Sometimes, commercial lease contracts are very straightforward. In other situations, though, commercial leases can be complicated and murky. In the case of one rent dispute between a South Florida landlord and its tenant, the 3d District Court of Appeal concluded that a trial court wrongfully denied the tenant an evidentiary hearing to prove that some payments to cover maintenance and taxes actually qualified as rent under the lease terms.
When Double Park LLC entered into an agreement to lease a parking lot from Kaine Parking 125, LLC, the parties agreed to a “triple net” lease that required the tenant, as part of its rent obligation, to pay for maintenance and repairs, insurance, and one-half of the property taxes. The lease also stated that, if the tenant subleased the lot at a rental rate greater than what Double Park was paying Kaine, the tenant owed that excess to the landlord.
This became an issue after the tenant eventually subleased the lot. The landlord complained that the tenant was not paying the additional rent it owed because the subtenant was paying Double Park more than what Double Park was paying Kaine. The two sides eventually ended up in court, with the tenant alleging breach of contract and the landlord alleging non-payment of rent. The landlord also took the next step of asking the court to order the tenant to deposit the unpaid excess rent money into the court registry. The tenant balked, arguing that it did not actually owe the excess rent that the landlord claimed. The tenant asked the court to hold an evidentiary hearing to determine how much money should be deposited into the registry.
The trial court, during a non-evidentiary hearing, instead chose to order Double Park to pay into the registry the difference between the gross amount it was collecting from the subtenant and the base amount it was obligated to pay to the landlord.
The tenant appealed, arguing that the trial court’s methodology was not a correct way to calculate the excess rent. The appeals court concluded that the trial court should have convened the evidentiary hearing. A factual dispute existed regarding what the “true” amount of total rent was that the tenant was paying the landlord. For example, Double Park paid $2,500 per month for refurbishing the lot and also paid one-half of the property taxes. The appeals court pointed out that, if the tenant paid the landlord directly to cover these costs, those payments seemed to be includable as “rent” and should have factored into the calculation of the difference between the subtenant’s rent it paid the tenant and the tenant’s total rent it was paying the landlord.
Commercial leases can be intricate documents with highly complicated elements. Obtaining the benefit of the bargain for which you negotiated can be a challenge. To make sure you are armed with the advice and representation you need regarding your commercial leases, talk to the Florida real estate attorneys at Stok Folk + Kon. Our attorneys have the experience, skill and dedication you need to protect your interests.
Contact us online or by calling (954) 237-1777 to schedule your consultation.
More blog posts:
When You Can (And Cannot) Escape Your Florida Commercial Lease Early Under Constructive Eviction, Florida Business Lawyers Blog, June 4, 2015
Tenant Entitled to Evict Subtenant Despite Unjust Enrichment in Broward County Commercial Lease Dispute, Florida Business Lawyers Blog, April 29, 2015