Commercial lease and sublease agreements can be complex contracts, and they may become even more so when the agreement between the parties involves more than just a simple payment-for-occupancy exchange. A recent case before the 4th District Court of Appeal involved such an arrangement, when a rent dispute erupted between a property’s subtenant and the tenant, who was also the subtenant’s provider of marketing services.
Edge Pilates Corporation leased a space for a pilates fitness studio in Fort Lauderdale. Edge evetually subleased part of its space to Tribeca Aesthetic Medical Solutions, where Tribeca would run a plastic surgery and cosmetic medicine office. The sublease agreement stated that the medical office’s rent was payment not only for occupancy of the subleased space, but also for the tenant’s agreement to, in all its marketing activities, advertise both its and Tribeca’s businesses.
Sometime later, the subtenant failed to pay its rent on time. The tenant sued for eviction and, when it did, the subtenant countersued, claiming that the pilates studio failed to provide the marketing efforts that were required under the sublease agreement. The trial court ruled against all of the claims each side made except one: the subtenant’s unjust enrichment claim. The court decided that the tenant had been unjustly enriched by accepting the full rent amount every month but failing to provide the marketing services required by the agreement. The court set the value of those marketing services at $100,000 and issued a ruling in favor of the subtenant in that amount.
The judgment did not survive the tenant’s appeal, however. The appeals court concluded that the tenant met all the statutory requirements necessary to be entitled to an order of eviction. To evict a tenant (or, in this case, a subtenant), the Florida Statutes require you to establish that an agreement existed for the payment of rent, that you did not receive the rent owed to you in accordance with the terms of the agreement, that you provided the tenant with the statutorily required three-day notice demanding payment of the unpaid rent or the surrender of possession of the property, and that the tenant did not comply with that demand within the three-day period.
In Edge’s case, it offered evidence at trial proving that had an agreement with Tribeca, that Tribeca defaulted on paying its rent, that Edge sent Tribeca a three-day notice, and that, at the end of those three days, Tribeca had not paid but was still in possession of the property. Armed with this evidence, the pilates studio was entitled to a judgment evicting the medical office.
The appeals court also reversed the $100,000 unjust enrichment award in favor of the medical office. The parties’ lease agreement did not specify how much of Tribeca’s rent was payment for the use of the space and how much was compensation for Edge’s marketing services. At trial, no reliable evidence was presented establishing the value of the marketing services. The appeals court determined that the trial court should hear more evidence on the value of Edge’s marketing before assessing a damages amount on the unjust enrichment issue.
In Edge and Tribeca’s case, part of what made their litigation complicated was a lack of clarity in their sublease agreement. The contract required the subtenant to pay one flat amount each month in exchange for two discrete, different benefits (the tenant’s marketing services and occupancy of part of the tenant’s leased space), without stating a separate sub-value for each. For helpful advice and skilled representation in your commercial leasing arrangements, whether typical or atypical, consult the experienced Florida business law and real estate attorneys at Stok Folk + Kon.
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More blog posts:
Easements Sometimes Limit What You Can Build on Your Own Property… But Not in This Case, Florida Business Lawyers Blog, Feb. 13, 2015
Dealing With a Property Subject to Covenants, Conditions and Restrictions, Florida Business Lawyers Blog, Feb. 10, 2015