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Handbook-of-Business-Contracts

Handbook-of-Business-Contracts

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Handbook-of-Business-Contracts
Handbook-of-Business-Contracts

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Published by: ahemadam on Apr 20, 2013
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There are a number of circumstances where a tenant will no longer be responsible for its duties
pursuant to the lease.

Surrender

The tenant no longer has to pay rent once the leased property is effectively conveyed back
(surrendered) to the landlord. This occurs when the landlord and the tenant agree that the lease will
end. If the unexpired term on the lease is more than a year, the surrender must be in writing to be
enforceable. Breach of the Covenant of Quiet Enjoyment This covenant or promise is implied into all
landlord-tenant relationships, and it implies that the landlord will not interfere with the tenant’s right
to possess the leased property. If the landlord invades the tenant’s right to possession, the tenant may
either assert his or her rights and retake possession or terminate the lease relationship, in which case
rent no longer has to be paid. Constructive eviction or breach of implied warranty may also give the
tenant the right to terminate the lease.

Abandonment by Tenant

In the past if a tenant unjustifiably abandons the property, the landlord could simply do nothing and
continue to collect rent from the tenant. Most states now require the landlord to make reasonable
efforts to mitigate damages by reletting to a new tenant. Generally, these states even require the
landlord to take affirmative steps such as advertising the space. If the landlord fails to take reasonable
steps to lease the property, his recovery against the original tenant will be reduced.

If the landlord accepts the abandonment or surrender of the property, then the tenant is relieved from
further liability. However, the mere fact that the landlord enters the property after abandonment,
makes repairs, takes back the keys, and offers to relet the property, does not constitute an acceptance
of the surrender.

JIAN AgreementBuilder® - Handbook of Business Contracts

100

Condemnation

A condemnation occurs when, for example, the government forces you to sell your property so it can
build a highway. In the event of a condemnation where 100% of the property for the balance of the
lease is taken, the lease is terminated, and the tenant no longer has to pay rent. If, however, the taking
is for less than the remaining lease term or only part of the property is taken, then the lease is not
terminated, and the tenant must still pay rent. In any case, the tenant will get his fair share of the
condemnation award.

Destruction of the Premises

Most, but not all, states relieve a tenant from his obligation to pay rent where that tenant leases part of
an improvement and that improvement is destroyed. What this means is that if you rent an office in a
building and that office is destroyed through no fault of your own, you no longer have to pay rent. On
the other hand, if you rent the land and build an office building which is destroyed, you still have to
pay the rent.

Breach

In some states, the failure to pay rent, does not allow the landlord to terminate the lease. It merely
gives the landlord a cause of action for damages. However, most states have enacted unlawful detainer
statutes which allow a landlord to terminate a lease where the tenant fails to pay rent. On the other
hand, if your lease requires the landlord to redecorate, but he or she refuses to do so, you can sue, but
you cannot terminate the lease.

The Hold-Over Doctrine

When a tenant no longer has a right to be in possession of the leased property, the landlord can either
treat this hold-over tenant as a trespasser and evict, or bind the tenant to a new periodic tenancy. If the
landlord creates a periodic tenancy, the terms and conditions of the old lease will apply. Where the
original term was for a year or more, a year-to-year tenancy will result. Furthermore, if, prior to the
termination of the original lease, the landlord notifies the tenant that occupancy after termination will
be at a higher rent, the tenant must pay that rent even if he or she objects. Many states give the
landlord double rent in hold-over situations where the tenant does not have a bona fide belief that
justifies the hold-over, and the landlord has made a written demand to the tenant to vacate.

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