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Evidence in Commercial Lease Dispute Proved Tenant Was a Holdover and Had Not Renewed Lease, Florida Court Rules

empty officeA recent commercial lease dispute between a landlord and a tenant of a property in Miami-Dade County presented the question of whether the parties’ negotiation communications and the tenant’s remaining in the space amounted to a renewal of the parties’ lease. Ultimately, the Third District Court of Appeal affirmed a lower decision holding that the evidence in the case did not demonstrate a lease renewal, but the tenant did owe the landlord rent as a “holdover” tenant.

The dispute revolved around a repair service business’ tenancy at a space in Hialeah. The landlord and the tenant signed a five-year lease for the period of 2001-2005. The lease gave the tenant the right to renew for an additional five years but required that it notify the landlord 120 days before the initial lease term ended.

Along the way, there were a few issues. Hurricane Wilma struck in the fall of 2005, doing some damage to the property. Allegedly, the landlord orally promised the tenant that, if the tenant would pay for the repairs, the landlord would issue reimbursement for the cost.

The landlord and the tenant exchanged many communications regarding renewing the lease but never reached a written agreement. The tenant, however, remained in the property and continued paying rent for another three years. On July 31, 2009, the tenant left the property.

That action spawned the lawsuit. The landlord sued for breach of the lease. The two sides’ communications amounted to a renewal, the tenant breached when it left in July 2009, and, therefore, the tenant owed unpaid rent for the period from August 2009 to December 2010, according to the landlord. The tenant countersued, arguing that the landlord wrongfully withheld its security deposit and wrongfully failed to pay reimbursement for the hurricane-related repairs.

At the end of the trial, the court concluded that the lease wasn’t renewed and that the tenant was a holdover tenant. As the landlord of a holdover tenant, this landlord was entitled to receive one month’s rent because the tenant did not notify the landlord before leaving the property. This meant the landlord was entitled to payment for rent for August 2009 and for property taxes the tenant improperly hadn’t paid. The tenant, on the other hand, was entitled to its security deposit and to the cost of the hurricane repairs. The result was a net award of $7,550 to the tenant.

The landlord appealed, but its appeal was beset by procedural problems. During the course of the litigation, the tenant corporation was administratively dissolved by the State of Florida for failing to file certain required corporation paperwork. Eventually, the tenant was reinstated by the state. Based upon this dissolution, the landlord argued that the tenant was not allowed to pursue its counterclaim. The appeals court ruled against the landlord because it raised the issue of the tenant’s corporate standing for the first time in its appeals case. The landlord’s contention, “raised for the first time after final judgment and after notice of appeal, comes too late.”

Even if the landlord had raised the issue in a timely manner, it likely would not have defeated the tenant’s counterclaim. The trial court, if presented with a timely claim regarding corporate status, could have simply stopped the case until the tenant got its corporate paperwork in order and got its active status reinstated.

Another of the landlord’s arguments — that it was entitled to double rent for August by virtue of the tenant’s status as a holdover tenant — had its own procedural problems. The landlord’s arguments contended solely that it was entitled to unpaid rent because the two sides had a valid lease covering 2006-2010, which the tenant breached. The landlord made detailed assertions about the unpaid rent it was owed in its complaint filing, and it never made any claim for double rent based upon the tenant’s status as a holdover tenant. By failing to include that in its pleadings, it was not able to pursue this argument on appeal.

Finally, the landlord argued unsuccessfully that the tenant should not have received compensation for the hurricane damages, based upon the alleged oral agreement. Again, there was a procedural problem. The tenant put on evidence at trial about the existence of the oral agreement and its terms. The landlord didn’t object to this evidence. Even though the tenant didn’t include the oral agreement issue in its pleadings, the landlord had a full and fair opportunity to defend against this claim at trial. When the landlord failed to object, that meant that the oral agreement issue was “tried by consent,” and the tenant was permitted to recover its damages.

If you find your business locked in a commercial lease dispute with your landlord or tenant, you need counsel working for you who is experienced in dealing with these cases. The knowledgeable South Florida commercial lease attorneys at Stok Folk + Kon have been helping both tenant and landlord businesses resolve their lease disputes and protect their interests.

Contact us online or by calling (305) 935-4440 to schedule your consultation and find out how this firm can help you.

More blog posts:

Stok Folk + Kon Client Settles With Landlord in South Florida Breach of Contract Case, Florida Business Lawyers Blog, April 13, 2017

Florida Landlord Entitled to Summary Judgment on Possession But Not Rent in Lease Abandonment Case, Florida Business Lawyers Blog, March 3, 2017