Tenant Must Pay Rent on Space Delivered by Owner

March 1, 2003

A lease said the tenant wasn't obligated to pay rent until the owner had delivered the “entire premises vacant.” The “premises” consisted of a space in one building and three spaces in another building, one of which was occupied by a grocery store when the lease was signed. The owner tried but couldn't evict the grocery store, and so couldn't deliver that space to the tenant. The owner abated the tenant's rent. But the tenant refused to pay any rent, claiming that it didn't have to pay until the fourth space was delivered. The owner sued the tenant for violating the lease.

A lease said the tenant wasn't obligated to pay rent until the owner had delivered the “entire premises vacant.” The “premises” consisted of a space in one building and three spaces in another building, one of which was occupied by a grocery store when the lease was signed. The owner tried but couldn't evict the grocery store, and so couldn't deliver that space to the tenant. The owner abated the tenant's rent. But the tenant refused to pay any rent, claiming that it didn't have to pay until the fourth space was delivered. The owner sued the tenant for violating the lease.

A New York appeals court ruled that the tenant had to pay rent on the space delivered by the owner and ordered the tenant to pay nearly $800,000. The court noted that nothing in the lease indicated any intention to relieve the tenant of paying rent for the 20-year lease term for the “substantial space” that was delivered to it. In addition, the tenant hadn't initially objected when the owner abated its rent; it raised this issue only after its down payment on the rent had run out—three years after the lease was signed, the court added [Rachel Bridge Corp. v. Avi Dishi].

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