Tenant that Waited to Vacate Premises Not 'Constructively Evicted'

Facts: In 2002, a tenant approached the owner about subletting two of its floors to a second tenant. Instead, the owner entered into a separate lease with the second tenant and charged less for rent. The primary tenant was required to cover the difference and be responsible for the full rent if the second tenant defaulted.

Three years into the lease, the second tenant stopped paying rent after allegedly discovering dangerous toxins on the premises. Several months later, after receiving a rent demand letter, the second tenant vacated the premises but claimed that it was forced to vacate because of the dangerous toxins.

The owner sued the primary tenant for the unpaid rent, and won. The primary tenant then sued the second tenant to recover the amount the primary tenant had paid to the owner.

Decision: A New York court ruled in favor of the primary tenant.

Reasoning: The second tenant did not prove that it was constructively evicted—that is, forced to vacate the premises because of unsafe conditions—said the court. To claim constructive eviction, the second tenant would have had to vacate soon after the unsafe condition was discovered.

Editor's Note: The second tenant also argued that the owner had violated the lease's “implied warranty of habitability—that is, the owner's guarantee that the premises were in a condition suitable for the tenant's needs. However, implied warranties of habitability are not applicable to commercial leases.

• Dell Inc. v. GJF Construction Corp., December 2007