Commercial leasing disputes can be costly. Not only can they sour a relationship between a landlord and a tenant, they are often very expensive. Between legal fees and lost rent or services, a lot of time and money can go into a commercial lease dispute. Thankfully, many commercial lease disputes can be avoided through careful drafting and communication. But, in any event, disputes can still arise and elevate into full-blown lawsuits. In this article, we discuss some common things causing commercial lease disputes and what parties can do to work through lease disputes when they happen.
What Can Cause a Commercial Leasing Dispute?
Disputes can arise from many different issues.
A tenant might stop paying rent because they believe the landlord is violating the lease or some applicable law.
For example, if a common element on a property stops working, and a tenant believes that the landlord is responsible for repairing it, a dispute can arise.
When the lease or the particular law is clear, the landlord should fix the issue. Unsurprisingly, that would be the end of the dispute. But, if the landlord believes that the tenant is incorrect, the dispute likely will escalate into a lawsuit or even an eviction proceeding.
On the flip side, if the tenant is engaging in behavior that the landlord deems inappropriate under the lease, they may demand that the tenant cease that behavior or risk being evicted or otherwise penalized. If the tenant refuses, a dispute will arise.
In many cases, a dispute will arise because there is unclear or ambiguous language in a lease.
What’s Not a Legitimate Lease Dispute?
Personal grudges against another party will not give rise to a legitimate dispute. Similarly, any bad faith actions against the other party won’t get very far.
A simple, clerical error likely won’t give rise to a legitimate dispute either. That is, if a tenant tries to pay rent but accidently addresses the payment incorrectly, but still pays a day later after discovering the mistake, that probably wouldn’t be a material breach of a lease. Conversely, if the tenant knows they addressed it incorrectly and does nothing to solve it, that probably would be a breach.
As a general rule, if something is a material breach of the lease, it gives rise to a legitimate dispute. Naturally, the issue in many disputes is determining whether something is actually a material breach.
In any event, let’s talk about how to resolve a commercial leasing dispute in greater detail.
Resolving a Commercial Leasing Dispute
Lease disputes can be complicated and time consuming. It’s important for both parties to understand their rights under the lease before proceeding. It’s also vital that both parties constantly look towards an ultimate resolution.
The Lease: The First Line of Defense
The first line of defense for either party is the lease.
If something is clearly spelled out in the lease, it’s unlikely that a court will go against it.
Conversely, if language is unclear, the court may have to step in to clarify what exactly the clause means.
To avoid this, tenants and landlords alike should hire an experienced attorney to review the lease before it is ultimately signed. An attorney will be able to determine whether or not the lease is in the best interests of either party and can help to negotiate revised terms.
Whether or not the language is clear, the lease is the primary resource that a court will reference in solving a lease dispute. The court will weigh the parties’ actions against the lease, and will decide accordingly.
However, it can take a long time to get through the court system (or even to arbitrate if a lease calls for arbitration in lieu of a trial). In the meantime, parties should try to negotiate a solution among themselves.
Settlement between the parties is generally a lot more efficient than waiting for the court system to sort something out. The parties should clearly communicate their demands during the negotiation process and seek an amicable solution whenever possible.
Potential solutions can vary greatly. The parties can negotiate rent abatement, explicitly restrict a particular behavior, or some other adjustment to the lease.
Ultimately, each party has something that the other one wants. A tenant wants to use a particular space, and a landlord wants to collect rent for leasing that space. Simply put, both parties have an interest in ending the dispute sooner rather than later.
However, one party may have a significantly greater leverage over the other party. This might be because the breach of the lease is particularly obvious, or simply because one party has greater resources and can withstand a long dispute.
Regardless, each party should consult with legal counsel in working through a lease dispute. Even if it doesn’t go to court, any settlement can have lasting consequences on both parties.
Escalation & Resolution
If negotiations are successful, the dispute ends!
But, if negotiations fall short for whatever reason, the dispute can get elevated into a lawsuit. This means that at least one party is asking the court to solve the dispute for them. The court will weigh the various factors and make a decision.
As mentioned earlier, some leases will include a mutual agreement to arbitrate. This means that the parties will use arbitration rather than a bench or jury trial. The lease will outline any limitations in how the parties can escalate a dispute.
If the court determines that one party is breaching, the other party can use its default remedies as outlined in the lease. This might include outright termination or some other measure.
Both parties should avoid self-help measures unless specifically provided for in the lease.
For example, a landlord should not proactively lock a tenant out of a space. Similarly, a tenant should not attempt to sabotage a landlord’s operations.
If there is any doubt, the parties should first consult with their respective attorneys in determining a course of action.
Conclusion – Solving a Commercial Leasing Dispute
Ultimately, the best way to solve a commercial lease dispute is before it happens. Clear drafting during lease negotiations is imperative. Communication between the parties after the fact can help to solve problems before they compound as well.
But, when they do happen, having an attorney on your side can help to make sure that your best case is presented.
If you need assistance in working through a commercial lease dispute, or if you need help drafting a lease, the experienced attorneys at Johnston Tomei Lenczycki & Goldberg LLC can help. Call us today at (847) 549-0600 or email us at email@example.com to schedule a free consultation.