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Commercial Lease Agreement’s Lack of Clarity Sends South Florida Tenant and Landlord Back to Trial Court for More Hearings

Alhambra CircleIn a recent Third District Court of Appeal decision, a South Florida commercial tenant secured a reversal of a lower court’s ruling in favor of its landlord. The appeals court sent the two sides back to the lower court to present more evidence about what their true intent was regarding the rent provision in their agreement. The problem with the contract that led the appeals court to order additional action was that the lease contract’s rent provision was not clear and unambiguous on its face.

The tenant, Charbonier Food Services LLC, had owned and operated a restaurant in a Coral Gables office building owned by 121 Alhambra Tower LLC since 2011. For four years, the two sides had no disputes regarding rent, and Charbonier paid its full rent on time every month. Starting in the fall of 2015, though, the landlord starting charging Charbonier an extra $10,000, which it claimed it was allowed to do under the rent provision in the two sides’ lease agreement.

The tenant objected to the landlord’s interpretation of the lease and, when rent was due, simply sent the landlord the normal amount it had always paid. The landlord then sent the tenant a letter stating that it was $10,700 in arrears and giving Charbonier seven days to pay up or get out. The tenant went to court to ask a judge to issue a declaratory judgment supporting its interpretation of the lease. The landlord countersued for an order of eviction. In addition, the landlord asked the judge to order the tenant to pay the disputed amount of rent into a registry controlled by the court.

The trial court concluded that the lease’s language clearly supported the landlord’s interpretation of the rent provision and issued a ruling in the landlord’s favor. Charbonier appealed, and the appeals court reversed the lower court’s ruling. The problem was, in the opinion of the appeals court, that the two sides did not have a lease agreement that was clear and unambiguous. The rent provision was both unclear and “susceptible to more than one reasonable interpretation.” The appeals court concluded that it could not, based upon the language in the lease agreement, figure out exactly what the intent of the two sides was and precisely how much Charbonier should have owed the landlord for rent.

Generally speaking, when two sides go to court over a contractual dispute, the court may only consider the language that is contained in the contract document itself. That holds true when the contract is clear and unambiguous. However, when a contract, such as a commercial lease agreement like the one between Charbonier and Alhambra, is unclear or ambiguous, the court can consider evidence beyond just the wording of the agreement. In this case, the only outside evidence the two sides could present would be evidence that showed what their intent was when they created the lease agreement, which would allow the court to deduce what the proper amount of rent was.

Win or lose, this litigation will have likely been expensive and time-consuming for both sides. This could have been avoided with a lease agreement that was more clear and unambiguous on its face regarding rent. The experienced Florida real estate and landlord-tenant litigation attorneys at Stok Folk + Kon have many years of experience helping commercial clients at all steps of the process, from assessing the benefits and drawbacks of a lease proposal to drafting a workable lease agreement to litigating disputes that arise over your commercial contracts.

Contact us online or by calling (305) 935-4440 to schedule your consultation.

More blog posts:

Anti-Assignment Clauses and Commercial Contracts in Florida, Florida Business Lawyers Blog, July 6, 2016

Possible Unjust Forfeiture, Cured Defaults Impede Florida Landlord’s Effort to Evict Restaurant-Nightclub Tenant, Florida Business Lawyers Blog, Feb. 19, 2016

Photo credit: Comayagua99 at Wikimedia Commons.