An “anchor” tenant at a South Florida shopping mall won its case seeking to sublease part of its space to a sporting goods retailer. The commercial tenant was successful because of the way its agreement with the landlord was worded. (The contract clearly allowed the store to sublet to other retailers, and there was nothing in the contract that said that the store had to get the landlord’s approval at any point in the process of obtaining a subtenant.) The store’s success is a clear example of the paramount importance of ensuring proper wording in your commercial lease, which is but one of many ways that a South Florida business attorney can help you.
The store, Sears, leased a large “anchor” space within the Gardens Mall in Palm Beach Gardens. At some point, Sears decided to sublease part of its space to Dick’s Sporting Goods. The landlord did not approve of the sublease. In an attempt to prevent the sublease from coming to fruition, the landlord began to collaborate with the City of Palm Beach Gardens. Eventually, the city passed a resolution that required tenants to obtain both landlord and city approval before subleasing space in Gardens Mall.
Sears sued. Sears argued that its original agreement with the landlord, signed in 1987, gave it the right to sublease its space. According to the department store’s complaint, the landlord improperly impaired the store’s ability to contract by coordinating with the city to prevent the subleasing of Sears’ space at the mall.
The appeals court sided with Sears, concluding that the city resolution improperly restricted Sears’ constitutional right to contract. The resolution reduced the value of Sears’ interest – namely, Sears’ ability to sublease.
Additionally, the appeals court agreed with Sears that its agreement with the landlord gave it the right to sublease, and, based upon that agreement, Sears was free to enter into a sublease without having to seek advance approval from the landlord. The agreement between Sears and the landlord specifically stated that Sears “shall have the right to assign this Lease and to sublet from time to time the Demised Premises or any part thereof.” The agreement restricted Sears to subleasing to retail businesses, but this was not an impediment because Dick’s was a sports merchandise retailer.
The plain language of the agreement between Sears and the landlord contained no provision in it, according to the court, that mandated that “Sears [needed] to seek approval before subleasing one floor of its two-story lease, within the mall, to either Dick’s or any other retailer.” Based upon that contract’s terms, Sears was entitled to a declaratory judgment declaring Sears’ right to sublease.
When you enter into a commercial lease, whether you’re the tenant or the landlord, it is important to understand exactly what each provision does (and does not) do, as well as ensure that every part has been negotiated and resolved to your satisfaction. In this and many other regards, experienced Florida commercial leasing counsel can help. The diligent South Florida landlord-tenant attorneys at Stok Folk + Kon have been helping commercial landlords and tenants in Florida for many years achieve agreements that work for them. Find out how you can put our skills and resources to work for you.
Contact us online or by calling (305) 935-4440 to schedule your consultation and find out how this firm can help you protect your interests.
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 Mall Tenant Launches Class-Action Attack Against Commercial Landlord Over Utility Charges, Florida Business Lawyers Blog, Oct. 21, 2016