Tenant Must Pay Post-Termination CAM Charges

March 22, 2022

What Happened: A retail tenant asked out of its lease, and the landlord agreed. The result was a written termination agreement requiring the tenant to pay a $55,000 lump sum, as well as “all Minimum Guaranteed Rental, Tenant’s Common Area Maintenance Charge, Insurance Escrow Payment, and Tax Escrow Payment. . . . up to and including the Termination Date.” The tenant paid the lump sum but not the CAM charges.

What Happened: A retail tenant asked out of its lease, and the landlord agreed. The result was a written termination agreement requiring the tenant to pay a $55,000 lump sum, as well as “all Minimum Guaranteed Rental, Tenant’s Common Area Maintenance Charge, Insurance Escrow Payment, and Tax Escrow Payment. . . . up to and including the Termination Date.” The tenant paid the lump sum but not the CAM charges. So, the landlord sued. The tenant claimed that it didn’t have to pay the CAM charges since they were part of the lease agreement and the lease no longer existed.

Ruling: The Missouri federal court nixed the tenant’s argument and ruled for the landlord.

Reasoning: The termination agreement contained no ambiguities. The lease was to be canceled and terminated as of 11:59 p.m. on the date the landlord received the lump-sum termination payment, the court explained. The CAM and other charges didn’t constitute part of the termination payment and thus weren’t due on any particular date. So, the lump sum didn’t extinguish the duty to pay CAM, and the landlord could enforce the termination agreement.

  • Holly Hills Realty, LLC v. PF at S. Grand, LLC, 2022 U.S. Dist. LEXIS 1911, 2022 WL 43325

 

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