lease also required the owner to replace the anchor with a tenant “operating a similar type and size business.” When the grocery store anchor moved out, the tenant began paying the abated rent amount. The owner told the tenant that a home improvement store was taking over the anchor's space, so that, beginning in September, the tenant should resume making full rent payments. When the tenant continued to pay the abated rent amount only, the owner sued it for violating the lease.

A Missouri appeals court ruled that the tenant was entitled to a rent abatement until the anchor was replaced by a tenant with a similar business. The court said that the tenant included this language about the replacement tenant in the lease to provide for the type of customer traffic necessary for the tenant's type of business—that is, selling women's clothing. Since a home improvement store isn't similar to a grocery store nor does it attract a similar type of customer, the owner had not satisfied this requirement. So the court ruled that the tenant could continue to pay the abated rent amount and ordered the owner to pay the tenant $5,100 in attorney's fees [Rathbun v. The Cato Corp.].

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