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A Florida Appeals Court Rules Against a Landlord’s Claim for Payment from the Court Registry in Broward County Sublease Dispute

pilates studioSometimes, in Florida. when landlords and tenants become embroiled in a dispute and in subsequent litigation, it becomes necessary for the court to handle and hold the rent payments that are owed under the terms of the commercial lease. Once those payments are made into the court’s registry, who has the right to obtain those funds if your case involves multiple parties like a landlord, a tenant, and a subtenant? For answers to questions like these and effective representation in your commercial leasing litigation, retain the services of an experienced Florida commercial landlord-tenant attorney.

One recent case from South Florida involved this mix of a landlord, a tenant, a subtenant, and the court registry. The Broward County building owner had leased a space to a pilates business. That tenant eventually subleased part of the space to a plastic surgery and cosmetic medicine office. For the subtenant, the arrangement made good business sense, since the subtenant counted on the traffic from the pilates studio to funnel some additional business to its plastic surgery and cosmetic medicine business. Additionally, the sublease agreement called for the tenant to provide marketing services for the subtenant’s office.

Before the lease ended, though, the tenant left the premises. The subtenant then stopped paying rent. It contended that its business required the traffic provided by the pilates business and that it was no longer getting the benefit of the marketing services promised to it in the sublease agreement. That spawned litigation, with the tenant seeking an order of eviction and money damages for breach of the lease, while the subtenant sought money damages for unjust enrichment. Once the case entered litigation, the subtenant paid its rent but paid it into the court registry, as required by Florida law.

The next wrinkle occurred when the landlord entered the case to claim that it was entitled to the rent money that was held by the court registry. Depending on the facts of a case, a landlord may be entitled to be paid from the court registry. If the non-receipt of rent puts the landlord in jeopardy of losing the property or otherwise places an unfair hardship on the landlord, the landlord can seek and obtain an order from the court allowing it to receive hardship payments from the court registry.

As the tenant-subtenant litigation continued, moving back and forth between the trial court and court of appeal, more rent obligation accrued. By the time the case went back to the trial court, the landlord persuaded the trial judge that it was owed $143,000 in rent. This was a major defeat for the subtenant, who had won an unjust enrichment award of $100,000, but there was only $6,000 left in the registry.

The subtenant appealed and won. The money in the registry was rent but was not necessarily rent owed to the landlord. The landlord was only entitled to hardship payments. Whichever rights the landlord had to the registry money, those rights were subordinate to the main court action between the tenant and subtenant.

Commercial leasing lawsuits can potentially be complex litigation matters with multiple parties. Make sure that you are prepared for whatever transpires and are armed with effective counsel to protect your business interests. The knowledgeable South Florida landlord-tenant litigation attorneys at Stok Folk + Kon have been providing diligent representation to our commercial landlord and tenant clients for many years.

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:

Uncertainty Surrounding the Identity of the Correct Landlord Allows St. Petersburg Tenant to Avoid Summary Judgment, Florida Business Lawyers Blog, Sept. 8, 2017

Voluntary Use of the Court Registry in a Florida Commercial Landlord-Tenant Dispute, Florida Business Lawyers Blog, Feb. 15, 2017

Photo Credit: UptownFitness, [CC0 License], via Pixabay